What Has Gone So Awry at Zipcar – and the UK Car-Sharing Market Dead?
A volunteer food project in Rotherhithe has provided a large number of cooked meals each week for 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 not have use of New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It sent shockwaves across London when it said it would shut down its UK operations from 1 January.
This means many volunteers cannot collect food from a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same flexible hours.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the operational hurdle we will face. A lot of people like ours are going to struggle.”
“Knowing the reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Major Blow for City Vehicle Clubs
The community kitchen’s drivers are among more than half a million people in London who were car club members, now potentially left without easy use 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, pending consultation with employees, is a big blow to the vision that car sharing in cities could reduce the need for private vehicle ownership. However, some analysts have noted 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 many urbanists and green advocates as a way of reducing 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 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 increased activity.
What Went Wrong?
Zipcar was founded in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company's total earnings, and a deficit 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 international business, where we are taking deliberate steps to simplify processes, enhance profitability”.
Its latest financial reports said revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
The Capital's Specific Challenges
Yet, several experts noted that London has specific problems that made it difficult for the company and its rivals 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 start paying London’s congestion charge, adding extra expenses.
- Unequal Parking Fees: Residents in some boroughs pay just £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a significant barrier.
“We should literally be charged one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
Lessons from Abroad
Nations in Europe offer examples for London to follow. Germany enacted national shared mobility laws in 2017, providing a unified system for parking, subsidies and exemptions. 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 car sharing 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 integrate it with train and bus stations. He added that one unnamed client was already seriously considering entering the London market: “There will be fill this gap.”
The Future Landscape
The company’s competitors can be split into two models:
- Company-Owned Fleets: Which maintain 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. 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 build momentum. For now, more people may feel forced to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the coming weeks will be a rush to find a way. The logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the prospects of shared mobility in the UK.
