REDUCED demand for new vehicles from rental companies, coupled with the well documented difficulties within the UK motor retailing sector, contributed to a drop in operating profits at Arriva Motor Retailing. The 38-dealer group subsidiary of Arriva has reported 1999 operating profits of £15.6 million - down from £18.3 million in 1998 - on turnover of £608.2 million (1998: £659.2 million).

In publishing its full-year results this week the company said: 'The decline in turnover primarily reflected a fall in demand from rental companies. The contribution from Broadwood Finance and Arriva Finance Lease was unchanged at £6 million. Arriva's vehicle rental business, which operates a fleet of 8,500 vehicles from more than 50 locations nationwide, returned operating profit up from £6.9 million in 1998 to £7.5 million last year on turnover of £78.4 million (1998: £58.9 million).

Overall, Arriva announced pre-tax profits for the year to December 31, 1999 of £198.7 million (1998: £94.5 million). Excluding the profit of £103.5 million from sale of the leasing business in July pre-tax profits were £95.2 million. Group turnover was £1.534 billion (1998: £1.556 billion). Operating profits from the continuing operations - which now mainly comprises bus and rail businesses - excluding exceptionals increased 6% to £97 million (1998: £91.3 million). There remains speculation that the company may yet dispose of its dealership business as it increasingly focuses on passenger transport.