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

The volunteer food project in Rotherhithe has distributed hundreds of cooked meals weekly for two years to pensioners and vulnerable locals in southeast London. However, their operations have been thrown into disarray by the announcement that they will lose cars and vans on New Year’s Day.

This organization depended on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. It sent shockwaves through the capital when it declared it would shut down its UK operations from 1 January.

It will mean many volunteers cannot collect food from the Felix Project, which gathers surplus food from grocery stores, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same convenient access.

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

“Knowing the reality, everyone is concerned and thinking: ‘How are we going to carry on?”

A Significant Setback for Urban Car-Sharing

The community kitchen’s drivers are among more than half a million people in London registered as car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. The vast majority of those members were likely with Zipcar, which held a dominant position in the city.

This shutdown, pending consultation with staff, is a big blow to hopes that car sharing in urban areas could cut the need for private vehicle ownership. However, some analysts have noted that Zipcar’s departure need not spell the end for the concept in Britain.

The Promise of Shared Mobility

Shared vehicle use is prized by city planners and green advocates as a way of mitigating the ills linked to vehicle ownership. Most cars sit idle on the side of the road for 95% of the time, using up space. They also require large CO2 output to produce, and people without a vehicle tend to use active travel and take transit more. That helps urban areas – reducing congestion and pollution – and improves public health through more exercise.

Understanding the Decline

The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered 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 international business, where we are taking deliberate steps to simplify processes, enhance profitability”.

Its latest financial reports said revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for discretionary spending,” it said.

London's Unique Challenges

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

• Inconsistent Rules: With numerous local councils, car-club operators face a patchwork of different procedures 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: Residents in some boroughs pay as little as £63 for a annual 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,” said Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”

Lessons from Abroad

Other European countries offer models for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework 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.

“The evidence shows is that shared mobility around the world, especially in Europe, is growing,” said Bharath Devanathan of Invers.

He suggested authorities should start to treat car sharing as a form of public transport, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”

What Comes Next?

The company’s competitors can roughly be divided into two camps:

1. Company-Owned Fleets: 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 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 already weighing up 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 build momentum. In the meantime, more people may choose to buy cars, and many across London will be left without access.

For Rotherhithe community kitchen, the coming weeks will be a rush to find a way. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the future of shared mobility in the UK.