What Exactly Has Gone Awry at Zipcar – and the UK Car-Sharing Sector Dead?
A community kitchen in Rotherhithe has been delivering a large number of cooked meals each week for two years to pensioners and needy locals in south London. However, their operations face major disruption by the news that they will lose access to New Year’s Day.
This organization depended on Zipcar, the app-based vehicle rental service that allowed its cars from the street. It caused shock through the capital when it declared it would cease its UK business from 1 January.
It will mean many helpers will be unable to collect food from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Other options are less convenient, costlier, or do not offer the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “My team and I are worried about the operational hurdle we will face. A lot of people like ours are going to struggle.”
“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for Urban Car-Sharing
These volunteers are among more than half a million people in London who were car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were likely with Zipcar, which had a near-monopoly position in the city.
The planned closure, subject to consultation with employees, is a big blow to hopes that car sharing in cities could reduce the need for owning a car. Yet, some analysts also suggested that Zipcar’s exit need not mean the demise for the idea in Britain.
The Promise of Car Sharing
Shared vehicle use is prized by many urbanists and green advocates as a way of mitigating the problems linked to vehicle ownership. Most cars sit as two-tonne dead weights on the side of the road for the vast majority of the time, occupying parking. They also require large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take public transport more. That helps urban areas – easing congestion and pollution – and improves people’s health through increased activity.
Understanding the Decline
The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's overall annual revenue, and a deficit that reached £11.7m in 2024 gave little incentive to continue.
Avis Budget has said the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to simplify processes, improve returns”.
Its latest financial reports said 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 non-essential services,” it said.
The Capital's Specific Hurdles
Yet, industry observers noted that London has particular issues that made it difficult for the sector to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of varying processes and prices that complicate operations.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
- 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 annually, 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’re putting less polluting cars in their place.”
Lessons from Abroad
Other European countries offer examples 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 5.4 shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK lags behind at 0.7.
“What we see is that shared mobility around the world, particularly on the continent, is expanding,” said Bharath Devanathan of Invers.
Devanathan said authorities should start to treat car sharing as a form of public transport, and integrate 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
The company’s competitors can be split 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 already weighing up the UK gap. Rory Brimmer, its UK managing director, said there was a “big opportunity” 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 build momentum. For now, more people may choose to buy cars, and many across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a rush to find a solution. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of shared mobility in the UK.
