What Has Gone So Awry at Zipcar – Is the UK Car-Sharing Sector Finished?

The community kitchen in Rotherhithe has been delivering hundreds of cooked meals each week for two years to pensioners and vulnerable locals in southeast London. However, the group's plans face major disruption by the news that they will not have use of 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 sent shockwaves through the capital when it declared it would shut down its UK business from 1 January.

It will mean many helpers cannot collect food from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same flexible hours.

“It’s going to be affected massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the operational hurdle we will face. Many groups like ours are going to struggle.”

“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”

A Major Blow for Urban Car-Sharing

The community kitchen’s drivers are among more than half a million people in London registered as 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, subject to consultation with employees, is a serious setback to the vision that car sharing in urban areas could cut the need for owning a car. Yet, some analysts also suggested that Zipcar’s departure need not spell the end for the concept in Britain.

The Potential of Car Sharing

Shared vehicle use is prized by many urbanists and green advocates as a way of mitigating the ills linked to vehicle ownership. Most cars sit as two-tonne dead weights on the street for 95% of the time, occupying parking. They also require large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take transit more. That helps urban areas – easing congestion and pollution – and improves public health through increased activity.

What Went Wrong?

Zipcar was founded 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 loss that reached £11.7m in 2024 gave little incentive to continue.

Avis Budget has said the closure is part of a “wider restructuring across our global operations, where we are taking targeted actions to streamline operations, improve returns”.

Zipcar’s most recent accounts noted revenues had fallen as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.

The Capital's Specific Challenges

However, several experts 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 prices that complicate operations.
• New Costs: The closure comes as electric cars start paying London’s congestion charge, adding extra expenses.
• Parking Permit Disparity: Residents in some boroughs pay as little as £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, creating a significant barrier.

“We should literally be charged one-twentieth of a private parking cost,” argued 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 models for London to follow. Germany introduced national shared mobility laws 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 lags behind at 0.7.

“What we see is that shared mobility around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.

Devanathan said authorities should start to view vehicle clubs as a form of public transport, and link 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 be split into two models:

1. Fleet Operators: 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 hire out their own vehicles via an app – similar to Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.

Turo, 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. “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 establish themselves. For now, 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 solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the prospects of shared mobility in the UK.