What Has Gone Wrong at Zipcar – Is the UK Car-Sharing Market Dead?

A community kitchen in Rotherhithe has been delivering a large number of prepared dishes each week for two years to elderly residents and vulnerable locals in southeast London. Yet, their operations face major disruption 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 allowed its fleet of vehicles from the street. The company caused shock through the capital when it said it would shut down its UK business from 1 January.

It will mean many helpers cannot pick up supplies from the Felix Project, which gathers excess produce from supermarkets, cafes and restaurants. Other options are further away, more expensive, or lack the same flexible hours.

“The impact will be massively,” said Vimal Pandya, the community kitchen’s founder. “My team and I are concerned by the logistical challenge we will face. Many groups like ours will face difficulties.”

“Faced with this reality, they are all worried and thinking: ‘How are we going to carry on?”

A Major Blow for Urban Car-Sharing

These volunteers are part of over 500,000 people in London registered as car club members, now potentially left without easy use to vehicles, avoiding the burden and cost of ownership. Most of those people were probably with Zipcar, which had a near-monopoly position in the city.

This shutdown, subject to consultation with staff, is a serious setback to hopes that car sharing in cities could reduce the need for owning a car. Yet, some experts have noted that Zipcar’s exit need not spell the end for the idea in Britain.

The Potential of Car Sharing

Shared vehicle use is valued by many urbanists and green advocates as a way of reducing the problems associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the street for 95% of the time, using up space. They also involve large CO2 output to produce, and people who do not own cars tend to walk, cycle and take transit more. That helps urban areas – easing congestion and pollution – and improves people’s health through increased activity.

What Went Wrong?

The company started in 2000 before its acquisition 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 grew to £11.7m in 2024 gave no reason to continue.

The parent company stated the closure is part of a “broader transformation across our global operations, where we are taking targeted actions to simplify processes, enhance profitability”.

Its latest financial reports said revenues had declined as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the economic squeeze, which continues to suppress demand for non-essential services,” it said.

The Capital's Specific Challenges

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

• Patchwork Policies: Across 33 boroughs, car-club operators face a patchwork of varying processes and prices that complicate operations.
• Congestion Charge: The closure coincides with 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 year’s 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 resident’s permit,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”

A European Example

Nations in Europe offer models for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework for parking, support and waivers. 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, particularly on the continent, is expanding,” commented Bharath Devanathan of Invers.

Devanathan said authorities should start to view vehicle clubs as a form of mass transit, and integrate it with train and bus stations. He added that one unnamed client was already seriously considering entering the London market: “Operators will fill this gap.”

What Comes Next?

Other players can roughly be divided into two camps:

1. Fleet Operators: Which own or lease 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 – similar to Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.

One company, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK head, said there was a “significant chance” 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. For now, more people may feel forced to buy cars, and many across London will be without a convenient option.

For the volunteers in Rotherhithe, the coming weeks will be a scramble to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the prospects of car-sharing in the UK.