THE seismic effect of falling residual values on the rental and leasing industry played havoc with company profits and plunged some into losses of millions of pounds, a major new survey has revealed.

An analysis of companies' financial results in the rental and leasing industry reveals that debts are high, while profit margins and profitability are deteriorating.

The Business Ratio report reveals that across the two industries, pre-tax profit margins fell from 8.4% in 1997/1998 to 6.7% in 1999/2000, despite increased average turnover. Among the lengthy list of casualties was BCH Vehicle Management, which plummeted from a profit of £1 million in the year to December 31, 1998 to a £2.29 million loss in 1999, which included a write-down of its fleet value.

First National Vehicle Contracts is listed with a loss of £2.4 million for 1999, on turnover of £83 million, compared to a profit of £1 million in 1998 on turnover of £61 million. Even companies recording profits have seen their fortunes plummet, with GE Capital Fleet Services seeing profits fall from £21 million on turnover of £141.6 million in 1998 to £13.2 million profit on £143 million turnover in 1999.

Rental firms fared little better, with Europcar UK listing a £54.6 million loss on turnover of £88.4 million in 1999, although sources say some costs were attributed to European operations and UK losses were more like £15 million. Enterprise Rent-A-Car UK is listed with losses of £3.7 million on turnover of £61.18 million for 1999.

Copies of the report cost £275+VAT and are available from 0208 4818720.