It saw profits jump from £15 million to £16.4 million for the six months to June, despite its fleet size falling slightly to 91,800 from 92,100 at the same period last year.
Profits are shared equally between the firm's co-owners, Lex Service and HBOS.
Disposal losses on cars reaching the end of their contracts during the first half were absorbed within a £45 million provision Lex made at the end of 2000.
Jon Walden, the firm's managing director, said the improvement followed a series of new launches, including YourChoice, a personal lease product, and i-FM (Interactive Fleet Manager) an online enquiry facility for customers that allows them to download their own reports and examine fleet information online.
Walden added: 'We have plans to launch a structured emoployee car scheme, although that can currently be provided if it is something that a customer particularly wants.'
Parent firm Lex Service's interim results showed underlying profits up 6% to £33.2 million, although one-off expenses pushed pre-tax profits down heavily to £20 million, compared to £40.3 million at the same period last year.
Lex Service, which rebrands as RAC in September, intends to build business through more cross-selling to its 6.6 million private and 20,000 business customers.
RAC Business Solutions grew revenue by 17% to £70.3 million and made a profit of £400,000, compared to a loss of £700,000 in the same period last year. Pre-tax profits at RAC Auto Windscreens were £12.8 million.