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

The community kitchen in Rotherhithe has distributed hundreds of cooked meals weekly for two years to elderly residents and needy locals in southeast London. Yet, their operations have been thrown into disarray by the announcement that they will not have access to 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. The company sent shockwaves through the capital when it said it would cease its UK operations from 1 January.

It will mean many volunteers will be unable to pick up supplies from a major food charity, that collects excess produce from grocery stores, cafes and restaurants. Other options are further away, costlier, or lack the same convenient access.

“The impact will be massively,” stated Vimal Pandya, the project's founder. “Personally me and my team are worried about the logistical challenge we will face. Many groups like ours will face difficulties.”

“Knowing the reality, they are all worried and thinking: ‘How are we going to carry on?”

A Significant Setback for Urban Car-Sharing

The community kitchen’s drivers 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. The vast majority of those people were likely with Zipcar, which held a dominant position in the city.

This shutdown, pending consultation with staff, is a big blow to the vision that vehicle clubs in cities could cut the need for owning a car. However, some experts have noted that Zipcar’s exit need not mean the demise for the idea in Britain.

The Potential of Car Sharing

Car sharing is prized by many urbanists and environmentalists as a way of reducing the problems associated with vehicle ownership. Most cars sit as two-tonne dead weights 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 benefits cities – reducing congestion and pollution – and boosts public health through increased activity.

What Went Wrong?

Zipcar was founded in 2000 before being bought by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its owner's overall annual revenue, 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 deliberate steps to simplify processes, enhance profitability”.

Zipcar’s most recent accounts noted revenues had declined as drivers took less frequent, shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which continues to suppress demand for discretionary spending,” it said.

London's Unique Hurdles

Yet, several experts noted that London has specific problems that made it much harder for the sector to succeed.

• Inconsistent Rules: With numerous local councils, car-club operators face a patchwork of varying processes and prices that complicate operations.
• New Costs: The closure coincides with electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
• Parking Permit Disparity: Locals in some boroughs pay just £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a significant barrier.

“We should literally be charged one-twentieth of a private parking cost,” said 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 car-sharing legislation in 2017, providing a unified system for parking, subsidies and exemptions. Now, the country has several shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK trails at 0.7.

“What we see is that car sharing around the world, especially in Europe, is expanding,” said Bharath Devanathan of Invers.

Devanathan said authorities should start to treat car sharing 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.”

What Comes Next?

The company’s competitors can roughly be divided into two models:

1. Fleet Operators: Which maintain their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. Person-to-Person Rentals: Which allow users to rent out their own vehicles via an app – a kind of 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 managing director, 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 build momentum. For now, more people may feel forced to buy cars, and others across London will be left without access.

For Rotherhithe community kitchen, the next month will be a scramble to find a way. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the future of car-sharing in the UK.