What Has Gone So Wrong at Zipcar – and the UK Vehicle-Sharing Market Dead?
The community kitchen in Rotherhithe has been delivering a large number of prepared dishes each week for the past two years to pensioners and needy locals in south London. However, their operations have been thrown into disarray by the news that they will not have access to New Year’s Day.
This organization depended on Zipcar, the car-sharing company that customers to access its fleet of vehicles from the street. It caused shock across London when it said it would shut down its UK business from 1 January.
It will mean many helpers cannot collect food from the Felix Project, that collects surplus food from grocery stores, cafes and restaurants. Obvious alternatives are further away, more expensive, or lack the same flexible hours.
“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are concerned by the operational hurdle we will face. Many groups like ours will face difficulties.”
“Faced with this reality, everyone is concerned and thinking: ‘How will we continue?’”
A Significant Setback for Urban Car-Sharing
The community kitchen’s drivers are part of more than half a million people in London registered as car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. The vast majority 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 big blow to the vision that vehicle clubs in cities could cut the need for owning a car. However, some experts have noted that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Car Sharing
Car sharing is prized by many urbanists and green advocates as a way of mitigating the problems linked to vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for 95% of the time, occupying parking. They also involve large CO2 output to produce, and people without a vehicle tend to walk, cycle and take public transport more. That helps urban areas – 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 barely registered 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 “broader transformation across our global operations, where we are taking targeted actions to streamline operations, improve returns”.
Zipcar’s most recent accounts 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.
London's Unique Hurdles
However, several experts noted that London has particular issues that made it much harder for the sector to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork 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.
- Parking Permit Disparity: Locals in some boroughs pay just £63 for a year’s electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a significant barrier.
“Our fees should be 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
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 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, especially in Europe, is expanding,” said Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs as a form of public transport, and integrate 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.”
The Future Landscape
The company’s competitors can roughly be divided into two models:
- Company-Owned Fleets: 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.
Turo, a US-headquartered P2P service, is assessing the UK gap. Rory Brimmer, its UK head, 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 some time for other players to establish themselves. In the meantime, more people may choose to buy cars, and many across London will be without a convenient option.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a way. The logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on vital services and the future of shared mobility in the UK.