University of Phoenix
Essentials of College Writing
Final Research Paper - Lotus Rental Cars
This paper will focus on preparing an assessment for Lotus Rental Car’s Chief Financial Officer on the feasibility of adding alternative fuel vehicles to the fleet. Although there are many forms of alternative fuel vehicles, this study will primarily focus on the use of hybrid vehicles at Lotus Rental Cars. We will discuss the background of Lotus Rental Car’s current status, the advantages and disadvantages of adding alternative fuel vehicles, and provide our recommendation on why and how it should be done. Our focus will be on three specific areas: budget costs, marketing strategy and performance as well as how Lotus Rental Cars will benefit financially from using this new process in their current fleet. Background
Lotus Rental Cars is a national domestic rental car organization operating in several locations within the United States headquartered in Los Angeles, California. They have been in business for 20 years and are not as well-known among customers as some of their competitors, such as Budget, Avis and, Enterprise. Lotus Rental Cars uses various vehicles from economy to larger sized vehicles for rental purchase by their customers for personal or business need.
A large concern of the organization is long-term cost savings and developing a better marketing strategy. The cost of using various vehicles, increased gas prices caused by the economic downturn, and maintenance of these vehicles will produce a long-term debt versus profit over the next several years if Lotus Rental Cars does not take action to prevent at an operating loss. Lotus Rental Cars needs to develop a long-term solution for the budget concerns and offer a product to make them stand out among their competition.
Because there is a concern over the long-term effects of operating costs, Lotus Rental Cars needs focus on expenses from the purchase of vehicles, fuel prices, and maintenance costs to remain healthy financially. Purchasing a hybrid vehicle to test the waters would prove to be a financial gain for the organization. Although costly to purchase, hybrid vehicles ultimately save money in long-term situations. According to the International Energy Agency ("Outlook," n.d., p. 1), “In countries with relatively high gasoline prices, the savings in gasoline costs currently pay back the extra purchase costs of the car in about eight years. As manufacturing volumes and gasoline prices increase, this payback period could be reduced to 3-5 years, and consumers would have an economic incentive to buy Hybrid Electrical Vehicles.” Because hybrid vehicles operate with an electric motor and battery, the electric motor assists in acceleration, this allows for a smaller and more efficient internal combustion engine (International Energy Agency, 2010), thus saving on the maintenance of the vehicles. There are several advantages to using alternative fuel vehicles from a domestic to global level. According to the Federal Energy Management Program (National Renewable Energy Laboratory, a DOE national laboratory, September 2003, p. 1), “Relying more on domestic fuels and less on imported petroleum will enhance the nation’s energy security, help to curb air emissions, and serve as a hedge against fluctuating fuel prices.” In an effort to preserve our nation’s energy source, switching to hybrid vehicles will allow Lotus Rental Cars visibility with their customers who prefer “going green” and allow the organization a unique marketing strategy. Hybrid vehicles produce less pollution by using their combustion engines. Reduction of pollution by using hybrid vehicles will prove to be another successful marketing strategy for Lotus Rental Cars. It shows the customers and stakeholders of the organization the willingness to the commitment to keeping the environment healthy. Customers, who...