The Closure of Zipcar UK: A Major Shift in Car-Sharing Services

Impact on Car-Sharing in the UK

The world’s biggest car-sharing company, Zipcar, has announced it will close its UK operations. This decision will remove access to its shared fleet across London at the end of this year. Owned by the US car rental group Avis Budget, Zipcar will suspend new bookings through its app after December 31, pending the outcome of a consultation regarding possible redundancies. Last year, the UK operating company had 71 staff members, according to its latest accounts.

This closure is a significant setback for advocates of car-sharing as a sustainable form of personal transport. It also affects car clubs that relied on Zipcar to share private vehicles.

James Taylor, Zipcar UK’s general manager, communicated this news in an email to customers. He stated, “We are proposing to cease the UK operations of Zipcar and have today started formal consultation with our UK employees.” He directed customers to the website of CoMoUK, a national charity for shared transport, to explore other car-sharing options.

Challenges Facing Car-Sharing Companies

The closure comes after a challenging period for car-sharing companies. In March, The Guardian reported that Avis Budget had quietly downgraded the valuation of its Zipcar subsidiary. This was due to declining revenues and rising costs in key markets.

Zipcar’s UK closure will coincide with an increase in London’s congestion charge. Starting in January, electric cars, including those driven by car club members, will also be subject to this charge. Zipcar would have had to pay up to £18 daily for any cars entering the zone, except for a small number permanently based inside. They would then need to decide how much of this cost to pass on to consumers.

The changes to congestion charges are estimated to add £1 million annually to car club costs, most of which would be borne by Zipcar. The company was thought to operate nearly 3,000 vehicles, including cars and vans, making up the majority of the 5,300 shared vehicles in the UK.

A spokesperson for Sadiq Khan, the mayor of London, emphasized the importance of car clubs. They play a crucial role in reducing the need for private car ownership. The mayor recently announced that electric car clubs with dedicated parking bays in the congestion charge zone will receive a 100% discount on the charge starting in January.

The Need for Supportive Policies

Richard Dilks, chief executive of CoMoUK, expressed that the closure signifies a “failure to have supportive policy” towards car clubs. The UK lags behind other European countries, with only 0.7 shared cars per 10,000 people, compared to 2.2 in Germany and 4.4 in Switzerland, according to car-sharing software company Invers.

“We’ve been warning for a while about the viability of car clubs in London,” said Dilks. “People rely on these services – that’s how they work. If that’s taken away, it’s a significant blow.”

The charity counted 328,000 car club users in the UK as of March. Dilks noted that many of these users may be forced into private car ownership instead.

A Brief History of Zipcar

Zipcar was founded in 2000 by two entrepreneurs in Cambridge, Massachusetts. It was acquired by Avis Budget in 2013 for $491 million (£371 million). The company continues to operate in 25 US states and three cities in Canada, according to its website. However, the proposed closure in the UK follows Zipcar (UK) reporting an £11.7 million loss for 2024.

Despite the impending closure, Zipcar stated it would honor existing bookings, including those over the Christmas period. They will also contact users with bookings extending into the new year. Paying subscribers will receive refunds for the period after December 31.

The Rise of Car-Sharing

The concept of car-sharing gained popularity during the coronavirus pandemic. Companies like Zipcar, Enterprise Car Club, and Share Now offered app-based car rentals by the hour. Meanwhile, platforms such as Hiyacar, Turo, and Getaround enabled users to rent neighbors’ cars.

However, companies managing their own fleets have struggled to achieve profitability due to relatively high maintenance costs for vehicles scattered throughout cities.

Zipcar in the UK pioneered the “flex” model, which allowed users to park in residents’ bays almost anywhere in central London. Other cars or vans were stationed in dedicated bays, all accessed via a mobile app.

Car-sharing is generally viewed as more sustainable. It helps avoid the extra CO2 emissions associated with producing vehicles for every individual household.

Looking Ahead

An Avis Budget Group spokesperson stated, “Today, Zipcar informed UK members that we are proposing to cease Zipcar’s operations in the UK and have begun the required formal consultation with our UK employees. This proposal is part of a broader transformation across our international business, where we are taking deliberate steps to streamline operations, improve returns, and position the company for long-term sustainability and growth.”

As part of this proposal, new bookings in the UK will be suspended beyond December 31, 2025, subject to the outcome of the consultation. Zipcar UK will continue to operate as usual during this period. All other markets remain fully operational and unaffected.

In conclusion, the closure of Zipcar UK marks a pivotal moment for car-sharing services. As we navigate these changes, it’s essential to consider how we can adapt and innovate in the face of evolving market dynamics. The future of mobility is at stake, and we must work together to ensure sustainable solutions for all.

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