A MAJOR drive for fleet business by two of Britain's biggest independent leasing companies has provided the strongest signal yet that years of residual value chaos is expected to end. The move comes after more than a year of consolidation, which has seen finance house and bank-owned contract hire companies rocket in size, predominantly through taking over smaller independent rivals.

This week it was revealed that Arnold Clark, the dealer group which already owns Arnold Clark Finance, has ploughed hundreds of thousands of pounds into a new Milton Keynes-based leasing venture, called Activa Contracts. This is aimed at expanding the Arnold Clark contract hire base into the south of England and has brought together leading figures from independent leasing companies that were casualties of the collapse in residual values and the growth of the 'superleague' last year. The team is being led by managing director Ian Hill, who was managing director of Hartwell Motor Contracts.

Hartwell was at the centre of a bleak forecast for independent contract hire firms when it publicly conceded defeat to the superleague and sold 5,500 of its 8,000-vehicle fleet to debis Car Fleet Management. At the time, Edward McCabe, group managing director of dealer and property group Hartwell, said the emergence of a contract hire superleague meant his firm could not compete against the bigger players. But Hill is determined to win fleet business.

His finance director is Peter Smith, who formerly ran the finance division of AutoMotive Strategy, the William Jacks contract hire subsidiary that closed last year because of the residual value crisis sweeping the industry. Activa Contracts has taken on the contracts of William Jacks that were still 'live' when the firm shut to new business. Hill said: 'This is a show of confidence in the market from Arnold Clark, because it will be three years before the contracts we write now end and we start to make money.

'We have started business with no baggage and with residual value predictions that we believe are sustainable. Our view is that this consolidation in the industry is not necessarily good for customers, as combining operations and systems and procedures for large firms can lead to a clash of cultures. We wanted a solid, stable platform and we will be competitive on price. This industry and business is not for the faint-hearted, because this business takes time to produce a profit.