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

A community kitchen in Rotherhithe has provided hundreds of cooked meals weekly for two years to elderly residents and needy locals in southeast London. Yet, the group's plans have been thrown into disarray by the news that they will not have cars and vans on New Year’s Day.

This organization depended on Zipcar, the app-based vehicle rental service that customers to access its fleet of vehicles from the street. It sent shockwaves across London when it said it would shut down its UK operations from 1 January.

This means many helpers cannot collect food from the Felix Project, which gathers surplus food from grocery stores, cafes and restaurants. Obvious alternatives are further away, costlier, or do not offer the same flexible hours.

“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “My team and I are concerned by the operational hurdle we will face. A lot of people like ours are going to struggle.”

“Knowing the reality, everyone is concerned and thinking: ‘How will we continue?’”

A Major Blow for Urban Car-Sharing

These volunteers are among over 500,000 people in London registered as car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. The vast majority of those members were probably with Zipcar, which held a dominant position in the city.

This shutdown, subject to consultation with employees, is a serious setback to the vision that vehicle clubs in urban areas could reduce the need for private vehicle ownership. Yet, some analysts also suggested that Zipcar’s departure need not spell the end for the concept in Britain.

The Promise of Shared Mobility

Car sharing is prized by many urbanists and environmentalists as a way of mitigating the ills associated with vehicle ownership. Most cars sit idle on the side of the road for 95% of the time, occupying parking. They also involve large CO2 output to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – easing congestion and pollution – and boosts public health through increased activity.

Understanding the Decline

Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK income were minimal compared with its parent company's total earnings, and a loss that grew to £11.7m in 2024 gave little incentive to continue.

Avis Budget has said the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to simplify processes, improve returns”.

Zipcar’s most recent accounts noted revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the cost-of-living crisis, which is dampening demand for discretionary spending,” it said.

The Capital's Specific Hurdles

However, several experts noted that London has particular issues that made it much harder for the sector to succeed.

• Inconsistent Rules: With numerous local councils, car-club operators face a patchwork of different procedures and prices that made it harder.
• Congestion Charge: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
• Unequal Parking Fees: Locals in some boroughs pay just £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 annually, creating a major disincentive.

“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.”

Lessons from Abroad

Other European countries offer models for London to follow. Germany introduced national car-sharing legislation in 2017, providing a nationwide framework 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.

“The evidence shows 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 integrate it with train and bus stations. He added that a potential operator was looking at entering the London market: “Operators will fill this gap.”

The Future Landscape

Other players can be split into two models:

1. Company-Owned Fleets: Which own or lease their own cars. This includes 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 – a kind of Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.

One company, a US-headquartered P2P service, is assessing the UK gap. Rory Brimmer, its UK managing director, 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.

However, 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 without a convenient option.

For Rotherhithe community kitchen, the coming weeks will be a scramble to find a solution. The logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the prospects of car-sharing in the UK.