What Has Gone So Wrong at Zipcar – Is the UK Vehicle-Sharing Sector Dead?
The volunteer food project in Rotherhithe has been delivering hundreds of prepared dishes each week for the past two years to elderly residents and needy locals in south London. However, the group's plans face major disruption by the announcement that they will lose access to New Year’s Day.
This organization had relied on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It caused shock through the capital when it declared it would shut down its UK operations from 1 January.
It will mean many helpers cannot pick up supplies from a major food charity, that collects surplus food from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or lack the same convenient access.
“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the logistical challenge we will face. Many groups like ours are going to struggle.”
“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
These volunteers are part of 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 people were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with employees, is a serious setback to hopes that vehicle clubs in urban areas could reduce the need for private vehicle ownership. Yet, some experts have noted that Zipcar’s departure need not spell the end for the idea in Britain.
The Potential of Car Sharing
Car sharing is valued by city planners and environmentalists as a way of mitigating the problems associated with vehicle ownership. Most cars sit idle on the side of the road for the vast majority of the time, using up space. 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 being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK income were minimal compared with its owner's overall annual revenue, and a loss that grew to £11.7m in 2024 gave no reason to continue.
Avis Budget has said the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to simplify processes, improve returns”.
Its latest financial reports said revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the economic squeeze, which continues to suppress demand for non-essential services,” it said.
The Capital's Specific Hurdles
However, several experts noted that London has particular issues that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and costs that complicate operations.
- New Costs: The closure coincides with electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Residents in some boroughs pay just £63 for a annual electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.
“We should literally be charged one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”
Lessons from Abroad
Other European countries offer examples for London to follow. Germany introduced national car-sharing legislation in 2017, providing a nationwide framework for parking, subsidies and exemptions. Now, the country has 5.4 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 car sharing around the world, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of public transport, and link it with train and bus stations. He added that a potential operator was already seriously considering entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two camps:
- Fleet Operators: Which own or lease their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Person-to-Person Rentals: Which allow users to rent out their own vehicles via an app – similar to Airbnb for cars. Examples 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. “A space exists that is going to need to be filled, because London still needs to move,” Brimmer said.
Yet, it could take some time for other players to build momentum. For now, more people may feel forced to buy cars, and many across London will be left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a solution. The delivery problem caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of car-sharing in the UK.
