Van-rental company Northgate has issued a profit warning to the stock exchange that includes a £60m drop in the residual value of its fleet.

The company has made the announcement following a drop in used vehicle values in both the UK and Spain, the two countries in which Northgate operates.

Northgate had issued warnings about the future of residual values back in October last year, but this is the first time the company has had to act on the matter.

The statement by chief executive Steve Smith (pictured) also announced that it has increased its rates of depreciation to 20% a year, an increase of 1% in the UK.

In order to cope with a reduction in rental demand, Northgate has already started to reduce the amount of vehicles on its fleet. It is reportedly off-loading 5000 of its 133,000 vehicles, and is suspending the purchase of new units.

Northgate is the first rental firm to write down the value of its vehicles in this recession. However, in the previous recession several rental and leasing firms took hits on their RVs, and industry experts have predicted the same will happen this year.