Fleet News

Profits tumble as residuals fall takes toll

DISPOSAL losses saw the pre-tax profits of Lex Vehicle Leasing tumble 42% in the first six months of the year after the UK's largest contract hire company found itself exposed to the downturn in used car prices. Interim results showed turn-over up at £207million (1998: £201million) for the year to June 31 but pre-tax profits sharply down at £12.4million (£21.3million). Lex attributed the decline to 'lower market prices for used cars, which resulted in disposal losses compared with disposal gains in the first half of 1998.'

Jon Walden, managing director of Lex Vehicle Leasing, said the residual values of ex-lease cars had fallen by 7% to 10% - equivalent of £500 to £600 per car - over the past 18 months and predicted that business would be difficult for some time to come, particularly with interest rates on long-term borrowing rising by almost 1% over the last three to four months.

Lex Service is investigating the re-branding of its Lex Autocentres and Lex Autosales with the RAC name. Following its take-over of the RAC, Lex has organised into three divisions, of which RAC Motoring Services now incorporates all the RAC's activities including BSM, together with Lex's all-makes servicing and used car businesses.

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