What Has Gone So Wrong at Zipcar – and the UK Car-Sharing Sector Dead?
The volunteer food project in Rotherhithe has distributed hundreds of cooked meals each week for the past two years to elderly residents and vulnerable locals in southeast London. However, the group's plans have been thrown into disarray by the announcement that they will lose access to New Year’s Day.
The group depended on Zipcar, the app-based vehicle rental service that allowed its cars via smartphone. The company caused shock across London when it said it would cease its UK operations from 1 January.
This means many helpers cannot pick up supplies from the Felix Project, that collects excess produce from grocery stores, cafes and restaurants. Obvious alternatives are further away, more expensive, or lack the same convenient access.
“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the logistical challenge we will face. A lot of people like ours will face difficulties.”
“Faced with this reality, everyone is concerned and thinking: ‘How will we continue?’”
A Major Blow for City Vehicle Clubs
The community kitchen’s drivers are part of over 500,000 people in London who were car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. Most of those members were likely with Zipcar, which held a dominant position in the city.
This shutdown, pending consultation with employees, is a big blow to the vision that vehicle clubs in urban areas could reduce the need for owning a car. Yet, some experts have noted that Zipcar’s departure need not spell the end for the concept in Britain.
The Potential of Car Sharing
Shared vehicle use is prized by many urbanists and environmentalists as a way of mitigating the ills linked to vehicle ownership. Most cars sit idle on the street for the vast majority of the time, using up space. They also require large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take public transport more. That helps urban areas – 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 US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's total earnings, and a deficit that reached £11.7m in 2024 gave no reason to continue.
Avis Budget has said the closure is part of a “broader transformation across our international business, where we are taking deliberate steps to streamline operations, enhance profitability”.
Its latest financial reports noted revenues had fallen as drivers took fewer and shorter trips. “This trend reflect the ongoing impact of the cost-of-living crisis, which is dampening demand for non-essential services,” it said.
London's Unique Hurdles
Yet, industry observers 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 different procedures and costs that complicate operations.
- New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding extra expenses.
- Parking Permit Disparity: Residents in some boroughs pay just £63 for a year’s 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 private parking cost,” argued Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars 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 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 car sharing 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 link 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:
- Fleet Operators: Which own or lease their own cars. This includes 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.
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 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 next month will be a scramble to find a way. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the future of car-sharing in the UK.
