Lotus Rental Car's CFO feasibility adding alternative fuel vehicles fleet
The problem of switching to a more fuel efficient car, especially ones that are considered non-polluting will arise for all tourist and individual car owners. The reason is the rising cost of fossil fuels and the actions of environmentalists and other powers that try and curb the use of fossil fuels and cars in many places. While the operators have some more breathing time, it can be predicted that in the near future there will be a forced shift to hybrid cars, electric vehicles and non-fuel-based vehicles in all sectors of the world. The automotive industry is itself gearing up for the change. One factor that has made the automobile producers take to producing hybrid vehicles and electric and other fuel vehicles is primarily the costs of fuel as is obtained now. The rising cost in fuel has made automobile manufacturers lean to producing engines that are more efficient. The rise in fuel costs created priority targets for the automotive market to make vehicles cut fuel consumption by innovating on the engine and other components. (Maxton; Wormald, 2004)
Fuel efficiency has been attempted by the use of technology like aerodynamic streamlining, power-train technology, and increasing the engine capacity. Other attempts have included the reduction of weight, which is achieved by the new design of the vehicle and substituting conventional material with the lighter polymers which have all been prompted by the changes in the fuel economy needs and one metal that has replaced the conventional iron and tin is aluminum. Aluminum is the best choice of the lightweight materials substitution because of stable cost and since it is not controversial as plastic. (Becker, 2006) Technology has also progressed and research has reached the peek in finding vehicles that use alternatives to gasoline. (Ulrich, 2007)
Experts predict that in the future the U.S. market would in 20 years be able to replace gasoline. That means that other nations will follow suit. So it is proposed that some time in the future all companies and individuals will be forced to replace the current vehicles with hybrid models or alternate fuel models. Instead of making sudden changes gradual introduction of such vehicles can be made.
Thesis Statement: Alternate fuel vehicles can be introduced in a phased manner and as the laws become stringent the transition can be made on a full scale based on the market situation.
Primarily there will come a time when the purchase of fossil fuel vehicle will become a liability for the company. But those days are far off. In future car companies are going to concentrate on the new fuel vehicles and cut down on the petrol and diesel versions in view of the fact that vehicle makers are forced to innovate and create cars and vehicles that are bound to keep the technology changed. In other words the industry seeks to add or create new technology to every model to retain the market. This has led to a lot of innovations and a technology spiral. Some of these are the result of social changes that demand technology to make for example driving safe, and other gadgets that are an attraction and used for branding of the cars and the need of fuel efficiency have changed the role of research and technical development in the industry. So as a market feature -- the hybrid cars and alternate fuel cars which are very costly now are expected to become cheap on mass production. Based on this information the analysis is done with the current position of the company.
Lotus Car Rental:
Lotus Car Rental in Greece as of now is the big name in the state. Having the HQ at Athens, Greece has a fleet of cars, which is provided to tourist and the business and cars for the customers range from the business use cars to tourist vehicles. The vehicles are with 600 cc to 3700cc capacity with multipurpose vehicles, minibus and jeeps. (Lotus Car Rental.com, 2011b)
Already the company has experimentally tried hybrid cars, and the fleet consists of small cars, luxury cars, and the eco friendly hybrid cars for ecology conscious customers. The services span cars that have vintage value for weddings. The modern cars include "Morgan, Fiat Punto, Hyundai Atos, Volkswagen Polo 1.2cc Kia Picanto 1.0cc, Fiat Grande Punto 1.4cc Smart for2 SunRoof 700cc, Fiat Multipla 1.6cc, Hyundai Accent 1.4cc Automatic, Smart Cabrio 700cc, Honda Civic Hybrid Automatic, Renault Megane 1.6cc, Hyundai H-ONE 2.4cc, Volvo S40 1.6cc, Jeep Wrangler 2.4cc & 3.8cc, Jeep Grand Cherokee 3.7 Automatic, Renault Grand Espace 2.0cc, Mercedes E. 200 1.8cc, Mercedes SLK 1.8cc and sport vehicles like Jaguar X-Type, Porsche Boxster S. 3.2cc and BMW 645 cabrio." (Lotus Car Rental.com, 2011a)
The company has been doing well in the Greek Holiday and tour segment and can grow with the growth in tourism to Greece which is a possibility, considering that in future tourism may be limited to low cost destinations from Europe. So as far as the company is concerned it has to gear up for a change. The salient point that has to be made at this juncture is that not only the company has tried hybrids, but most of the company's whose cars are stocked by the Lotus Company has entered the hybrid arena. Therefore as far as the transition is concerned it will be carried out as the demands and external situations change without much difficulty. Because the company is using Fiat, Honda vehicles more, it is possible that as and when these companies bring out cheaper versions of electric and other vehicles one or two such vehicles can be acquired if necessary. But why must the company go in for such alternate fuel vehicles when it is doing well as it is?
One thing is certain. A change is coming in the automotive industry. At present these cars are being made in a trial basis using many other compounds and even hybrid cars using both gasolines, electricity and so on are being experimented. The forerunners in this field appear to be Honda, Toyota and Ford. But it is still a long way off. Thus the technology trend is to create fuel efficient vehicles that adhere to legal norms of emission. Technology that comes with other gadgets not part of automobile hitherto has now become a part of the vehicle leading to more and more additions of features. Innovation is the result of market fragmentation and the organizational complexity that has come about in the industry. This has affected the manufacturers and suppliers of components and the automobile suppliers are the most affected in the sudden change in technology that requires more and more sophisticated components. Thus innovation in the automobile industry has a ripple effect. (Becker, 2006)
A long time ago the changes began to happen. In 2005 the General Motors Graphyte concept vehicle was displayed at auto shows and this was followed with low-polluting gas-electric hybrids, diesels and hydrogen-fueled vehicles, and Ford Motor went into hybrids. The challenge has been taken up by Ford, Toyota and Honda has taken to manufacturing such vehicles. Toyota and Honda have already brought in the Civic and Accord Sedans, and many variants of diesels. Many other companies have even used biogas, hydrogen, and this involves modifying gas stations and creating hydrogen filling stations which may take another 20 years. (Healey; et al., 2005)
The primary problem is that there is a need for huge infrastructure for maintaining and running these resources for such cars. For example the charging points for electric vehicles will have to be created before these vehicles can be put on the street. Secondly the cost of the fuel is so high as of now that it is not feasible to run such vehicles without a general public infrastructure for refilling, charging and fuel outlets. (Waterfield, 2011)
The changes that are bound to come are a result of individuals feeling diffident to the pollution issues. The people of different regions react in different ways to pollution. There is a resistance that people show to polluting vehicles, and this feeling is spreading, For example it was reported in the Times 3 that the European Union will ban cars from cities by 2050 and this will apply to major cities like London and all other cities across Europe with a view to remove carbon dioxide emissions which means that the petrol and diesel-driven cars and lorries will go off roads. Simultaneously the plan is afoot to remove cheap holiday flights "from Britain to southern Europe with a target that over 50 per cent of all journeys above 186 miles should be by rail." (Waterfield, 2011)
In other words the nations of the European Union will rely more on rail transport and reduce petrol cars and other vehicles. Though the tourism sector and the Association of British Drivers scoffed at the idea of the proposal to ban cars since it will reduce the…