What Has Gone So Wrong at Zipcar – Is the UK Vehicle-Sharing Sector 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 southeast London. However, the group's plans face major disruption by the announcement that they will not have access to New Year’s Day.

The group had relied on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It caused shock through the capital when it declared it would cease its UK operations from 1 January.

It will mean many helpers will be unable to pick up supplies from the Felix Project, which gathers excess produce from grocery stores, cafes and restaurants. Other options are further away, costlier, or lack 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. Many groups like ours will face difficulties.”

“Knowing the reality, everyone is concerned and thinking: ‘How will we continue?’”

A Major Blow for Urban Car-Sharing

These volunteers are part of 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. The vast majority of those people were probably with Zipcar, which held a dominant position in the city.

The planned closure, pending consultation with employees, is a serious setback to the vision that vehicle clubs in cities could cut the need for owning a car. Yet, some analysts also suggested that Zipcar’s exit need not spell the end for the concept in Britain.

The Potential of Car Sharing

Shared vehicle use is prized by city planners 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 the vast majority of the time, occupying parking. They also involve large CO2 output to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – reducing congestion and pollution – and improves public health through more exercise.

Understanding the Decline

The company started in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company'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 “broader transformation across our global operations, where we are taking targeted actions to simplify processes, enhance profitability”.

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 is dampening demand for non-essential services,” it said.

The Capital's Specific Hurdles

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

• Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that made it harder.
• Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
• Unequal Parking Fees: Residents in some boroughs pay as little as £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.

“We should literally be charged one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”

Lessons from Abroad

Nations in Europe offer models for London to follow. Germany introduced national car-sharing legislation in 2017, providing a unified system for parking, subsidies and exemptions. 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.

“What we see is that car sharing around the world, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.

He suggested authorities should start to view vehicle clubs as a form of mass transit, and link it with train and bus stations. He added that a potential operator was already seriously considering entering the London market: “Operators will fill this gap.”

What Comes Next?

Other players can be split into two camps:

1. Company-Owned Fleets: Which own or lease 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 – a kind of Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.

One company, 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. 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 scramble 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 car-sharing in the UK.