What Exactly Has Gone So Awry at Zipcar – and the UK Vehicle-Sharing Market Finished?

The community kitchen in Rotherhithe has distributed hundreds of prepared dishes each week for the past two years to elderly residents and needy locals in southeast London. However, the group's plans face major disruption by the announcement 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 customers to access its fleet of vehicles from the street. The company sent shockwaves across London when it declared it would cease its UK operations from 1 January.

It will mean many volunteers will be unable to pick up supplies from the Felix Project, which gathers surplus food from supermarkets, cafes and restaurants. Other options are further away, more expensive, or do not offer the same flexible hours.

“The impact will be massively,” stated 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 will face difficulties.”

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

A Major Blow for City Vehicle Clubs

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 probably with Zipcar, which had a near-monopoly position in the city.

The planned closure, pending consultation with employees, is a big blow to hopes that car sharing in urban areas could cut the need for private vehicle ownership. Yet, some experts also suggested that Zipcar’s departure need not mean the demise for the idea in Britain.

The Potential of Car Sharing

Shared vehicle use is valued by city planners and environmentalists as a way of mitigating the problems linked to vehicle ownership. Most cars sit as two-tonne dead weights on the side of the road for 95% of the time, occupying parking. They also involve large carbon emissions to produce, and people who do not own cars tend to walk, cycle and take public transport more. That benefits cities – reducing congestion and pollution – and improves people’s health through increased activity.

What Went Wrong?

The company started in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK revenues barely registered compared with its parent company's overall annual revenue, and a loss that grew to £11.7m in 2024 gave little incentive to continue.

The parent company stated the closure is part of a “broader transformation across our international business, where we are taking targeted actions to streamline operations, improve returns”.

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

The Capital's Specific Hurdles

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

• Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of varying processes and prices that made it harder.
• New Costs: The closure comes as electric cars becoming liable for London’s congestion charge, adding unavoidable costs.
• Unequal Parking Fees: Locals 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 major disincentive.

“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

Nations in Europe offer models for London to follow. Germany introduced national shared mobility laws in 2017, providing a nationwide framework for parking, subsidies 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 car sharing around the world, especially in Europe, is expanding,” said Bharath Devanathan of Invers.

Devanathan said authorities should start to view vehicle clubs as a form of public transport, and link 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 maintain 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 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.

One company, a US-headquartered P2P service, is already weighing up 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.

However, it could take some time for other players to establish themselves. In the meantime, more people may choose to buy cars, and others across London will be left without access.

For the volunteers in Rotherhithe, the coming weeks will be a scramble to find a way. The delivery problem caused by Zipcar’s exit underscores the broader impact of its departure on vital services and the prospects of shared mobility in the UK.