What Has Gone Wrong at Zipcar – and the UK Car-Sharing Sector Dead?

A volunteer food project in Rotherhithe has been delivering a large number of prepared dishes each week for two years to pensioners and vulnerable locals in south London. Yet, the group's plans have been thrown into disarray by the news that they will lose access to New Year’s Day.

This organization had relied on Zipcar, the app-based vehicle rental service that customers to access its cars from the street. It caused shock through the capital when it declared it would cease its UK business from 1 January.

This means many helpers will be unable to collect food from a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or lack the same convenient access.

“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “My team and I are concerned by the operational hurdle we will face. A lot of people like ours will face difficulties.”

“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”

A Major Blow for Urban Car-Sharing

These volunteers are among over 500,000 people in London registered as car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were probably with Zipcar, which had a near-monopoly position in the city.

This shutdown, pending consultation with staff, is a big blow to the vision that vehicle clubs in urban areas could reduce the need for owning a car. However, some experts have noted that Zipcar’s exit need not mean the demise for the idea in Britain.

The Potential of Car Sharing

Shared vehicle use is prized by city planners and green advocates as a way of reducing the ills linked to vehicle ownership. Typically, vehicles 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 CO2 output to produce, and people without a vehicle tend to use active travel and take transit more. That benefits cities – 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 parent company'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 deliberate steps to simplify processes, enhance profitability”.

Zipcar’s most recent accounts said revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the economic squeeze, which is dampening demand for discretionary spending,” it said.

The Capital's Specific Challenges

However, several experts noted that London has specific problems that made it difficult for the company and its rivals to succeed.

• Patchwork Policies: With numerous local councils, car-club operators face a patchwork of different procedures 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 floating car club would pay over £1,100 per year, creating a significant barrier.

“Our fees should be one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”

A European Example

Other European countries offer examples for London to follow. Germany enacted national car-sharing legislation 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 lags behind at 0.7.

“The evidence shows is that car sharing around the world, especially in Europe, is expanding,” said Bharath Devanathan of Invers.

Devanathan said 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 looking at entering the London market: “There will be fill this gap.”

The Future Landscape

Other players can be split into two camps:

1. Company-Owned Fleets: Which maintain 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. “A space exists 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. In the meantime, more people may choose to buy cars, and others across London will be left without access.

For the volunteers in Rotherhithe, the next month 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 prospects of shared mobility in the UK.