What Exactly Has Gone So Wrong at Zipcar – Is the UK Vehicle-Sharing Market Dead?
The community kitchen in Rotherhithe has provided a large number of prepared dishes weekly for two years to pensioners and needy locals in south London. However, their operations have been thrown into disarray by the news that they will not have use of New Year’s Day.
The group had relied on Zipcar, the app-based vehicle rental service that allowed its cars from the street. The company caused shock across London when it said it would shut down its UK business from 1 January.
This means many helpers cannot pick up supplies from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are further away, costlier, or lack the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the logistical challenge 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 registered as car club members, who could be left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those people were probably with Zipcar, which held a dominant position in the city.
This shutdown, pending consultation with staff, is a serious setback to hopes that car sharing in urban areas could reduce the need for owning a car. However, some analysts have noted that Zipcar’s exit need not spell the end for the concept in Britain.
The Potential of Car Sharing
Shared vehicle use is valued by city planners and environmentalists as a way of mitigating the ills linked to vehicle ownership. Most cars sit idle on the street for the vast majority of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to use active travel and take public transport more. That helps urban areas – reducing congestion and pollution – and boosts people’s health through more exercise.
What Went Wrong?
Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's total earnings, and a deficit that grew to £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to streamline operations, enhance profitability”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the economic squeeze, which is dampening demand for non-essential services,” it said.
London's Unique Hurdles
However, industry observers noted that London has particular issues that made it much harder for the sector to succeed.
- Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of varying processes and costs that made it harder.
- New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Locals in some boroughs pay just £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 annually, 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 introduce cleaner models in their place.”
Lessons from Abroad
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 5.4 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, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.
He suggested authorities should start to view vehicle clubs as a form of public transport, and integrate 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 roughly be divided into two camps:
- Fleet Operators: Which maintain their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: 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 peer-to-peer platform, is assessing 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 build momentum. For now, more people may choose to buy cars, and others across London will be without a convenient option.
For Rotherhithe community kitchen, the next month will be a rush to find a way. The logistical challenge caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the prospects of shared mobility in the UK.
