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

A volunteer food project in Rotherhithe has been delivering a large number of prepared dishes each week for the past two years to pensioners and needy locals in southeast London. Yet, their operations have been thrown into disarray by the news that they will lose access to New Year’s Day.

This organization depended on Zipcar, the car-sharing company that allowed its cars via smartphone. 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 collect food from the Felix Project, that collects surplus food from supermarkets, cafes and restaurants. Obvious alternatives are further away, more expensive, or do not offer the same convenient access.

“It’s going to be affected massively,” said Vimal Pandya, the project's founder. “My team and I 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 are we going to carry on?”

A Significant Setback for City Vehicle Clubs

These volunteers are part of more than half a million people in London who were car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. Most of those people were probably with Zipcar, which had a near-monopoly position in the city.

The planned closure, pending consultation with employees, is a serious setback to hopes that car sharing in urban areas could cut the need for private vehicle ownership. However, some analysts have noted that Zipcar’s exit 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 mitigating the ills associated with vehicle ownership. Most cars sit as two-tonne dead weights on the street for 95% 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 public transport more. That helps urban areas – easing congestion and pollution – and boosts public health through increased activity.

What Went Wrong?

Zipcar was founded in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its owner's total earnings, and a loss that reached £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 streamline operations, improve returns”.

Zipcar’s most recent accounts noted revenues had declined as drivers took fewer and shorter trips. “These changes reflect the ongoing impact of the economic squeeze, which continues to suppress demand for non-essential services,” it said.

The Capital's Specific Challenges

Yet, several experts noted that London has specific problems that made it much harder for the company and its rivals to succeed.

• Inconsistent Rules: With numerous local councils, car-club operators face a mosaic of different procedures and costs 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 as little as £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 annually, creating a major disincentive.

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

Lessons from Abroad

Other European countries offer examples for London to follow. Germany enacted national shared mobility laws in 2017, providing a unified system for parking, support 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.

“The evidence shows 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 mass transit, and link 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

Other players 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. Peer-to-Peer Services: Which allow users to hire out their own vehicles via an app – a kind of Airbnb for cars. Players include Britain’s Hiyacar and the US’s Getaround and Turo.

Turo, 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. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.

Yet, it could take a while for other players to establish themselves. 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 highlights the wider implications of its departure on community groups and the future of shared mobility in the UK.