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

The volunteer food project in Rotherhithe has been delivering hundreds of cooked meals weekly for the past two years to elderly residents and needy locals in south London. Yet, the group's plans face major disruption by the announcement that they will lose cars and vans on New Year’s Day.

This organization had relied on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles via smartphone. The company caused shock through the capital when it declared it would cease its UK business from 1 January.

This means many volunteers cannot collect food from a major food charity, which gathers excess produce 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,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are worried about the logistical challenge 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

These volunteers 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.

The planned closure, subject to consultation with staff, is a big blow to hopes that car sharing in cities could cut the need for owning a car. However, some analysts also suggested that Zipcar’s departure need not spell the end for the idea in Britain.

The Promise of Shared Mobility

Shared vehicle use is prized by city planners and green advocates as a way of reducing the ills linked to vehicle ownership. Most cars 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 carbon emissions to produce, and people without a vehicle tend to use active travel and take transit more. That helps urban areas – easing congestion and pollution – and improves public health through increased activity.

What Went Wrong?

The company started in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK income barely registered compared with its owner's total earnings, and a deficit that grew to £11.7m in 2024 gave no reason to continue.

Avis Budget has said the closure is part of a “broader transformation across our international business, where we are taking targeted actions to streamline operations, improve returns”.

Zipcar’s most recent accounts said revenues had declined as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which is dampening demand for non-essential services,” it said.

London's Unique Hurdles

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

• Inconsistent Rules: With numerous local councils, car-club operators face a patchwork of varying processes and prices that made it harder.
• 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 annual electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.

“Our fees should be one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We’re putting less polluting cars in their place.”

Lessons from Abroad

Nations in Europe offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework 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 shared mobility 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 a potential operator was already seriously considering entering the London market: “There will be fill this gap.”

What Comes Next?

The company’s competitors can roughly be divided 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. Person-to-Person Rentals: Which allow users to rent out their own vehicles via an app – a kind of 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 assessing the UK gap. Rory Brimmer, its UK head, 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 a while 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 coming weeks will be a rush to find a way. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the future of shared mobility in the UK.