It began as Green politics was becoming fashionable in Europe, taking root in France, the Netherlands, Germany and Switzerland; then America got the bug, in the liberal coastlands of Boston, Massachusetts, and Portland, Oregon; now the car rental giants are jumping on the bandwagon and setting up car-sharing clubs.

Hertz is among those laying down a challenge to the likes of Zipcar, Streetcar and City Car Club, with plans to place hundreds of rental cars in local neighbourhoods in London, Paris, New York and New Jersey over the next year as it tries to offset falling revenues from its traditional rental business.

The US-listed company is launching its service - Connect - next week and hopes to expand into new markets, including Germany and Spain, as early as six months later. In doing so, it will be the first big car rental company to launch a car-sharing service in the UK since Avis dropped its Urbigo club two years ago because of a lack of interest.

The economic and political climate has changed markedly since then. The boom years are being replaced by a global recession and chaotic oil prices have made people think more seriously about environmental issues. Membership of car-sharing clubs - which allow members to pay an annual fee for a smart card that gives them access to cars parked close to their home that can be rented by the hour - has more than doubled in Britain this year. Car taxes have risen, too, as have parking fees and fuel costs.

The clubs are also being promoted by local authorities, especially in big cities such as London, as a way of beating congestion. Research has shown that for every car club vehicle, up to 20 private cars can be taken off the road.

There are more than 60,000 people using more than 1,500 club cars in the UK. Streetcar, Britain's biggest car club operator, has 1,000 cars and vans in seven cities. It says that since March membership has risen from 27,537 to 50,000. Similarly, City Car Club has reported year-on-year growth of more than 93 per cent this year and now has more than 8,000 UK members in seven cities, including London, Edinburgh and Bristol.

Scott Griffiths, chief executive of Zipcar, the biggest international car club, which has more than 250,000 members, believes that there will be two million car club members in North America and a further two million in Europe within ten years. “This is a multibillion-dollar industry unfolding,” he said. “Having seen some of the growth we have seen in the last few years, rental firms are trying to get into the game - albeit a bit late.”

Better late than never, though. The car club market's rapid growth is highly attractive to Hertz, which said that it was suffering “unprecedented volume contraction” in its traditional rental markets at its third-quarter results this month.

Neil Cunningham, general manager of Hertz in the UK, who has responsibility for the development of the company's Connect car club in Europe, said: “We are really ambitious for Connect. At this early stage it is about proving the concept, being competitive and having the best offer and then growing rapidly.”

Hertz's car club service will start in Britain with 15 cars placed in public car parks in Central London and on a housing development in Ealing, West London. The company is in negotiations with a number of local authorities in the capital to secure on-street parking bays. Hertz expects to have “hundreds” of cars around London within a year.

According to Mr Cunningham, Hertz will be able to use its existing infrastructure, such as call centres, relationships with car manufacturers, insurers and marketing partners, to grow quickly. “If I decided to open in a large city in Spain tomorrow, I could probably do it in a couple of weeks,” he said. Hertz is also talking to some of its corporate customers about offering them its new car club service to meet some of their car pool or short-term rental requirements. “I think it has huge potential, as it is so convenient and quick,” Mr Cunningham said.

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