Car2Go to be suspended in San Diego, Minneapolis and St. Paul
Car-sharing service Car2Go will suspend its services on the 31 December this year in San Diego, St Paul and Minneapolis. The move is due to a lack of uptake in San Diego and high car rental taxation rates in Minnesota and St Paul. However, the company has confirmed users in these regions will still have access to their accounts and services in other cities where Car2go continues to operate throughout the US and Canada.

Car-sharing service Car2go announced Friday that it plans to suspend service in St. Paul and Minneapolis by the end of the year.

The car-sharing program cited Minnesota’s high rental car-taxes as its reason for leaving the Twin Cities.

“It is our hope that we might one day resume operations here as taxation policy evolves,” Blaire Kniffin, a Car2go spokeswoman, wrote in an email Friday.

Car rental taxes in Minnesota are 9.2 percent with a 5 percent fee, according to the National Conference of State Legislatures. Combined, the rates are the highest in the nation, according to the group.

Kniffin said the state’s taxes made the Twin Cities one of the most expensive metro areas in North America to run the service and said it became too difficult for the company to offer affordable prices.

Car-sharing services and traditional rental-car companies have different clients as car-sharing services typically rely on local customers, whereas car rental companies draw on out-of-town visitors, said Frank Douma, a research scholar for the University of Minnesota’s Center for Transportation Studies.

“There’s always the question of whether they should be paying that tax in the first place,” Douma said.

Besides state taxes, Car2go also paid the city of St. Paul and Minneapolis for use of metered parking spots. The service paid St. Paul $68,500 for 2016, Public Works administrative programs manager Ellen Biales said.

The city will not lose any revenue as a result of Car2go’s departure, Biales said.

The service has more than 29,000 members and 400 vehicles throughout the Twin Cities. Car2go launched in St. Paul in July 2014 and in Minneapolis in October 2013.

In December 2015, the company narrowed its service in St. Paul to high-use areas, drawing criticism from some of its users.

Members could use the cars at a fixed rate of 41 cents per minute or $10 per hour.

Car2go offers short-term rentals of two-seat Smart cars scattered around the St. Paul and Minneapolis. Members access the cars through a mobile app, use them for commutes or errands and then leave them parked for the next users.

Neighborhood parking distinguished Car2go from other auto-sharing services such as ZipCar and St. Paul-based HourCar, which have designated spaces. Car2go cars can be parked in a wide variety of spaces in St. Paul or Minneapolis, such as residential or commercial streets or at meters without being required to pay.

Minneapolis resident Vanessa Perry said being able to park the cars almost anywhere was a big draw for her in choosing Car2go over other car-sharing companies.

Without Car2go, she said, planning transportation will be more difficult for her single-car family.

“This really going to impact the way we’re going to be able to function,” she said.

Car2go members are promised lifetime memberships when they sign up. In a message to customers, the service said its Twin Cities members will still be able to use cars in other cities in North America, according to the company’s message to its users.

Dec. 31 will be the final day of service for Car2go users in the Twin Cities.

Minneapolis resident Julie Cohen said she used Car2go four times a week on average and has been a customer since the service first came to the Twin cities.

Cohen said even the $200 a month she spent on Car2go was less than the cost of owning and maintaining her own vehicle. Without the service, she said she might have to consider buying a car.

“I think it’s a huge loss to the Twin Cities to not have this car-sharing option,” she said.

Fellow Minneapolis user Shannon Engstrom said that without the service, she’ll have to rely more on traditional public transportation to get around.

She said she chose Car2go over other car-sharing options because she thought it offered the most flexibility. She said it also appealed to her for environmental and economic reasons.

“It’s better for everyone and for me financially,” she said.