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Lotus Rental Car Assessment Essay

INTRODUCTION

Adding alternative fuel vehicles to the fleet is essential to our environment, beneficial for our consumers, and potentially highly profitable for Lotus Rental Car. With the everlasting increase in fuel, the consumer is looking for alternative ways to save money on fuel and at the same time be conscious about the negative impact that fuel and diesel have in our environment.

Alternative fuel vehicles have never been more popular in the U.S. and are becoming a major source for public transportation. Our community has become educated about the damaging effect in which gas and diesel vehicles have been causing our environment. These vehicles are more environmentally friendly and are typically more cost-effective to produce. Therefore, it has a great financial impact to the common family. Alternative fuel vehicles can help our consumers save money on gas while simultaneously impacting our environment in a positive and healthy way.

If Lotus Rental Car is aggressive and proactive in the purchase of alternative fuel vehicles, it will become the first major rental car company to lead a successful path to the future. Lotus Rental Car will become the model company of the new rental car era. We will decrease expenses, expand the variety of a new customer base, increase revenues through the new continuous revenue stream and sponsors. As a result of your new and wise investment, our company’s market shares and profits will soar to a new company and industry records.

A new division to our marketing department will be established to help promote the importance of renting from Lotus Rental Car. The marketing department will incorporate the benefit to our environment along with the potential savings to our consumers. The brand new marketing campaign and strategy will help promote our new vision. The alternative fuel market has few competitors, therefore, giving us the opportunity to add new customers to our company. We will be the first modern company to benefit from this rare opportunity to dramatically increase our revenue flow.

ENVIRONMENT

It does not take long to notice alternative fuel vehicles on the road everywhere you go. These type of vehicles are becoming the new trend in today’s evolving automotive industry. As a community and consumer, we are more educated on how we directly impact our environment, both in a negative and positive way.

Our federal government has developed agencies and passed federal acts to ensure we limit the harm we do to our environment. The United States Environmental Protection Agency (EPA) was established in 1970 and viewed as a necessary part of our federal government to help reduce our nation’s rising air pollution. According to the United States Environmental Protection Agency, “Transportation source emit greenhouse gases that contribute to climate change…In 2011, transportation represented approximately 27 percent of total U.S. GHG emissions” (“Transportation”, 2011). In other words, we will have a significant impact in reducing the greenhouse gases being emitted into our atmosphere.

The EPA has been credited with significantly improving our air quality. In 1997, the Clean Air Act was passed to control and reduce ozone pollution. The Clean Air Act is essentially a fuel control measure to assist our local states in helping reduce our ozone pollution. Alternative fuel is significantly cleaner than conventional gasoline and provides significant reductions of certain compounds that contribute to air pollution and ozone pollution. According to Aaron Windecker and Adam Ruder (2013), “Emissions were reduced by adopting alternative fuel vehicles” (p.40). Their research concluded that alternative fuel vehicles that were added to vehicle fleets had reduced emission that harm our environment.

In today’s new automotive industry, we can see how these measures have greatly impacted our communities and businesses. Almost all major ports are transitioning to alternative fuel vehicles. In the Long Beach and Los Angeles Ports, traditional diesel semi-trucks are no longer allowed access. In 2008, the Los Angeles Port established the Clean Truck Program to assist the Clean Air Act. This program targeted major sources of air emissions and incorporated a ban on polluting trucks. All pre-1989 trucks were banned from entering the port.

Research conducted by the Clean Air Act showed that “In its first year, the program reduced the rate of port truck emissions by an estimated 70 percent, and when fully implemented in 2012, the emissions were reduced by 80 percent” (“Portoflosangeles.org”, 2014). This is just a small example of how one port can positively impact the environment. A comparable impact can be accomplished here at Lotus Rental Car. By altering our fleet to provide more alternative fuel vehicles to our consumers, we will be contributing to our environment by improving our current air quality, ozone layer and reducing toxic air pollutants.

Transportation agencies are also transitioning to alternative fuel vehicles. Buses being operated by diesel and gas are being phased out and being replaced with environmentally friendly fueled vehicles. Our local cities are purchasing alternative fuel vehicles and are incorporating them into their general use, such as for police detectives and forensic units. There is not a negative impact to our environment if we change our fleet to be more diverse and environmentally friendly.

CONSUMER

In today’s changing market, traditional fuel sourced vehicles such as gasoline and diesel are no longer fulfilling the needs of every customer. “Vehicles and the fuel it takes to power them, are an essential part of our American infrastructure and economy, moving people and goods across the country” (Department of Energy, p. 1, 2014, October). Expanding our market-share in the leasing of vehicles will require a more diversified lineup.

We want our customers to understand that at Lotus, we are not thinking just about profit for our company; Lotus is also concerned with the moral values of each customer. Once we introduce our new fleet of vehicles which will include an alternative fuel source vehicle, we will be ahead of our competitors, and our growth will occur as projected. Doing our best to provide a full selection of rental cars including alternate fuel source vehicles will satisfy and meet the demands of today’s consumer.

