Abstract Creating a fleet of Alternative fuel vehicles for Lotus rental cars would be a very wise decision. There is a strong movement towards using alternative fuels for many reasons. The consumers are now motivated to drive vehicles that not only protect the environment, but also save money. More and more car manufactures are providing vehicles that use alternative fuels or “Flex” fuels. This movement in the market place is gaining momentum. It would be wise for Lotus to lead this market by providing this service to the consumer. Feasibility of an alternative fuel vehicle fleet.
Today’s environmentally concerned consumers are looking for ways to not only save the environment, but also save money. Oil prices are constantly on the rise and turmoil in the oil producing regions has not helped alleviate the problem. Taking these considerations and research into account, we feel that Louts Rental Cars should invest in an alternative fuel vehicle fleet. Background Alternative fuels are derived from resources other than petroleum. Some Alternative fuels are produced domestically, reducing our dependence on imported oil, and some are derived from renewable sources.
Often, they produce less pollution than gasoline or diesel (fueleconomy, 2007). Currently there are a wide variety of alternative fuel vehicles, or AFV’s, on the market. These alternative fuel vehicles use a variety of different alternative fuels. The more common types of fuels used are ethanol, biodiesel and natural gas. These fuels have been around for many years, but their widespread use has only been in the last decade. Ethanol fuel is from corn, grasses, and other crops. Biodiesel is a form of diesel fuel that is produced from vegetable oils.
This type of fuel not only produces fewer pollutants than normal diesel fuel, but also be reused and filtered. Natural gas is used in two forms to fuel vehicles: compressed (CNG) or liquefied (LNG). CNG is the type used for passenger vehicles, which can run on CNG alone, or have a bi-fueling system that uses both CNG and gasoline (greenerchoices, 2006). While there are various alternative fuels, access to alternative fuels should be a consideration. These vehicles are becoming very popular with consumers because of the lower cost and better mileage, creating market pressure to build more alternative fuel stations.
The environmental conscious public is looking for a more “green” way to travel, and, fortunately, there are many different types of alternative fuel vehicles available on the market today. Cleaner vehicles using battery electric, hybrid electrical and alternative fuels are often supported by government incentives to encourage adoption of new technologies that are beneficial to society (California Air Resources Board, 2007). Many of the leading car manufactures’ are offering models that can be ordered to use alternative fuels.
In fact, most car manufacturers offer vehicles that can be converted to an alternative fuel system. While there may be cost increase involved in these upgrades. The long term cost of fueling these vehicles and Government incentives help to bring the ownership cost down. Furthermore, there is a very powerful shift of social values in today’s society. Many cultures around the world are working to save and preserve the environment. The idea of “saving the environment” is not only good ethics, but it could be very good business.
Since 1998, patrons of EV Rental Cars have saved around fifty thousand dollars via renting alternative fuel vehicles from the corporation, and EV rentals has saved around fifty thousand gallons of gasoline through the use of alternative fuel vehicles (anonymous, 2000). “Very good business” is perhaps an understatement. Key Problems As we all know, the world is not perfect. There can be drawbacks in many aspects of life, especially business. The addition of alternative fuel vehicles to Lotus Rental Cars’ fleet is no different. Below we have listed some of the problems that could be encountered with alternative fuel vehicles.
All information is based on a review of the background and research conducted for this case study analysis. 1. AFV’s require specialized repair shops and technicians for any malfunctions. 2. Some AFV’s produce less horsepower than conventional gasoline-powered vehicles and cannot operate as long or as far as conventional gasoline-powered vehicles due to rechargeable batteries.. 3. AFV’s can be more expensive than conventional gasoline-powered vehicles. Alternatives Problem 1 Some AFV’s are similar to non-AFV’s, but all require special attention when it comes to repairs.
Flex fuel vehicles, or FFV’s, are similar to conventional gasoline automobiles, but still require qualified mechanics and technicians to work on them (Gable & Gable, 2007a). FFV’s tend to follow the same maintenance schedule as non-FFV’s, but FFV’s require E85 compatible replacement parts when dealing with any engine management and fuel system components (2007a). Hybrid repair is more complicated than most of AFV’s because of its many advanced components. Any malfunction in one component of a hybrid can seriously affect the others (Gable & Gable, 2007b).
Due to the way that hybrids are manufactured, “serious troubleshooting, diagnosis, and repair” of these vehicles is best left to qualified technicians to avoid injury and further compromising the vehicles (2007b). Natural gas and propane vehicles are also very similar to gasoline-powered vehicles (Gable & Gable, 2007c). A considerable difference concerning maintenance between conventional vehicles and these AFV’s is the “fuel storage and delivery system”(2007c). Another key difference is that natural gas and propane vehicles’ maintenance schedules usually deviate from conventional maintenance schedules (2007c).
Understanding how a vehicle operates can make a significant difference in being knowledgeable of how to maintain it. A plausible business solution to this problem would be that Lotus Rental Cars purchases new AFV’s from reliable dealers only. This would ensure that vehicle service contracts are valid and the most qualified mechanics maintain Lotus Rental Cars’ AFV fleet. In addition, extended warranty packages should be purchased for lengthened reassurance. Lotus Rental Cars might also choose to have their own technicians trained to keep up with maintenance on an AFV fleet once the service contracts expire.
