Avis Europe said on Monday it had launched “a full investigation” after it identified potential malpractice in its Portuguese subsidiary which could cost the group €3m from current year profits, plus the costs of the investigation. Last year the car rental group made a profit before tax and restructuring charges of €38.9m and analysts were predicting pre-tax profits of around €38m for 2007.

Martyn Smith, Avis Europe’s finance director, flew to Portugal with another board member, on Sunday night to look into the matter. He was accompanied by staff from KPMG, the accounting firm, which Avis Europe has hired to assist in the investigation.