The deal is understood to be Lex Vehicle Leasing's largest single contract and is also the first major fleet deal secured under the Government's Private Finance Initiative. Lex will purchase the majority of the current fleet used at RAF stations across the UK and replace vehicles as they come due for renewal. All vehicles will be funded and fully maintained by Lex and will be backed by a full accident management package and daily rental service.

Lex won the contract after an 18-month competitive tender involving five fleet management companies. It is the culmination of a rationalisation process which started back in March 1994 under the 'Frontline First' defence cuts and was subsequently treated as a PFI scheme (Fleet News July 22, 1994). The MoD expects to make savings of some £17 million as a result of the deal and if successful, it could pave the way for outsourcing the rest of the MoD's estimated 11,000 vehicle administrative fleet.

RECORD levels of new orders resulting in a record fleet size contributed to highest-ever half-year pre-tax profits at Lex Vehicle Leasing - the UK's largest contract hire and leasing company.

Lex Vehicle Leasing is part of Lex Service which this week reported turnover of £812 million for the six months to June 30 - up from £770 million on 1995 - and pre-tax profits of £27.7 million (1995: £21.9 million). Lex Vehicle Leasing's contribution was a record £9.5 million (1995: £8.5 million) after Lombard took its 50% profit as the business is a joint venture between the two groups.

Managing director David Galloway said he was 'delighted' with the results and attributed the record profits to a combination of service improvements, competitive value for money pricing and listening to the requirements of fleet customers. Pre-tax profits were also boosted by strong residuals on used cars, but Galloway sounded a warning as to the future strength of residuals. The first six months of 1996 have been a hectic period for Lex Vehicle Leasing with the full roll out of its One-Call company car driver service and the launching of a number of new initiatives including a fuel card.

In the first six months of the year Lex Retail's profit increased 17%, while a significant improvement in the company's Hyundai importership with 8,015 cars registered in the first half of the year contributed to Hyundai Car (UK) reporting an £800,000 profit against a £1.4 million loss in the first half of 1995.