What Exactly Has Gone So Wrong at Zipcar – Is the UK Car-Sharing Sector Dead?

A volunteer food project in Rotherhithe has been delivering hundreds of cooked meals each week for two years to pensioners and vulnerable locals in southeast London. Yet, the group's plans have been thrown into disarray by the news that they will not have access to New Year’s Day.

The group had relied on Zipcar, the app-based vehicle rental service that allowed its cars from the street. It caused shock through the capital when it declared it would shut down its UK operations from 1 January.

It will mean many helpers will be unable to pick up supplies from the Felix Project, that collects excess produce from supermarkets, cafes and restaurants. Obvious alternatives are less convenient, costlier, or do not offer the same flexible hours.

“The impact will be massively,” stated Vimal Pandya, the project's founder. “My team and I are concerned by the operational hurdle we will face. Many groups like ours will face difficulties.”

“Knowing the reality, they are all worried 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, who could be left without convenient access to vehicles, without the hassle and cost of ownership. Most of those members were probably with Zipcar, which had a near-monopoly position in the city.

This shutdown, pending consultation with employees, is a serious setback to hopes that vehicle clubs in urban areas could cut the need for private vehicle ownership. Yet, some analysts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.

The Potential of Shared Mobility

Shared vehicle use is prized by many urbanists and environmentalists as a way of reducing the ills linked to vehicle ownership. Most cars sit idle on the side of the road for the vast majority of the time, using up space. They also involve large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take transit more. That benefits cities – reducing congestion and pollution – and boosts people’s health through more exercise.

What Went Wrong?

The company started in 2000 before being bought 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 loss that grew to £11.7m in 2024 gave no reason 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, enhance profitability”.

Its latest financial reports said revenues had fallen as drivers took less frequent, shorter trips. “This trend reflect the continuing effect of the economic squeeze, which is dampening demand for discretionary spending,” it said.

London's Unique Challenges

However, several experts 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 varying processes and prices that made it harder.
• New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
• Parking Permit Disparity: 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 annually, creating a major disincentive.

“Our fees should be one-twentieth of a resident’s permit,” said 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 enacted 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 lags behind at 0.7.

“The evidence shows is that car sharing around the world, particularly on the continent, is growing,” said Bharath Devanathan of Invers.

Devanathan said 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 already seriously considering entering the London market: “Operators will fill this gap.”

What Comes Next?

The company’s competitors can be split into two models:

1. Company-Owned Fleets: Which maintain their own cars. Examples 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 – 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 some time for other players to establish themselves. In the meantime, more people may choose to buy cars, and others across London will be without a convenient option.

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