What Has Gone Awry at Zipcar – Is the UK Car-Sharing Sector Dead?
The community kitchen in Rotherhithe has distributed a large number of prepared dishes each week for two years to elderly residents and vulnerable 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 depended on Zipcar, the car-sharing company that customers to access its cars from the street. The company caused shock through the capital when it said it would shut down its UK operations from 1 January.
This means many volunteers will be unable to collect food from a major food charity, that collects excess produce from grocery stores, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same flexible hours.
“The impact will be massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are worried about the logistical challenge we will face. Many groups like ours are going to struggle.”
“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”
A Major Blow for City Vehicle Clubs
These volunteers 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. Most of those people were probably with Zipcar, which held a dominant position in the city.
This shutdown, subject to consultation with employees, is a big blow to hopes that car sharing in urban areas could reduce the need for private vehicle ownership. However, some analysts have noted that Zipcar’s departure need not mean the demise for the idea in Britain.
The Potential of Car Sharing
Shared vehicle use is prized by many urbanists and environmentalists as a way of reducing the ills associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for 95% of the time, occupying parking. They also require large carbon emissions 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 boosts people’s health through increased activity.
What Went Wrong?
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK income barely registered compared with its owner'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 “wider restructuring across our international business, where we are taking deliberate steps to streamline operations, improve returns”.
Zipcar’s most recent accounts said revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.
London's Unique Challenges
However, industry observers noted that London has specific problems that made it much harder for the sector to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that complicate operations.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Locals in some boroughs pay as little as £63 for a year’s 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 resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer examples for London to follow. Germany enacted national shared mobility laws 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 car sharing around the world, particularly on the continent, is growing,” 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: “Operators will fill this gap.”
What Comes Next?
Other players can be split into two camps:
- Company-Owned Fleets: Which maintain their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Person-to-Person Rentals: Which allow users to hire out their own vehicles via an app – a kind of 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 “significant chance” to win more users. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.
However, it could take some time for other players to establish themselves. For now, more people may choose to buy cars, and others across London will be left without access.
For Rotherhithe community kitchen, the next month will be a scramble to find a way. The delivery problem caused by Zipcar’s exit underscores the wider implications of its departure on community groups and the future of car-sharing in the UK.
