What Exactly Has Gone Awry at Zipcar – Is the UK Car-Sharing Market Dead?
The volunteer food project in Rotherhithe has been delivering a large number of cooked meals weekly for two years to elderly residents and vulnerable locals in southeast London. However, the group's plans have been thrown into disarray by the news that they will not have cars and vans on New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles from the street. The company sent shockwaves through the capital when it declared it would cease its UK operations from 1 January.
It will mean many helpers will be unable to pick up supplies from a major food charity, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same convenient access.
“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “My team and I are concerned by the operational hurdle we will face. A lot of people like ours are going to struggle.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for Urban Car-Sharing
These volunteers are part of over 500,000 people in London registered as car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. The vast majority of those members were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with staff, is a serious setback to hopes that vehicle clubs in cities could reduce the need for owning a car. However, some analysts also suggested that Zipcar’s departure need not spell the end for the concept in Britain.
The Potential of Car Sharing
Shared vehicle use is prized by city planners and green advocates as a way of mitigating the problems linked to vehicle ownership. Typically, vehicles sit idle on the side of the road for 95% 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 helps urban areas – easing congestion and pollution – and improves public health through more exercise.
Understanding the Decline
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's total earnings, and a loss that grew to £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to streamline operations, improve returns”.
Zipcar’s most recent accounts noted revenues had declined as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which is dampening demand for discretionary spending,” it said.
The Capital's Specific Hurdles
Yet, several experts noted that London has specific problems that made it difficult for the sector to succeed.
- Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of varying processes and prices that made it harder.
- Congestion Charge: 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 year’s 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,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
Lessons from Abroad
Nations in Europe offer models for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework for parking, support and waivers. 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 shared mobility around the world, especially in Europe, is growing,” said Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that a potential operator was already seriously considering entering the London market: “There will be fill this gap.”
The Future Landscape
Other players can be split into two camps:
- Fleet Operators: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: 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 a while for other players to build momentum. For now, more people may choose to buy cars, and others across London will be without a convenient option.
For Rotherhithe community kitchen, the next month will be a scramble to find a solution. The logistical challenge caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the prospects of shared mobility in the UK.
