PERRY Group has sold its vehicle rental subsidiary Perry Contract Hire to First National Vehicle Contracts for £1.3 million - and issued a profits warning. The decision was taken due to what Perrys described as the further deterioration of the used car market and profitability of new and used car sales.

A statement from the company said: "The fuel crisis resulted in reduced demand in September in the group's aftersales departments, parts division and motor accident repair operations.

"Consequently, despite the restructuring measures which have been taken, it is probable that the group's results for the full year will fall short of market expectations."

John Woollatt, Perry Group chief executive, said: "The disposal of PCH generates funds to expand our nationwide motor accident repair business, reinforcing its position as the pre-eminent independent accident repairer in the UK."

In a separate announcement, First National Vehicle Holdings announced the closure of offices in Scotland and England as part of a new centralisation programme following the purchase of Highway Vehicle Contracts. The move, which will take place over the next year, will affect more than 80 staff, who are being offered relocation packages.

Direct sales, national accounts and car ownership schemes will be relocated to the firm's Bury headquarters, while regional accounts will be operated from Worcester. Shrewsbury will continue to be FNVH's base for vehicle rental and accident management services.

By the end of 2001, sites at Chertsey, Milton Keynes and Stirling will be closed and moved to the Bury headquarters.