Car2Go is Leaving Toronto: What does that mean for Carsharing?

It’s official… the world’s largest carsharing service is driving away from Toronto.

The decision from Car2Go comes as Toronto City Council introduces a parking pilot that will make carsharing operations much harder to operate. Whether or not the City Council intended that result is up for debate.

At issue is the creation of a new category of residential parking permit, one which Car2Go feels is too expensive. Essential to Car2Go’s operations, the permits give access to residential parking zones across the city (except those that are already at 95% subscription).

This decision also stipulates that up to four carsharing companies can enter the Toronto market at one time—but that they can only field a maximum of 500 cars each.

In other words, Car2Go is getting hit twice—both on parking costs, and on the number of cars they can have in the city.

A brief from Car2Go states that “almost 10,000 parking spaces where Torontonians regularly start and end Car2Go trips today will be forbidden once the pilot begins. In fact, approximately 50% of all trips Torontonian Car2Go members take every day would no longer be possible as a result of the heavy street restrictions.”

The City of Toronto claims that the new carsharing pilot is a structure that benefits providers, customers, and private citizens who compete for sought-after parking stalls. The pilot was voted into place 34–4.

Toronto Mayor John Tory said in a statement, “Throughout this process Car2Go has chosen confrontation over collaboration with City Council. While their decision to suspend operations in Toronto is unfortunate, it is their decision alone to walk away from a clear path towards regulations that would allow them to operate in our city in a reasonable, compatible way. I’m confident that other carsharing companies willing to work with us and to operate in this manner will succeed in Toronto.”

Councillor Mike Layton was more reserved in his response, searching for a last-minute resolution with Car2Go. “I’m eager to find out what is it that we need to do to maintain their operations, and is the tradeoff something the City of Toronto is willing to make. Is it about money? Is it about the space on the roads? Is it about what areas are being restrictive—or the process that they have to go through to get the permits?

“At the same time, we don’t want to sell the farm to make one company happy. If there are other companies that are interested that can function within the [] regulations then maybe we turn to them to fill that need.”

A Tough Pill to Swallow for Carsharing

After entering the Toronto market in 2012, Car2Go grew quickly. 80,000 Torontonians are currently members with Car2Go, and around 350 vehicles were in use in Toronto.

Car2Go and other carsharing services operate on the basis of a short-term rental–essentially a taxi service that the customer drives. The vehicle isn’t required to be returned to a central location but rather can be parked in a public parking space. The parking zone restriction of the free-float carshare pilot in Toronto would make finding a proper parking spot impossible about half the time.

For Car2Go, part of the refusal to accept the carsharing pilot in Toronto is certainly about cost. A stipulation in the pilot requires carsharing providers to pay a parking permit fee of $1,499.02 per vehicle. It’s inconceivable that another carsharing platform—Zipcar, Hertz On Demand, Maven, or any other platform—would be willing to enter the Toronto market with the same restrictions.

The decision by Toronto City Council is a death knell for carsharing in the city. Not only does the pilot create extremely limited zones for carsharing customers to park cars, but the cost to operate is exorbitant. While they continued to state that ridding the city of carsharing isn’t their goal, they did not make it welcoming for Car2Go or any service to operate under these new conditions.

Car2Go details that of the 26 cities in which they operate, Toronto was the most successful city. It’s also the only one where city policy has stifled operations.

The Future of Carsharing in Toronto?

The question remains of what current carsharing subscribers in Toronto will do. In a major city that struggles with congestion and a lack of parking spaces—problems which will only worsen—what will the restriction on carsharing programs and increasing regulation mean when more and more residents are choosing not to own a second or even a primary vehicle?

An Opportunity for Ridesharing?

What may be an insurmountable hurdle for carsharing in Toronto could be an opening for ridesharing providers to capitalize on: Uber, Lyft, Taxify and Facedrive all operate in Toronto.

And as an added bonus, when you use a rideshare, there’s no need to find a parking spot at all.

What do you think this means for the auto industry? Will this increase car sales? Will another company fill this new gap?

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