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

A community kitchen in Rotherhithe has distributed hundreds of prepared dishes weekly for the past two years to elderly residents and vulnerable locals in southeast London. Yet, the group's plans have been thrown into disarray by the news that they will lose access to New Year’s Day.

The group depended on Zipcar, the app-based vehicle rental service that customers to access its cars via smartphone. The company sent shockwaves across London when it said it would cease its UK operations from 1 January.

This means many helpers will be unable to pick up supplies from the Felix Project, that collects excess produce from grocery stores, cafes and restaurants. Obvious alternatives are less convenient, costlier, or lack the same convenient access.

“It’s going to be affected massively,” stated Vimal Pandya, the project's founder. “My team and I are concerned by the logistical challenge we will face. A lot of people like ours are going to struggle.”

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

A Major Blow for Urban Car-Sharing

The community kitchen’s drivers are part of over 500,000 people in London who were car club members, who could be left without easy use 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, subject to consultation with staff, is a big blow to the vision that vehicle clubs in cities could reduce the need for owning a car. Yet, some experts have noted that Zipcar’s departure need not mean the demise for the idea in Britain.

The Potential of Car Sharing

Car sharing is prized by city planners and environmentalists as a way of reducing the problems linked to vehicle ownership. Typically, vehicles sit idle on the street for the vast majority of the time, using up space. They also require large CO2 output to produce, and people without a vehicle tend to walk, cycle and take transit more. That benefits cities – reducing congestion and pollution – and boosts public health through more exercise.

What Went Wrong?

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

Avis Budget has said the closure is part of a “wider restructuring across our international business, where we are taking targeted actions to simplify processes, improve returns”.

Zipcar’s most recent accounts noted revenues had fallen as drivers took less frequent, shorter trips. “These changes reflect the continuing effect of the cost-of-living crisis, which is dampening demand for non-essential services,” it said.

The Capital's Specific Hurdles

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

• Inconsistent Rules: With numerous local councils, car-club operators face a patchwork of varying processes and costs that made it harder.
• New Costs: The closure coincides with electric cars start paying London’s congestion charge, adding extra expenses.
• Unequal Parking Fees: Locals in some boroughs pay as little as £63 for a year’s electric car parking permit. A similar shared vehicle 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’re putting less polluting cars in their place.”

Lessons from Abroad

Other European countries 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 5.4 shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK trails at 0.7.

“The evidence shows is that car sharing around the world, particularly on the continent, is expanding,” said Bharath Devanathan of Invers.

Devanathan said authorities should start to treat car sharing as a form of mass transit, and link it with train and bus stations. He added that a potential operator was looking at entering the London market: “There will be fill this gap.”

What Comes Next?

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 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.

Turo, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK managing director, 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.

However, it could take some time for other players to build momentum. For now, more people may feel forced to buy cars, and many across London will be without a convenient option.

For Rotherhithe community kitchen, the next month will be a rush to find a way. The logistical challenge caused by Zipcar’s exit highlights the broader impact of its departure on vital services and the future of car-sharing in the UK.