LEX Service is to pull out of the used car business but the company is adamant that it will expand both its business-to-business and consumer brands to provide a 'cradle to grave' service to both fleet and retail motorists.

Lex Autosales, Lex Service's network of seven used car stores, will close by the end of 2000 unless a buyer is forthcoming - a victim of the residual value plunge. Six of the seven sites - Bristol, Birmingham, Poole, Hemel Hempstead, Chelmsford, Waltham Cross and Ipswich - are owned by the company. While the cost of closure has not been disclosed, Lex Service chief executive Andy Harrison admitted the company would probably make a loss despite being able to sell the sites.

Following the disposal of its dealerships and Autosales, the Lex Service business can be broken down into three areas: RAC Motoring Services which includes BSM; Lex Business Services, which includes Lex Vehicle Leasing, Lex Transfleet, mechanical handling and inventory management and parts through Multipart; and vehicle marketing through the Hyundai and Isuzu UK importerships.

Although some national newspapers claimed Lex Service had a £200-£300 million war chest for acquisitions Harrison said: 'Lex Service has not got a war chest. We have still got debt on the balance sheet although we are financially strong and we will get stronger.'

But organic growth appears to be the way forward for Lex Service and Harrison pointed to the expansion of Lex Vehicle Leasing which has grown from 3,000 vehicles in 1980 to more than 93,000 vehicles today without a major acquisition.

Referring to the spate of deals in the contract hire and leasing market Harrison said: 'We had a look at some of the acquisitions which have taken place but we think it is better to go for organic growth which is our speciality. I think Lex Vehicle Leasing is the only company which has grown without any significant acquisition and that is because we deliver a very good service.'

He was speaking two weeks after Lex Defence Management was announced by the Ministry of Defence as the preferred bidder for a £500 million 10-year 8,500 vehicle contract hire deal - the largest potential deal in the company's history and one of the largest in fleet history. The company is also working with the MoD to provide other services through inventory management.

Harrison added: 'The RAC is a consumer brand and Lex is a business-to-business brand and those services we sell to the top 200 companies in the UK. Lex is a strong business-to-business brand and we have no plans to change the branding. We are not short of opportunities and we will talk about developments as and when they happen. But we will build a cradle to grave motoring service through the RAC and Lex businesses.'