Lotus Car Rental Alternative Fuel Assessment
Erik Larson, Linda Sherman, Christopher Sessoms
February 2, 2013
Winifred Winstead Donnelly
The creation of a fleet of alternative fuel sourced automobiles would be a wise decision for the Lotus Car Rental Company. There are two major issues that are on the minds of people these days, the environment and money. By creating a fleet of alternative fuel based automobiles the Lotus Rental Care Company can help ease the fears of people in both categories. By having the ingenuity to have a fleet of alternative fuel automobiles; the Lotus Car Rental will set themselves apart from the rest of the rental car companies. Lotus ...view middle of the document...
The first consideration is the cost of adding hybrid vehicles to fleet inventory. Individual vehicle cost ranges from $23,000 to $37,000 and the models available include Honda Civic, Volkswagen Jetta, Lincoln MKZ, and Lexus ES300H (Almeida, 2009). Fleet costs would be less depending on number of units purchased and vehicle upgrades. Lotus Rental Car’s rentals fall into three categories: economy, mid-size, and luxury. Based on a cursory review of Lotus Rental Car’s primary income producers, the number of hybrid vehicles added should fall within the three to five percent range for each category. The initial outlay should equal or be less than the number of vehicles within each specific category that will be retired within the purchase year. For instance, if ten percent of economy vehicles will be retired then five percent of the new vehicles purchased will be hybrid. By timing the introduction of the new hybrid vehicles with inventory retirement the initial cost outlay will be mitigated. The anticipated maintenance costs will be similar to the previous year’s cost and no change is expected. Income from vehicles retired is expected to equal the same percentage as non-hybrid automobiles and will not constitute a negative financial impact.
Advertising is a major consideration, although the cost is not expected to increase. Target markets will be in major cities where Lotus Rental Car’s already has a large presence. Urban centers with environmentally conscious drivers are the best place to begin a new hybrid product line. Adding information regarding the new line to existing websites provides maximum exposure with minimal cost. Other markets include environmentally conscious corporate businesses that already have a corporate account with Lotus.
Market share and future growth is connected to advertising and return on investment. The implementation costs are minimal. The monthly return on investment is tied to advertising, environmental activity, and rental cost. Advertising includes national campaigns and local markets. The rental market incorporates online sales and local customers. The majority of travelers will book a rental vehicle prior to arriving at the rental company. Pricing will play an important factor in a rental commitment. Up-sale will increase income potential.
Economy vehicles rentals begin at $9.99 and increase, depending on the current sales program. The cost may decrease, depending on the number of days booked, special pricing, and additional sale of navigation, XM radio, and infant seats. However, the average rental price for an economy vehicle is $29.99 per day and hybrid vehicles rent from $65.99 to $159 per day. The return on investment per day would range from $35 to $129.
It is clear the automotive industry is offering a variety of hybrid vehicles in response to customer demand. The future of the automotive industry includes alternative fuel vehicles of all models. As the automotive industry...