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Lotus Car Rental Launch “Lotus Green” Essay

In the current climate of environmental and financial concerns across the United States many businesses have taken the initiative to go “green. ” Green products and practices often cost more at the start and then generate savings over the lifetime of the product through energy conservation and maintenance savings. Car rental agencies, including Lotus competitors, have begun to incorporate hybrid options into their fleet as a way of tapping into an emerging class of eco-conscious consumers. Hybrid vehicles are becoming more popular among consumers and are expected to be common place in the near future.

Lotus can begin developing a green branch now as part of an initiative to update services that reflect future growth. There are currently more than 1,800,000 thousand cars for rent in the United States generating approximately $21 billion in revenue (Ohngren & Brown, 2007). The car rental business as a whole has steadily increased since 2002 and a rise is expected over the next five years. However, due to the dramatic fluxation in gasoline prices as well as growing environmental concerns there is currently a demand for fuel efficient and hybrid vehicles.

Rental statistics for Sports Utility Vehicles (SUVs), minivans, large trucks and other vehicles that have low fuel economy have been on the decline since consumers began to feel the impact of rising gasoline costs. Current customers looking to save money at the pump as well as a new generation of environmentally conscious spenders are looking for hybrid options. Lotus can accommodate this potential clientele base by launching a line of “green” vehicles. Major competitors such as Avis – Budget, Rent-A-Car, Hertz and Enterprise already offer hybrid vehicles for rent.

Although the price of these vehicles is higher per day customers are typically promised to save in gas mileage and they are paying the difference. The majority of potential clients interested in Hybrid vehicles are willing to pay more in exchange for the satisfaction of driving a vehicle that produces less carbon emissions and conserves gasoline. Hybrid-electric vehicles (HEV) use two or more sources of energy. The most common energy sources include a combination of renewable energy storage system (RESS) and gasoline or diesel.

However, solar energy, hydrogen and other alternative sources of fuel are available for use in HEVs as well. HEVs can be configured to increase power, improve gas mileage or provide auxiliary power for electrical devices and power tools. Emerging technology dictates that alternative fuels and hybrid vehicles are leading the way into the future. According to a Priceline survey 72 percent of travelers want rental car companies to offer hybrid vehicles (Environmental Leader, 2007, p. 01).

Approximately 39 percent said they would even be willing to pay $1 to $3 more per day for a hybrid option. Current investment projects in renewable energy may wan as the price of gasoline drops to $70 a barrel, the lowest in nearly two years, but long term projections indicate that the use of alternative fuels will prosper over the next ten years and gasoline usage (Environmental Leader, 2007, p. 01). Going green is going to become a necessity for rental companies that want to stay ahead of the curve.

Specifically companies promoting the benefits of green business practices as well as “eco-marketing” can build strong brand integrity (Ohngren & Brown, 2007). Advertising campaigns geared toward the emerging class of eco-conscience money makers are already proving to be successful. According to www. business. gov, a government based business resource, companies that are already competitive in price and services benefit from adding green initiatives, products and eco-labeling as a method of securing a share of the market (Business.

gov The Official Business Link to the US Government, 2008) As a small business looking to expand in a growingly competitive market Lotus can benefit from launching a green fleet of rental options. Current competitors are only using Hybrid vehicles as a small percentage of their fleet. By replacing three currently outdated vehicles with Hybrid options Lotus can begin a green campaign as well as update current selection of vehicles. The Honda Civic Hybrid and the Toyota Prius are two of the most cost effective hybrid vehicles currently on the market.

The 2009 Civic gets approximately 45 miles per gallon and can be purchased around $24,000. Although this is significantly higher than a conventional Civic, which costs approximately $16,000 and gets 34 miles per gallon, consumers looking to test drive a hybrid as well as a growing number of consumers who will make a decision based on environmental choices will choice this option over the conventional model despite the price. The 2009 Toyota Prius is emerging as an even more cost effective hybrid starting at $22,000 it gets 48 miles per gallon.

The standard price of a conventional car rental is approximately $55 per day. Competitors are charging $5 to $15 more per day for hybrid vehicles (Rent a Hybrid Car, n. d. ). Hybrid vehicles are becoming increasingly more common. So much so that hybrid rentals are also becoming more common. Eventually the cost of hybrid rental cars may be equivalent to that of standard vehicles. However, rental companies must take the lead and offer hybrid vehicles as well as promote them in order to pursue this avenue of business expansion.

“By making more hybrid vehicles available and promoting their benefits, rental companies could easily increase their popularity among otherwise uninterested consumers. As popularity increases, the price of renting these green cars, which cost less to maintain to begin with, could eventually equal that of standard rentals (Rent a Hybrid Car, n. d. , ¶ 4). In conclusion, hybrid vehicles currently cost more than conventional vehicles. But consumers are illustrating that they are willing to pay more for hybrid options.

Furthermore, the popularity of hybrid vehicles has already increased dramatically and is expected to continue to do so. The natural process of supply and demand has already produced an increased number of hybrid vehicles within the automobile market. This trend is expected to continue until hybrid vehicles become a staple within the auto industry. Lotus competitors have already begun to incorporate hybrid vehicles into their fleet as well as launch green campaigns and solidify branding. Lotus can gain an edge by incorporating hybrid vehicles as well as launching a branch of green car rentals.

Incorporating hybrids will keep Lotus competitive with other rental agencies as well as meet consumer demand for this product. Currently there are two cost effective hybrid options, the Honda Civic Hybrid and Toyota Prius. Although both have higher fuel economy than conventional vehicles the Prius is emerging as a better investment. The Prius gets better gas mileage and costs less. Adding a small percentage of hybrid options allows Lotus to launch a new eco-conscious branding campaign as well as pursue a new class of customers, the environmentally concerned.

References

Business. gov The Official Business Link to the US Government (Producer). (2008). Green Marketing [Video file]. Retrieved from www. business. gov Environmental Leader (2007, April 24). Rental Car Customers Want Hybrid Option. Retrieved from Environmental briefing web site: www. environmentalleader. com Ohngren, K. , & Brown, C. (2007, September/October). The Greening of the Auto Rental Industry. Auto Rental News, 6. Rent a Hybrid Car (n. d. ). Green or not? How much eco-cred do rental car agencies get for offering hybrids?. Retrieved December 01, 2008, from www. hybrid-rental-car. com


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