At the start of 2025, Zipcar warned of an exodus of car-sharing clubs from the UK market because of rising operating costs, but with little indication then that it would be the one to pull the plug.
Now as the company prepares to shut down its UK business by the year-end, its 650,000 registered members face the option of either buying their own vehicle or switching to a smaller rival, potentially at a higher cost.
“My business is set around Zipcar. I would happily pay more per hour if it meant they were going to stay [in the UK] because it’s such a convenient thing,” said Mark Mathew, a London-based handyman who is a regular user.
Zipcar, which allows individuals and businesses to rent vehicles by the hour or day, said this week it would suspend new bookings beyond December 31. Mathew said he would be forced to increase prices or limit the type of work he took on as a result.
Having sold his own car, Mathew had used Zipcar for nearly a decade — a few hours for two to three times a week — to transport his work equipment around the city. Buying a car was not a viable option because of the cost, meaning he would need to use other, more expensive car-sharing services. The extra cost would have to be passed on to clients, which could cause him to lose business, he added.
The struggles of Zipcar, which pioneered and expanded the use of car-sharing clubs in the UK over the past two decades, overshadow London’s efforts to reduce vehicle use and congestion in the city, according to analysts.
Richard Dilks, chief executive of Collaborative Mobility UK (CoMoUK), a transport charity, said: “It has quite profound implications because there are hundreds of thousands of users and there for sure will be a percentage of those who will be tipped into car ownership now.”
Zipcar had also shifted a third of its fleet of more than 3,000 vehicles to electric cars. That meant it would have faced £1mn in additional costs after the introduction of London’s £13.50-a-day congestion charge from January 2 for EVs, said analysts. Chancellor Rachel Reeves also recently announced the rollout of a new pay-per-mile road charge for EVs and plug-in hybrids starting in 2028.
“Unfortunately, Zipcar chose to focus their operations on London barely a year before the city took away its EV discounts,” said Michael Dnes, a former official at the Department for Transport who now heads transport policy at Stonehaven, a consultancy.
“It doesn’t look like a coincidence that they began to shut down only a few weeks after the city made its final decision and the new EV tax was announced,” he added.
Supporters say car clubs, where people can rent cars and vans by the minute, hour or day, offer a more sustainable and greener form of transport because they help to reduce private car ownership. Because these clubs use newer vehicles and a larger portion of electric models, they also contribute to lower carbon emissions and air pollution.
But car-sharing operators have also been saddled with the heavy costs of maintaining their fleets. Zipcar is the biggest player and accounts for about 40 per cent of the UK’s car club fleet, according to CoMoUK.
Its departure from the country leaves only a handful of car club operators and other car-sharing platforms, as well as local and regionally run clubs. The risk for London is that people will go back to owning their own cars, counter to the city’s aims.
In January, Zipcar, owned by US rental company Avis Budget, told the London Assembly transport committee that the costs of operating had “significantly increased since the pandemic”.
According to its estimates, car club members were able to save on average £3,000 a year compared to private car ownership. But the company predicted those benefits could be eroded if operators lifted prices to offset increased costs. “If costs continue to rise then we will see more operators exiting,” it warned.
According to its 2024 accounts, Zipcar UK reported an operating loss of £4mn last year, compared with a profit of £303,000 in the previous 12 months.
Car club memberships surged in popularity during the pandemic, as people shunned public transport. By 2021, nearly half a million active car club members were in the UK, a threefold rise from 2019, according to CoMoUK. But by the end of last year, that number had fallen to 343,000 compared to 874,000 registered members, with more than two-thirds of active users in London.
Dilks said that alongside a period of belt-tightening from consumers, car club businesses had faced rising costs in recent years. These included insurance premiums, an impending jump in the cost of running EVs and a dramatic rise in parking permit fees.
“Car sharing has always been a low-margin business and those margins have been squeezed and squeezed,” he said. “Even in a buoyant economy, it would be difficult for [car club operators] to pass on these additional costs, but we don’t have a buoyant economy . . . people are generally not feeling that well off.”
Avis Budget has said Zipcar’s operations outside the UK would not be affected, adding that its exit from Britain was part of “a broader transformation” to streamline its operations and improve returns.
Car club usage in the UK lags far behind other European countries, with less than one car club vehicle for every 10,000 people compared to five per 10,000 in Germany, according to CoMoUK and car-sharing technology group Invers.
Rory Brimmer, UK managing director at Turo, said the San Francisco-based car rental app, will attempt to step in to serve Zipcar customers, but called for more government support.
Instead of operating a fleet of vehicles, individual owners offer their vehicles to rent on Turo’s app for longer trips — a model it claims will shield it from ballooning operating costs.
But so-called peer-to-peer online car sharing has not expanded as rapidly as the car clubs, with drivers in the UK more reluctant to rent out their vehicles to strangers.
“There’s going to be from January 1 a huge void that Zipcar will leave,” Brimmer said. “I think we need to fill that void to prevent us going down the worst-case scenario, which is half a million people buying their own private car in London.”