What Exactly Has Gone Wrong at Zipcar – Is the UK Vehicle-Sharing Sector Finished?

The volunteer food project in Rotherhithe has provided hundreds of cooked meals weekly for the past two years to pensioners and vulnerable locals in south London. Yet, their operations have been thrown into disarray by the announcement that they will not have cars and vans on New Year’s Day.

This organization depended on Zipcar, the car-sharing company that customers to access its fleet of vehicles via smartphone. The company caused shock across London when it said it would cease its UK business from 1 January.

This means many helpers will be unable to pick up supplies from a major food charity, which gathers surplus food from grocery stores, cafes and restaurants. Obvious alternatives are further away, costlier, or do not offer the same flexible hours.

“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the logistical challenge 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 Significant Setback for City Vehicle Clubs

The community kitchen’s drivers are among more than half a million people in London who were car club members, who could be left without easy use to vehicles, without the hassle and cost of ownership. Most of those members were probably with Zipcar, which held a dominant position in the city.

This shutdown, subject to consultation with staff, is a serious setback to the vision that vehicle clubs in cities could reduce the need for owning a car. However, some experts have noted that Zipcar’s departure need not mean the demise for the concept in Britain.

The Potential of Shared Mobility

Shared vehicle use is valued by city planners and environmentalists as a way of mitigating the ills associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street for 95% 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 – easing congestion and pollution – and improves public health through increased activity.

What Went Wrong?

The company started in 2000 before its acquisition by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave little incentive to continue.

The parent company stated the closure is part of a “wider restructuring across our international business, where we are taking deliberate steps to simplify processes, improve returns”.

Zipcar’s most recent accounts noted revenues had declined as drivers took less frequent, 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

Yet, several experts noted that London has specific problems that made it difficult for the sector to succeed.

• Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of varying processes and costs that complicate operations.
• New Costs: The closure coincides with electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
• 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.

“Our fees should be one-twentieth of a resident’s permit,” said Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models 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 several 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 shared mobility around the world, especially in Europe, is expanding,” commented Bharath Devanathan of Invers.

Devanathan said authorities should start to treat car sharing 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: “There will be fill this gap.”

What Comes Next?

Other players can roughly be divided into two camps:

1. Fleet Operators: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. 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 P2P service, is already weighing up the UK gap. Rory Brimmer, its UK head, said there was a “significant chance” 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. For now, more people may choose to buy cars, and many 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 underscores the broader impact of its departure on community groups and the future of shared mobility in the UK.