FALLING residual values, coupled with strong competition which has kept rental rates down, have contributed to undermine the profitability of rental companies, although their combined fleets have topped the two-million vehicle mark for the first time. Those are the conclusions of the British Vehicle Rental and Leasing Association's 'Industry Review' which was launched at The Fleet Show.

BVRLA chairman Simon Kerr said falling residual values was the chief problem bedevilling the industry and, critically, affecting the profitability of member rental and leasing companies. However, last year saw a spate of takeovers and as companies battled to reduce overheads and increase revenues. And, says the report, the trend towards further amalgamation must be expected to continue.

BVRLA figures reveal that in the last 11 years membership has halved to 778 members and 83 associate members, but the fleet size has doubled, reaching a record 2,094,284 million units this year (1999: 1.86 million). Much of the reduction in members has come in the short term rental sector as in the long term sector membership has increased 7%, with takeovers resulting in a 'superleague' of 11 companies operating more than 50,000 units.