But Fleet NewsNet understands that shortlisted bidders for the company were offering no more than £150-£200 million, reflecting the current caution in the market over residual values. Arriva PLC's sales U-turn was announced to the City last on December 9, just 48 hours after the company had confirmed to that the sale of Arriva Automotive Solutions was on track to be completed before Christmas. Arriva put its car leasing and fleet management subsidiary up for sale as a result of City pressure which believes vehicle leasing is high risk. And, while the company's board listened to investors believing the sale would result in the company's shares being re-rated it was not prepared to 'give the business away'.
Arriva's Finance Division, which includes Automotive Solutions, will report profits of about £27 million for the 1998 financial year. The company's challenge is to convince City investors that vehicle leasing is not high risk, but merely cyclical, and that the finance division's underlying strength should not be compromised when residual values weaken.