The daily rental giant said corporate rental demand in the UK, France and Germany had been weaker in the first two quarters of this year as employers focused on their bottom line costs.
'Travel expenditures by European companies have been significantly constrained, and these constraints have extended to other areas of corporate activity, including those in the replacement sector associated with corporate leased fleets and company projects,' said the trading update.
Avis Europe does not expect this situation to improve in the second half of 2002, and says growth in the corporate sector will only come when economic growth returns to normalised levels in key European markets.
The company's accident replacement car hire business 3Arrows is now back on track, however, following settlement of the credit hire industry's dispute with insurers.
Mark McCafferty, chief executive of Avis Europe, said: '3Arrows is continuing to grow and we are collecting money from insurers, although there is still an element to bring in, and we plan to develop and grow the business through the agreement negotiated with the Association of British Insurers.'
He also sees growth for Avis Europe's internet sales channel which the company expects to account for 10% of all sales by the end of this year.
In the quarter after September 11, Avis saw its revenue fall by 5% compared to the same period in 2000, and it is now forecasting full year profits down by up to 15%. Shares plummeted by 54.5 pence to 118.5p on the news.