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Zipcar UK chief Q&A: Why it’s ‘challenging’ operating in London

Zipcar has been on manoeuvres in London of late, announcing it would introduce 300 electric cars to its fleet by the end of this year. James Walker caught up with UK general manager Jonathan Hampson for a chat about chat Zipcar, the state of the car-sharing sector and the challenges presented by London

If you work in London, it is likely that you have seen a Zipcar or one of its many competitors in the car-sharing market camped outside your office or home.

Car hire services for the millennial era have tapped into a demand for hassle-free, on-demand vehicle rental that requires far more interaction with apps than people.

Zipcar alone has more than 200,000 members using its service – which allows users to book a short, one-way trip or a longer two-way trip through an app.

They can then get in one of the 2,650 cars in the Zipcar fleet by tapping their app-based digital key or “Zipcard” – an electronic key card – against a card reader on the windshield.

Take-up of car sharing apps has been so positive that Zipcar announced it will introduce 300 electric cars to its Zipcar Flex fleet by the end of this year – cars users can rent by-the-minute for urban journeys.

The firm is also looking to turn its Flex fleet and Roundtrip cars – for longer distance journeys – all-electric by 2025, provided that local authorities make moves to increase charging points.

Zipcar UK general manager Jonathan Hampson, 39, is a 12-year veteran of the American-headquartered company, who is two years into his new role and has watched the market leap in real time across its UK cities London, Bristol, Oxford, Cambridge and Maidstone.

 

What has take-up of Zipcar been like in the UK so far?

Zipcar e-Golf, electric car, Zipcar
The Zipcar UK member base numbers at 215,000 users according to Hampson. (Picture: Amit Lennon)

Pretty strong. We have 215,000 members in London. We also have operations in Cambridge, Bristol, Oxford and Maidstone, but they are much smaller than our London operation.

Most of our investment has gone into London because it’s such a well-suited market for car-sharing.

That’s where most of our membership base and the majority of our take-up is as a result.

We’ve been going for 14 years now, having introduced car-sharing pretty much from scratch, so we’ve made very considerable progress – but the potential for car-sharing in London is much greater.

We’re restlessly dissatisfied about wanting Zipcar to be bigger, but we have come a long way.

 

What plans have you got for Zipcar expansion elsewhere in the UK?

Nothing imminently. I think car-sharing will work well in a number of UK cities to a much greater degree than exists.

There are already other operators in those cities, but car-sharing remains pretty small and could be significantly larger.

All cities are grappling with the same types of things – a lot of people are moving into the cities, they’re constrained for space, a lot of them have congestion and air quality issues.

Zipcar app
Zipcar UK general manager Hampson has called for local authorities to invest in electric charing infrastructure. (Picture: Zipcar)

Car-sharing can help with a lot of those things, so I think there is potential.

The challenge for us as a capital incentive business is we have to prioritise our investments, so for the short-to-mid term we will continue to focus that investment in the UK on London.

I would certainly hope to bring Zipcar to more markets, but not yet.

 

Was there a particular point in time that Zipcar saw the car-sharing business really take off?

No, not really. I remember back to the early days when we would go to meetings or conferences and talk about what we did in car-sharing and suddenly manufacturers would look at us as if we were environmentalists.

I look at it now and I see that everyone is falling over themselves to say what they’re doing in mobility – whether it be manufacturers or rental companies, everyone is piling into this space because they know it’s the future of how people get around, particularly in cities.

That penny has firmly dropped, so I think there has been a huge validation of car-sharing and our sector that’s gone on over the last five years.

There’s much further to run on this and it will be fascinating to see how it all plays out and how people find different niches in mobility.

 

Have you got any plans to make your Zipcar fleets all-electric?

By the end of the year, electric vehicles will make up a third of the flex fleet. We’d like to take that further but flex is for short urban trips, so of course we want those to be all electric.

By 2025, we would like to run an all-electric fleet, and that’s both in our Roundtrip and our Flex services.

Flex is the easier to electrify because it’s for short, urban trips and it’s not pre-booked so you don’t have the concern around whether a person turning up for a booking has enough range to be able to do what they want to do.

What I hope is that by the early 2020s, the Zipcar Flex fleet can be entirely electric.

If I talk about manufacturers, Volkswagen has the ID Neo coming out in the early 2020s, which is meant to have range parity with a petrol vehicle.

It’s meant to be priced comparatively to a petrol vehicle, so why wouldn’t we be able to transfer our whole fleet of Flex vehicles to a vehicle like that in the early 2020s? That’s what we should aspire to do.

But there is a reality that London still doesn’t have a huge amount of infrastructure to charge those vehicles.

 

Electric car, electric vehicle, Automated and Electric Vehicles Act
The Automated and Electric Vehicles Act gives the government new powers to install charging points for electric vehicles (Wikipedia Commons/Mariordo)

 

What would you like to see authorities do about the number of electric charging points?

The obvious answer is that London needs significant growth in infrastructure.

I want buying an electric vehicle, or running an electric fleet in our case, to be as obvious a choice as buying a petrol vehicle.

