What Exactly Has Gone So Wrong at Zipcar – Is the UK Vehicle-Sharing Sector Finished?
The community kitchen in Rotherhithe has been delivering a large number of cooked meals weekly for two years to pensioners and needy locals in southeast London. However, their operations face major disruption by the news that they will not have cars and vans on New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. The company sent shockwaves across London when it said it would shut down its UK operations from 1 January.
It will mean 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, costlier, 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 operational hurdle we will face. A lot of people like ours are going to struggle.”
“Faced with this reality, everyone is concerned and thinking: ‘How are we going to carry on?”
A Significant Setback for City Vehicle Clubs
These volunteers are among over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. Most of those people were likely with Zipcar, which held a dominant position in the city.
The planned closure, subject to consultation with employees, is a serious setback to hopes that car sharing in urban areas could reduce the need for owning a car. However, some experts also suggested 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 many urbanists and environmentalists as a way of mitigating the problems associated with vehicle ownership. Typically, vehicles sit idle on the side of the road for the vast majority of the time, using up space. They also require large carbon emissions 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 boosts public health through more exercise.
What Went Wrong?
The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company's total earnings, 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 global operations, where we are taking deliberate steps to simplify processes, improve returns”.
Its latest financial reports said revenues had declined as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.
The Capital's Specific Challenges
Yet, industry observers noted that London has particular issues that made it much harder for the sector to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of different procedures and prices that complicate operations.
- Congestion Charge: The closure comes as electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Locals in some boroughs pay as little as £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a significant barrier.
“Our fees should be one-twentieth of a private parking cost,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”
A European Example
Other European countries offer examples for London to follow. Germany enacted national shared mobility laws in 2017, providing a nationwide framework for parking, support and waivers. 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.
“The evidence shows is that shared mobility around the world, especially in Europe, is expanding,” 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 a potential operator was already seriously considering entering the London market: “Operators will fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two camps:
- Fleet Operators: Which own or lease their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Person-to-Person Rentals: Which allow users to rent 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. “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. In the meantime, more people may choose to buy cars, and others across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a rush to find a solution. The logistical challenge caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the future of shared mobility in the UK.
