What Exactly Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Sector Dead?

A community kitchen in Rotherhithe has distributed a large number of cooked meals each week for the past two years to elderly residents and needy locals in south London. However, their operations have been thrown into disarray by the news that they will lose cars and vans on New Year’s Day.

The group had relied on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It caused shock across London when it declared it would cease its UK business 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. Other options are less convenient, more expensive, or do not offer the same flexible hours.

“The impact will be massively,” said 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, everyone is concerned and thinking: ‘How will we continue?’”

A Significant Setback for Urban Car-Sharing

The community kitchen’s drivers are part of over 500,000 people in London who were car club members, who could be left without convenient access to vehicles, avoiding the burden and cost of ownership. Most of those members were probably with Zipcar, which held a dominant position in the city.

This shutdown, pending consultation with employees, is a serious setback to hopes that car sharing in cities could reduce the need for owning a car. Yet, some experts also suggested that Zipcar’s exit need not mean the demise for the concept in Britain.

The Potential of Car Sharing

Shared vehicle use is valued by city planners and green advocates as a way of reducing the ills linked to vehicle ownership. Most cars sit idle on the street for the vast majority of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – reducing congestion and pollution – and boosts people’s health through increased activity.

What Went Wrong?

The company started in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its owner's total earnings, and a loss that reached £11.7m in 2024 gave no reason to continue.

The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to simplify processes, 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 cost-of-living crisis, which is dampening demand for non-essential services,” it said.

The Capital's Specific Hurdles

Yet, industry observers noted that London has specific problems that made it much harder for the company and its rivals to succeed.

• Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of different procedures and costs 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 similar shared vehicle would pay over £1,100 per year, creating a major disincentive.

“We should literally be charged one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”

Lessons from Abroad

Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a unified system for parking, support and waivers. 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 expanding,” commented Bharath Devanathan of Invers.

Devanathan said authorities should start to view vehicle clubs as a form of mass transit, and integrate it with train and bus stations. He added that one unnamed client was looking at entering the London market: “There will be fill this gap.”

The Future Landscape

The company’s competitors can roughly be divided into two camps:

1. Company-Owned Fleets: Which own or lease their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. Peer-to-Peer Services: Which allow users to rent out their own vehicles via an app – similar to Airbnb for cars. Players include 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 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 establish themselves. For now, more people may choose 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 logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the future of shared mobility in the UK.