The only way that that will be the case is if people feel that they can charge their fleet or their own vehicle simply, and that is a long way from being the case at the moment.

In terms of how that could look, it’s going to be a mixture of rapid chargers, which can charge a vehicle in 20 minutes to half an hour. It could be overnight charging done through a lamppost.

The solutions could be varied, but all that needs to add up to the total situation where you can always charge any vehicle when you need to.

What I really want is for London and local authorities to be ambitious in their plans and make sure that what has frankly been slow progress in recent years accelerates significantly.

 

Is there a chance of Zipcar producing its own electric cars or charging stations?

It’s certainly not my starting point. I think, frankly, making money in car-sharing is challenging as it is and so I have no desire to be an infrastructure provider.

There are people who are experts at that and so I want to partner with people like that and say “I can provide the demand for your charging infrastructure, but you need to come forward with the supply”.

 

In your most recent accounts in 2016, you made an operating loss. What’s the explanation for this?

We’re very clear that Roundtrip is proven to be profitable in a commercial environment – and I can’t remember what exceptional items went into the 2016 account, but in North America and in London, Roundtrip car-sharing is a profitable business. It’s a low margin business, but it is profitable.

What we’ve done with Flex is make an investment in a new form of car-sharing that will take a while to pay back.

But with free-floating car-sharing, you need to put enough fleet out there so that when someone goes into the app they see there is a car near where they live and it takes a while for demand to build around that.

Roundtrip is in a steady state and profitable. With free-floating car-sharing, you’ve got to make an upfront investment.

That’s the cycle we’re in and it will take a while for that to pay back, but we believe it will put car-sharing in London in a much stronger position and continue to grow on the progress we’ve already made.

 

Would you expect the car-sharing model to replace the traditional car hire business, or do you think they are separate entities?

Zipcar UK
Hampson believes that car sharing apps and traditional rental firms will co-exist, not replace one another. (Picture: Zipcar)

“I think things will converge slightly. We’re part of [American car rental company] Avis, so I’m sure it would say it expects the car rental business to go through significant change in the next five to ten years.

There is an expectation among consumers that things become self-service, which is already the case in car-sharing. 

That market will be disrupted and Avis is certainly trying to position itself so it’s well-placed if that disruption happens.

Certainly some of the differences between car sharing and car rental will probably start to lessen, so where car-sharing has been self-service for years, car rental probably will be too.

It could well be that the differences are fewer and, actually, some of them still remain the same.

Zipcar and car-sharing is for your urban trips, but car rental will satisfy perhaps in a similar way your longer trips and out-of-town trips.

I don’t see one or the other disappearing. I do think they will start to look a lot more similar in the future.

 

How competitive is the car sharing market as a whole?

Mobility generally is competitive at the moment.

Londoners have more ways of getting around for any type of trip they have to do, so we need to ensure we remain compelling both in the car sharing segment and also the full mobility options people have.

Within car-sharing, now some of the manufacturers have got their own car-sharing schemes – DriveNow is BMW’s – and in the round trip space, rental companies are starting to come in so there’s an awful lot going on in the mobility space.

But certainly Zipcar, through our ambition and drive, has built up a really strong position in car-sharing.

 

 

Has Zipcar had any issues with car theft or criminal damage, and what do you make of police response?

London
The Zipcar UK general manager said it hadn’t had “huge problems” with theft, but needed to be on the top of its game. (Picture: André Gustavo Stumpf/Flickr)

We operate in London and all kinds of stuff goes on in London.

It’s a challenging city to operate in and when I talk to some of my North American colleagues, they never cease to be amazed by some of the things that go on here compared to their markets.

But in terms of theft, we always need to ensure we are one step ahead of anyone that might try and find a loophole or way in which they could take advantage of our service.

That’s because we’re putting good-quality cars out there and you’ll always find someone who wants to take advantage of that.

But our cars are not good vehicles for thieves to steal.

We can track them and we know at all times what each car is doing. We do not track our members but if we have reason to believe that something has been stolen, we can track it, immobilise the vehicle and recover it.

We haven’t had huge problems, but when operating in London, you always have to be on top of your game.

 

What specific challenges does London present that you’d like to see addressed?

The challenge for us operating in a city like London is that it is split into 33 different authorities, each of whom have their own policies, control over parking and desire to reinvent the wheel on a daily basis.   

That makes life really difficult because you go to some cities as a mobility provider and you talk to one person who can make sure your services are rolled out across the whole of their city in a way which is coherent.

In our case, we’ve got a lot of hard yards to cover to do anything. We might have our Roundtrip service now in 31 out of 33 boroughs but then we’ve got a new offering in our Flex service and we’ve got to go again, borough to borough, telling them why this is good for London and therefore it takes a long time.

Flex is in 10 boroughs at the moment, but what that means is some of our member base have access to it and some don’t.

That doesn’t really add up to a coherent solution for Londoners, who often don’t care what borough they live in – they want the same access to a service as anyone else.

The nature of London is something Zipcar is used to operating with but it is a challenge and it does slow down innovation.

Picture: Amit Lennon/Zipcar