New maintenance contracts would certainly give the corporation enough time to get all repair personnel into training and/or hire new technicians qualified to repair AFV’s. Problem 2 AFV’s do not always provide the desired performance of a conventional vehicle. Fortunately, horsepower ratings for alternative fuel vehicles can range from an estimated 76 horsepower in the 2008 Toyota Prius Hybrid (Kelley Blue Book, 2007) to 320 horsepower in some flex fuel vehicles (Giametta, 2007). To suppress the fact that some AFV’s do not have the range that a traditional gasoline vehicle provides, Lotus Rental Cars could simply choose not to purchase EV’s.
This will cut out any recharging issues for patrons and Lotus employees. Rental car customers are all different, and their needs can range from local business travelling to weekend leisure travel over long distances. Whatever the case may be, Lotus Rental Cars must retain a fleet containing multiple vehicles with a wide variety of specifications in order to satisfy customer requests. Problem 3 It is true that AFV’s can be more expensive than certain traditional vehicles. When one begins to delve into this subject, there are many factors to take into account.
Gas mileage, performance, maintenance costs, and overall costs are just a few of these factors. “Hybrids cost from $19,000 to $25,000 and gas saver cars cost from $14,0000 to $17,000” (Dunn, 2006), flex fuel vehicles can range from around $20,000 to around $37,000, and some natural gas and propane vehicles can cost consumers close to the price of conventional gasoline vehicles via tax credits (cleancities, 2007). Purchasing an alternative fuel vehicle could prove to be very disadvantageous to consumers if they only receive a minimal price difference in fuel costs and higher initial costs.
On the other hand, the purchase of an alternative fuel fleet for Lotus Rental Cars could prove to be a promising business endeavor. Since renters mostly pay for fuel in rental cars, Lotus Rental Cars might only have to purchase the first tank of fuel. Lotus would easily make up the initial cost and any fuel purchased for the AFV fleet. Recommendations Lotus Rental Cars can only benefit by converting to alternative fuels for their fleet. Using alternative fuels will reduce the amount of pollutants in the air.
According to the Pacific Northwest Pollution Prevention Center (1999), using petroleum-based fuels can be unhealthy for the human race. When petroleum is burned, carbon monoxide (CO), carbon dioxide (CO2), nitrogen oxides (NOx), sulfur oxides (SOx), volatile organic compounds (VOCs,) also known as reactive hydrocarbons, hydroxyl ions (OH-), and particulate matter (PM) are emitted. Additionally, nitrogen oxides and reactive hydrocarbons form low-level ozone (O3), a major component of smog, in the presence of sunlight. An alternative to using petroleum in vehicles will help with the quality of life for the world in general.
Vehicles can be converted to use alternative fuels, but not all vehicles have to be converted not to use any petroleum-based fuel as stated by the Air Force Center for Environmental Excellence (2005): “A converted vehicle is any vehicle that was originally manufactured to operate on conventional gasoline and has been modified or altered to operate on an alternative fuel. Leased and converted vehicles do not have to operate solely on an alternative fuel source. A duel fuel vehicle operates on two separate fuels, while a flexible fuel vehicle operates on a mixture of two or more different fuels.
” Using AFV’s can create economic benefits by reducing the fuel and overall maintenance costs to the vehicles. Lotus Rental Cars can have a variety of vehicles for customers while conserving the use of gasoline and receiving tax benefits from the government. Since many varieties of vehicles that can utilize alternative fuels are now available, it only makes sense to purchase multiple new makes, models, and classifications of alternative fuel vehicles, excluding electric vehicles, in order to provide ultimate customer satisfaction.
Furthermore, since there is already a prominent investment in conventional gasoline vehicles at Lotus Rental Cars, we suggest that the AFV fleet and traditional fleet are both offered as rental assets, thus, giving customers more options. Our final recommendation is to invest in training for any current Lotus Rental Cars mechanics and technicians. If necessary, new, qualified personnel should be hired in order to meet maintenance requirements. These measures will ensure that Lotus Rental Cars maintenance personnel are well qualified and confident enough to handle any task for the conventional or alternative fuel fleets.
In conclusion, the threat to our environment is proportionally growing with society’s concern for the environment and the future. Alternative fuel vehicles are the way of the future and could possibly be the only way a future for our children and us can exist. AFV’s are cost-efficient, emissions-compliant, and most importantly, environmentally friendly. With the new additions, Lotus Rental Cars could not only change the look of its rental fleet, but the look of the future. The only question left for Lotus Rental Cars leadership is what they would like the future of the agency to look like.
Maybe Lotus Rental Cars could be an agency that does not offer a clean air solution to customers by only offering conventionally powered vehicles, or perhaps a leading environmentally friendly vehicle rental corporation that offers alternative fuel vehicles in addition to conventional gasoline-powered vehicles, providing unsurpassed customer satisfaction. The feasibility is easy to see, the benefits are abundant, and the decision is yours. References Air Force Center for Environmental Excellence (2005). “PROACT fact sheet”. Retrieved November 15, 2007, from http://www. afcee. brooks. af. mil/pro-act/fact/afv.
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