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

A community kitchen in Rotherhithe has been delivering a large number of cooked meals each week for two years to pensioners and vulnerable locals in south London. However, their operations have been thrown into disarray by the news that they will lose use of New Year’s Day.

The group had relied on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. The company sent shockwaves through the capital when it said it would cease its UK business from 1 January.

This means many volunteers will be unable to 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 flexible hours.

“The impact will be massively,” said Vimal Pandya, the project's founder. “Personally me and my team are worried about the operational hurdle we will face. A lot of people like ours are going to struggle.”

“Knowing the reality, they are all worried and thinking: ‘How will we continue?’”

A Major Blow for Urban Car-Sharing

The community kitchen’s drivers are among over 500,000 people in London registered as car club members, now potentially left without convenient access to vehicles, avoiding the burden and cost of ownership. The vast majority of those people were likely with Zipcar, which held a dominant position in the city.

The planned closure, pending consultation with staff, is a big blow to the vision that vehicle clubs in cities could cut the need for private vehicle ownership. However, some experts also suggested that Zipcar’s departure need not spell the end for the idea in Britain.

The Potential of Shared Mobility

Car sharing is prized by city planners and environmentalists as a way of reducing the ills associated with vehicle ownership. Typically, vehicles sit as two-tonne dead weights on the side of the road for 95% of the time, occupying parking. They also require large carbon emissions to produce, and people without a vehicle tend to use active travel and take public transport more. That benefits cities – reducing congestion and pollution – and boosts public health through more exercise.

What Went Wrong?

Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its owner's overall annual revenue, and a deficit that grew to £11.7m in 2024 gave little incentive to continue.

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

Its latest financial reports said revenues had fallen as drivers took fewer and 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 Challenges

However, several experts noted that London has particular issues that made it difficult for the sector to succeed.

• Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of different procedures and prices that made it harder.
• New Costs: The closure coincides with electric cars becoming liable for London’s congestion charge, adding extra expenses.
• Unequal Parking Fees: Residents in some boroughs pay just £63 for a year’s electric car parking permit. A floating car club would pay over £1,100 per year, creating a major disincentive.

“We should literally be charged one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We’re taking cars off the street. We introduce cleaner models in their place.”

A European Example

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 exemptions. 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.

“What we see 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 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.”

The Future Landscape

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

1. Fleet Operators: Which own or lease their own cars. This includes Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
2. Person-to-Person Rentals: 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 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 many across London will be left without access.

For the volunteers in Rotherhithe, the coming weeks will be a rush to find a solution. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on community groups and the future of shared mobility in the UK.