AN increase in rental rates and a 5.5% gain in staff productivity helped Avis Europe boost its pre-tax profits by 14.3% to £41.2 million (£36m) on turnover of £303.5 million (£252m) for the year to June 30. The company achieved a 2.6% increase in rental rates (Euro revenue per day) for the first six months of the year, with the UK, France and Spain incurring the steepest rises.

Avis does not expect to repeat rate rises at the level achieved over the past 18 months, but chief executive Mark McCafferty said the recent increases were necessary to offset rising fleet costs across Europe. 'It's not only the price of cars, but also their rectification costs because manufacturers are becoming more stringent about their return condition,' he said.

McCafferty added that the introduction of new vehicle registration fees in France and the UK had also impacted on fleet costs. In the UK, Avis has integrated 3 Arrows into the group, following its acquisition in December 1998, and now supplies the credit hire firm's fleet from its own branch network. Overseas, Avis has acquired the business of its largest licensee in Germany, although McCafferty said this was not a precursor to the company corporately owning all its locations.