Zipcar, World’s Biggest Car-Sharing Firm, Exits UK Amid Rising Costs and Policy Changes

Despite the decision to shut down, Zipcar has pledged to fulfil all existing bookings, including those over the Christmas period.

Zipcar, the world’s largest car-sharing company, has announced that it will end its operations in the United Kingdom, removing its access to shared vehicles from London by the close of this year. It is the end of an era for many Londoners who relied on the service for flexible, car-free living.

Zipcar, owned by the US car rental giant Avis Budget Group, will stop new bookings through its app after December 31st while it conducts a formal consultation on potential staff redundancies. According to its latest financial statements, Zipcar UK employed 71 people in 2018.

For people who used car-sharing as an environmentally friendly alternative to private car ownership, the closure is a major setback.

The company’s UK general manager, James Taylor, stated that it has begun formal consultations with employees about the shutdown. Taylor encouraged its customers to look for alternative car-sharing platforms by visiting CoMoUK, a national charity that promotes shared transport.

Zipcar’s exit announcement comes after a challenging period for the car-sharing industry. Avis Budget had quietly reduced Zipcar’s valuation due to financial pressures from declining revenues and rising costs.

It also coincides with London making some changes to the congestion charge, which will apply to electric cars from January. This would have required Zipcar to pay a daily fee of up to £18 for vehicles entering the congestion zone, forcing the company to consider how to pass those costs on to users.

Industry experts state that new congestion charge rules could add around £1 million per year to car club operational costs, with Zipcar affected the most, as it operates close to 3,000 vehicles in the UK, accounting for more than half of the country’s shared vehicles.

In response to the new congestion charges, the mayor’s office recently announced that electric car clubs with designated parking in the congestion zone will receive a full discount on the charge.

According to data from the car-sharing software provider Invers, the UK follows other European countries in car-sharing access, with only 0.7 shared cars per 10,000 people, compared to 2.2 in Germany and 4.4 in Switzerland.

Analysts have warned about the fragility of car clubs in London, and that it would be a loss for many residents who rely on these services.

According to CoMoUK, there were 328,000 car club users in the UK and with the closure, many individuals will be forced to buy their own vehicles.

Zipcar was established in 2000 by two entrepreneurs in Cambridge, Massachusetts, and was acquired by Avis Budget in 2013 for nearly half a billion dollars. The company continues to operate in 25 US states and three Canadian cities.

Despite the decision to shut down, Zipcar has pledged to fulfil all existing bookings, including those over the Christmas period. Subscribers will receive refunds for any membership fees after December 31st.

Car-sharing services gained popularity during the pandemic as app-based platforms like Zipcar, Enterprise Car Club, and Share Now allowed users to rent vehicles by the hour. However, companies managing their own vehicles have struggled due to high maintenance costs.

In the UK, Zipcar was the first company to offer a flexible system that allowed users to park vehicles in dedicated spaces across central London, all accessible via a mobile app. Car-sharing in general is considered more sustainable than private ownership, as it reduces the total number of vehicles needed and cuts carbon emissions from manufacturing.

Avis Budget Group has stated that the closure was part of its plan to streamline international operations and position the company for long-term sustainability, adding that its other markets will continue to operate as normal.