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

The community kitchen in Rotherhithe has been delivering hundreds of cooked meals weekly for the past two years to elderly residents and vulnerable locals in southeast London. Yet, their operations have been thrown into disarray by the announcement that they will not have cars and vans on New Year’s Day.

The group had relied 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 cease its UK operations 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. Obvious alternatives are further away, more expensive, or do not offer the same flexible hours.

“The impact will be massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are concerned by the logistical challenge we will face. A lot of people like ours will face difficulties.”

“Faced with this reality, they are all worried and thinking: ‘How will we continue?’”

A Major Blow for Urban Car-Sharing

These volunteers are part of over 500,000 people in London who were car club members, now potentially left without easy use to vehicles, without the hassle and cost of ownership. Most of those people were likely with Zipcar, which held a dominant position in the city.

The planned closure, subject to consultation with staff, is a big blow to hopes that car sharing in cities could reduce the need for owning a car. However, some analysts have noted that Zipcar’s departure need not mean the demise for the concept in Britain.

The Promise of Shared Mobility

Car sharing is valued by city planners and green advocates as a way of reducing the ills associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street for 95% of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – easing congestion and pollution – and boosts people’s 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 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 “wider restructuring across our global operations, where we are taking targeted actions to simplify processes, improve returns”.

Its latest financial reports noted revenues had declined as drivers took fewer and shorter trips. “This trend reflect the continuing effect of the economic squeeze, which is dampening demand for discretionary spending,” 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.

• Inconsistent Rules: Across 33 boroughs, car-club operators face a patchwork of varying processes and costs that made it harder.
• Congestion Charge: The closure coincides with electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
• Parking Permit Disparity: Residents 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 significant barrier.

“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’re putting less polluting cars in their place.”

A European Example

Nations in Europe offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a unified system 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 trails at 0.7.

“What we see is that shared mobility around the world, particularly on the continent, is growing,” commented Bharath Devanathan of Invers.

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

What Comes Next?

Other players can be split into two models:

1. Company-Owned Fleets: Which own or lease 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 – 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 head, 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.

Yet, it could take some time for other players to build momentum. In the meantime, 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 logistical challenge caused by Zipcar’s exit underscores the wider implications of its departure on vital services and the prospects of shared mobility in the UK.