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

The community kitchen in Rotherhithe has distributed a large number of cooked meals weekly for the past two years to pensioners and vulnerable locals in south London. Yet, the group's plans face major disruption by the announcement that they will lose use of New Year’s Day.

This organization depended on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. The company caused shock through the capital when it declared it would cease its UK business from 1 January.

This means many helpers cannot pick up supplies from a major food charity, that collects surplus food from grocery stores, cafes and restaurants. Other options are further away, more expensive, or do not offer the same convenient access.

“The impact will be massively,” said Vimal Pandya, the project's founder. “My team and I are worried about the logistical challenge we will face. A lot of people like ours will face difficulties.”

“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”

A Significant Setback for City Vehicle Clubs

These volunteers are among more than half a million people in London who were car club members, who could be left without easy use to vehicles, avoiding the burden and cost of ownership. Most of those people were probably with Zipcar, which had a near-monopoly position in the city.

This shutdown, pending consultation with staff, is a serious setback to the vision that vehicle clubs in cities could cut the need for private vehicle ownership. Yet, some analysts have noted that Zipcar’s departure need not spell the end for the idea in Britain.

The Promise of Shared Mobility

Shared vehicle use is valued by city planners and environmentalists as a way of reducing the problems linked to vehicle ownership. Most cars sit as two-tonne dead weights on the side of the road for 95% of the time, using up space. They also involve large carbon emissions to produce, and people without a vehicle tend to use active travel and take public transport more. That benefits cities – reducing congestion and pollution – and improves public health through more exercise.

What Went Wrong?

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 no reason 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, enhance profitability”.

Its latest financial reports noted revenues had declined as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.

The Capital's Specific Hurdles

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

• Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that made it harder.
• New Costs: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
• Unequal Parking Fees: Residents in some boroughs pay just £63 for a annual electric car parking permit. A floating car club would pay over £1,100 per year, creating a significant barrier.

“We should literally be charged one-twentieth of a private parking cost,” said Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”

A European Example

Other European countries offer examples for London to follow. Germany introduced national shared mobility laws in 2017, providing a unified system for parking, support 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 lags behind 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 one unnamed client was looking at entering the London market: “Operators will fill this gap.”

The Future Landscape

The company’s competitors can be split into two camps:

1. Company-Owned Fleets: Which maintain their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. 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.

Turo, a US-headquartered P2P service, is already weighing up 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.

Yet, it could take a while 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 Rotherhithe community kitchen, the next month will be a scramble to find a solution. 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.