What Has Gone So Awry at Zipcar – and the UK Car-Sharing Sector Finished?
The community kitchen in Rotherhithe has been delivering hundreds of prepared dishes each week for two years to pensioners and needy locals in south London. Yet, their operations have been thrown into disarray by the announcement that they will lose cars and vans on New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that customers to access its cars from the street. It caused shock across London when it said it would cease its UK business from 1 January.
This means many helpers cannot collect food from a major food charity, that collects surplus food from supermarkets, cafes and restaurants. Other options are further away, costlier, or do not offer the same convenient access.
“It’s going to be affected massively,” said Vimal Pandya, the community kitchen’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 are we going to carry on?”
A Major Blow for City Vehicle Clubs
These volunteers are among over 500,000 people in London who were car club members, now potentially left without convenient access 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 staff, is a serious setback to hopes that vehicle clubs in urban areas could reduce the need for private vehicle ownership. However, some experts have noted that Zipcar’s departure need not spell the end for the concept in Britain.
The Promise of Shared Mobility
Car sharing is valued by city planners and environmentalists as a way of mitigating the problems associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for 95% of the time, using up space. They also require large CO2 output to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – easing congestion and pollution – and improves people’s health through increased activity.
Understanding the Decline
Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues 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.
The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking deliberate steps to streamline operations, enhance profitability”.
Its latest financial reports said revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.
London's Unique Challenges
However, several experts noted that London has specific problems that made it much harder for the company and its rivals to succeed.
- Patchwork Policies: With numerous local councils, car-club operators face a mosaic of varying processes and costs that complicate operations.
- New Costs: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Unequal Parking Fees: 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 major disincentive.
“Our fees should be one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
A European Example
Other European countries offer models for London to follow. Germany introduced national car-sharing legislation 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 lags behind at 0.7.
“The evidence shows is that car sharing around the world, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of public transport, and link 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.”
What Comes Next?
Other players can roughly be divided into two camps:
- Fleet Operators: 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 – similar to Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is already weighing up 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 some time for other players to establish themselves. For now, more people may feel forced to buy cars, and many across London will be without a convenient option.
For Rotherhithe community kitchen, the next month will be a scramble to find a solution. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the future of car-sharing in the UK.
