Car-sharing service car2go suspending operations in Toronto

The car-sharing service car2go said Thursday it is indefinitely suspending its operations in Canada's largest city because parking regulations make its business inoperable.

The German-based company sent an email to its 80,000 users on in Toronto on Thursday saying it will suspend operations of the flexible, short-term rental system on May 31.

Car2go CEO Paul DeLong said new regulations mean almost 10,000 parking spaces where users regularly start and end car2go trips will be forbidden come June. The company said the city is effectively banning car sharing in places where residential parking is at a premium.

Torontonians who own a car must apply for a residential parking permit to park on their street, but many streets already have cars with a permit sticker for every available parking spot. The city has banned car sharing on streets where 95 percent or more of the spots are spoken for.

But the company said those are the areas Torontonians most use car-share services, which rent cars for a few hours or days and are usually arranged via smartphone apps.

"We just can't continue to operate if we can't use those streets," DeLong said.

DeLong said city council is giving too much preferential treatment to car owners instead of coming up with solutions to reduce congestion.

"It's just a very difficult decision but one that the city has put us in," DeLong said.

He said they've been trying to work with Toronto's council for six years.

"For a city that see itself as an innovation hub for them to be this narrow minded I just have to scratch my head," he said.

Toronto Mayor John Tory said in a statement he encourages car sharing, but said it must be done carefully and Torontonians are already have difficulty finding a place to park their own cars.

"Throughout this process car2go has chosen confrontation over collaboration with City Council," Tory's statement said. "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."

Car-sharing services are popular with young, urban drivers unwilling or unable to buy their own car. Zipcar and Enterprise are competitors and remain active in Toronto. They depend more heavily on fixed, pre-arranged parking locations.

Car2go operates in 16 cities around the world, with about 375 cars in Toronto and 1,000 or more in some other locations. Car2go also previously suspended operations in cities including Miami, San Diego, Columbus, Ohio, Stockholm, Sweden, and Birmingham, England, for various reasons. The company is wholly owned by Daimler AG.