What Has Gone Wrong at Zipcar – and the UK Vehicle-Sharing Market Finished?
The volunteer food project in Rotherhithe has distributed a large number of prepared dishes weekly for two years to elderly residents and needy locals in south London. Yet, their operations face major disruption by the news that they will not have cars and vans on New Year’s Day.
The group had relied on Zipcar, the car-sharing company that allowed its fleet of vehicles from the street. It sent shockwaves through the capital when it said it would cease its UK business from 1 January.
This means many helpers will be unable to collect food from the Felix Project, which gathers excess produce from supermarkets, cafes and restaurants. Other options are further away, more expensive, or lack the same flexible hours.
“The impact will be massively,” stated Vimal Pandya, the project's founder. “My team and I are worried about the logistical challenge we will face. Many groups like ours are going to struggle.”
“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
The community kitchen’s drivers are among over 500,000 people in London registered as car club members, who could be left without easy use to vehicles, avoiding the burden and cost of ownership. Most of those members were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with staff, is a big blow to the vision that car sharing in cities could cut the need for owning a car. Yet, some analysts have noted that Zipcar’s exit need not mean the demise for the concept in Britain.
The Promise of Shared Mobility
Car sharing is valued by city planners and green advocates as a way of mitigating the ills linked to vehicle ownership. Typically, vehicles sit idle on the street for the vast majority of the time, occupying parking. They also require large CO2 output to produce, and people who do not own cars tend to use active travel and take transit more. That benefits cities – easing congestion and pollution – and improves public health through more exercise.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its owner's overall annual revenue, and a loss that grew to £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “wider restructuring across our international business, where we are taking targeted actions to simplify processes, enhance profitability”.
Zipcar’s most recent accounts noted revenues had declined as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Hurdles
Yet, several experts noted that London has particular issues that made it difficult for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of different procedures and costs that complicate operations.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Locals in some boroughs pay just £63 for a annual electric car parking permit. A floating car club would pay over £1,100 per year, creating a significant barrier.
“We should literally be charged one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
Lessons from Abroad
Other European countries offer models for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework for parking, subsidies and exemptions. Now, the country has several shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK trails at 0.7.
“The evidence shows is that shared mobility around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs as a form of public transport, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “There will be fill this gap.”
The Future Landscape
Other players can roughly be divided into two camps:
- Fleet Operators: Which maintain their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: Which allow users to hire out their own vehicles via an app – similar to Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered P2P service, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “significant chance” to win more users. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.
Yet, it could take a while for other players to establish themselves. For now, more people may feel forced to buy cars, and many across London will be left without access.
For the volunteers in Rotherhithe, the next month will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the prospects of car-sharing in the UK.