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

The volunteer food project in Rotherhithe has been delivering hundreds of cooked meals each week for the past two years to pensioners and needy locals in south London. However, the group's plans face major disruption by the news that they will lose use of New Year’s Day.

This organization had relied on Zipcar, the car-sharing company that customers to access its cars from the street. It sent shockwaves across London when it declared it would shut down its UK operations from 1 January.

It will mean many helpers will be unable to pick up supplies from a major food charity, that collects surplus food from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, more expensive, or do not offer the same flexible hours.

“It’s going to be affected massively,” said Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the operational hurdle we will face. Many groups like ours will face difficulties.”

“Knowing the reality, everyone is concerned and thinking: ‘How will we continue?’”

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, avoiding the burden and cost of ownership. Most of those members were probably with Zipcar, which held a dominant position in the city.

This shutdown, pending consultation with staff, is a big blow to the vision that car sharing in urban areas could reduce the need for private vehicle ownership. However, some experts have noted that Zipcar’s departure need not mean the demise for the idea in Britain.

The Potential of Car Sharing

Shared vehicle use is prized by many urbanists and environmentalists as a way of mitigating the ills 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 CO2 output 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 public health through increased activity.

Understanding the Decline

Zipcar was founded in 2000 before its acquisition by the American rental giant Avis Budget in 2013. Zipcar’s UK income 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.

Avis Budget has said the closure is part of a “wider restructuring across our global operations, where we are taking deliberate steps to simplify processes, enhance profitability”.

Its latest financial reports noted revenues had fallen as drivers took less frequent, shorter trips. “This trend reflect the ongoing impact of the economic squeeze, which is dampening demand for non-essential services,” it said.

The Capital's Specific Challenges

However, several experts noted that London has particular issues that made it difficult for the company and its rivals to succeed.

• Patchwork Policies: Across 33 boroughs, car-club operators face a mosaic of varying processes and prices that made it harder.
• New Costs: The closure coincides with electric cars becoming liable for London’s congestion charge, adding extra expenses.
• Parking Permit Disparity: Locals in some boroughs pay as little as £63 for a annual electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.

“Our fees should be one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We remove vehicles. We introduce cleaner models in their place.”

Lessons from Abroad

Other European countries offer models for London to follow. Germany enacted national car-sharing legislation in 2017, providing a nationwide framework 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 lags behind at 0.7.

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

He suggested authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that one unnamed client was looking at entering the London market: “Operators will fill this gap.”

What Comes Next?

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

1. Company-Owned Fleets: Which maintain their own cars. Examples 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 – similar to Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.

Turo, a US-headquartered peer-to-peer platform, is already weighing up the UK gap. Rory Brimmer, its UK head, 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. In the meantime, more people may choose to buy cars, and others across London will be without a convenient option.

For Rotherhithe community kitchen, the next month will be a rush to find a solution. The delivery problem caused by Zipcar’s exit highlights the wider implications of its departure on vital services and the future of car-sharing in the UK.