As the technology improves, more people are becoming aware of how traditional fuels, such as gasoline and diesel fuel harm the environment. Today’s consumers are concerned with these harmful effects, and wish to do something positive about it. “Alternative energy sources and technologies can play a vital role in lowering or eliminating our reliance on fossil fuels” (Kouroussis, D., & Karimi, S. 2006, August p 346). By providing alternative fuel vehicles, we are allowing our environmentally conscious consumers a means of transportation in which they save money in fuel costs and reduces the spread of air pollution. Those consumers will generate more business for us by sharing their rental experiences with both their colleagues and family. Everyone wants a healthy environment for the future generations.

Traditionally fueled vehicles will no longer make up the majority of all vehicles being currently rented and operated today. Yes, technology is changing daily, and scientists that work for the U.S. government are still developing ways to both increase fuel efficiently and reduce harmful emissions. However, we do not know when the next breakthrough in technology will become available to the market; Lotus needs to utilize the current technology today. The risk of incorporating alternative fuel source vehicles is one which Lotus needs to consider. Let us be the first rental company that offers a wider selection of vehicles by including the alternative fuel vehicles. This action will give our environmental conscious consumers a better feeling of spending their money with a company that aligns with their morals. Traditional fuel sources such as gasoline and diesel fuel may be a thing of the past, let us move forward into the future today.

COST

The initial cost of adding alternative fuel vehicles to the Lotus Rental Car fleet would be substantial. Generating revenue through selling additional shares on the stock market could have a negative effect if we do not show a profit after the first quarter in which we introduce a new fleet. There is only one other car rental agency that rents alternative fuel vehicles, which means we would have minimal competition in the industry. The United States currently has about 250,000 natural gas vehicles on the road today (“Cngnow.com”, 2014). Within the next ten years, that number is expected to increase by more than 200 percent. Not only do consumers want to buy eco-friendly cars, but they also want to rent them. Our proposed expansion shows this is the best time to invest in the alternative fuel industry. Research tells us there is a large market, and we would expect to see a substantial profit from our investments.

Adding new alternative fuel cars to our fleet will increase our customer percentage. Our new customer growth is expected to increase by 30 percent. Traditionally, more than half of new customers become long-term loyal customers. There is already a need to replace a large percentage of aging Lotus Rental Cars. This would be a great opportunity to retire some of the aging vehicles and implement the new alternative fuel vehicles to our new fleet. Replacing older vehicles as they phase out would cut cost while adapting to a more eco-friendly consumer service. Nearly three-quarters of drivers would consider an alternative fuel vehicle for their next car (“Consumersunion.org”, 2012).

We believe renting is no different than buying. A fleet of twelve new vehicles per lot would cost Lotus Rental Car Company approximately $420,000. After one year, we would have all the cars paid off, therefore, a large portion of the rental fees would be primarily profitable revenue. It truly is a great long term investment in the company where the potential growth could exceed previous rental car records. After the first quarter with our new fleet, there could be a potential of a 100 percent growth rate by the end of the year. By gaining a competitive edge on the fact that we are the only company in our region to offer this service, it appears the pros significantly outweigh the cons.

According to Natural Gas Vehicles for America, Compressed Natural Gas (CNG) currently costs approximately $2.13 per gallon compared with approximately $3.90 for gasoline (Keys, 2012, p.1). As being significantly more cost effective per gallon, CNG vehicles also go farther distances per gallon, which is even more of an incentive to consumers that have to fill up their rental car. Not only are you saving the environment but you are also saving the money in your consumer’s wallet. By not investing in natural gas vehicles, we would lose out on substantial tax credits in which the government is currently offering. If we switch over by December 31, we will save 25 percent on the total purchase price per vehicle. By all of these pros outweighing the cons, there is no reason we should not already have bought these natural gas vehicles.

CONCLUSION

If Lotus Rental Car transitioned towards purchasing a large number of alternative fuel vehicles, it would lead the rental car industry in the largest transition of this industry’s history. Consumers and sponsors would view Lotus Rental Car as environmentally friendly and the new leader in the industry. Our goal is that Lotus Rental Car will become one of the most profitable businesses while being environmentally and consumer friendly. There are no glaring drawbacks to our valuable environment, and both the consumer and our company can benefit from the savings. Let Lotus Rental Car make the successful investment today to modernize and lead the automotive industry towards alternative fuel vehicles.

REFERENCES

consumersunion.org. (2012). Retrieved from https://consumersunion.org/news/consumer- reports-survey-americans-say-fuel-economy-most-important-car-buying-factor/

cngnow.com. (2014). Retrieved from http://www.cngnow.com/vehicles/consumer- vehicles/Pages/information.aspx

Department of Energy, (2014, October). _Vehicles_. Retrieved from http://energy.gov/public-services/vehicles

epa.gov. (2011). Retrieved from http://www.epa.gov

Keys, R. (2012). Southwestern energy touts CNG. Arkansas Business, 29(20), 20. Retrieved from http://search.proquest.com/docview/1019740298?accountid=458

Kouroussis, D., & Karimi, S. (2006, August). Alternative Fuels in Transportation. _Bulletin of Science, Technology & Society, 26_(02770), 346-355. Retrieved from http://bst.sagepub.com.ezproxy.apollolibrary.com/content/26/4/346

portoflosangeles.org. (2014). Retrieved from http://portoflosangeles.org

Windecker, A., & Ruder, A. (2013, August). Transportation Research Part D: Transport and Environment, _23_, 34-40.


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