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AutoNation Reports Second-Quarter Earnings From Continuing Operations of $0.40 Per Share, Up 14%

Jul. 28, 2005
     * Total store revenue growth of 4%
     * Same store revenue growth of 2% for new vehicles, 4% for retail used
       vehicles, 7% for parts and service and 4% for finance and insurance

FORT LAUDERDALE, Fla., July 28 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2005 second- quarter net income from continuing operations of $106 million or $0.40 per share, compared to year-ago net income from continuing operations of $97 million or $0.35 per share, an increase of 14%. This increase was primarily a result of solid growth in both revenue and gross profit coupled with continued share repurchase, resolution of various tax matters and leverage of the Company's cost structure.

Second-quarter 2005 revenue totaled $5.0 billion, an increase of 4% compared to the year-ago period resulting from revenue growth in new vehicles of 3%, retail used vehicles of 4%, parts and service of 8% and finance and insurance of 4%. Selling, general and administrative expense (SG&A) in the quarter was $556 million or 70.8% of total gross profit, a 70 basis point improvement versus prior year. Operating income for the second quarter was $210 million, a second-quarter record, up 7% versus prior year.

Commenting on the quarter, Mike Jackson, AutoNation Chairman and Chief Executive Officer, stated, "AutoNation delivered solid results in the second quarter in every area of the business, including new and used vehicles, finance and insurance and we're especially pleased with our high-margin parts and service business. We also continued to make strides on the cost side of the equation." At the end of the second quarter 2005, AutoNation's new vehicle inventory level was 51 days supply versus 74 days at the end of second quarter 2004, representing a decline of 27,000 units or 26%.

Discontinued operations in the second quarter included a benefit of $0.36 per share from the resolution of various tax matters under audit from prior years.

For the six-month period ended June 30, 2005, the Company earned net income from continuing operations of $195 million or $0.72 per share. Excluding senior note repurchase cost, earnings per share from continuing operations for the six-month period ended June 30, 2005 were $204 million or $0.76 per share, compared to $0.68 per share in the prior year, an increase of 12%. The Company's revenue for the six-month period ended June 30, 2005 totaled $9.6 billion, compared to $9.4 billion in the prior year.

AutoNation will discuss these results and information regarding the Company's business and operating environment during a conference call and audio web cast this morning at 11:00 a.m. Eastern Time. To listen to the live conference call, dial (800) 762-7141 or listen to the audio web cast via the Internet at http://www.AutoNation.com by clicking on the "About Us" link, then clicking on "Investors" and then "Web casts." A playback of the conference call will be available after 2:30 p.m. Eastern Time July 28 through August 8, 2005 by calling (800) 475-6701 (access code #789179) or via the Internet as outlined above.

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and a component of the Standard and Poor's 500 Index. In 2004 AutoNation was named America's Most Admired Automotive Retailer for the 4th year in a row. AutoNation has approximately 27,000 full- time employees and owns and operates 349 new vehicle franchises in 17 states. For additional information, please visit http://corp.AutoNation.com or http://www.AutoNation.com , where more than 100,000 vehicles are available for sale.

FORWARD-LOOKING STATEMENTS

Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, estimates and expectations is contained in the Company's SEC filings. The Company undertakes no duty to update its forward- looking statements, including its earnings outlook. This release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as net income and diluted earnings per share from continuing operations for the six-month periods ended June 30, 2005 and 2004, adjusted in each case to exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improves the period-to-period comparability of the Company's results from its core business operations.

                                AUTONATION, INC.
                     UNAUDITED CONSOLIDATED INCOME STATEMENTS
                      ($ in millions, except per share data)

                                       Three Months Ended   Six Months Ended
                                            June 30,            June 30,
                                         2005      2004      2005      2004

        Revenue:
           New vehicle                 $3,052.0  $2,966.5  $5,736.6  $5,678.7
           Used vehicle                 1,143.7   1,082.0   2,224.4   2,145.1
           Parts and service              658.3     611.4   1,303.7   1,222.0
           Finance and insurance          160.8     154.2     307.6     301.4
           Other                           23.6      22.4      44.6      46.0
        Total revenue                   5,038.4   4,836.5   9,616.9   9,393.2

        Cost of sales:
           New vehicle                  2,835.2   2,756.7   5,322.5   5,273.4
           Used vehicle                 1,035.9     980.2   2,002.0   1,938.8
           Parts and service              370.6     340.6     736.2     683.8
           Other                           11.4      10.5      20.6      20.3
        Total cost of sales             4,253.1   4,088.0   8,081.3   7,916.3

        Gross profit                      785.3     748.5   1,535.6   1,476.9

        Selling, general and
         administrative expenses          555.9     534.9   1,086.1   1,060.6
        Depreciation and amortization      20.5      19.5      40.8      38.0
        Other (income) expenses            (0.7)     (1.4)     (0.6)      0.4

        Operating income                  209.6     195.5     409.3     377.9

        Floorplan interest expense        (28.8)    (20.3)    (54.2)    (36.9)
        Other interest expense            (15.4)    (19.7)    (33.0)    (39.0)
        Other interest expense -
         senior note repurchases           (0.7)       --     (15.1)       --
        Interest income                     1.4       0.7       2.9       1.4
        Other gains (losses)                0.7      (1.0)     (0.2)     (1.4)

        Income from continuing
         operations before income
         taxes                            166.8     155.2     309.7     302.0

        Provision for income taxes         61.0      58.7     115.0     116.7

        Net income from continuing
         operations                       105.8      96.5     194.7     185.3

        Income (loss) from
         discontinued operations, net
         of income taxes                   89.0      (4.4)     97.1      (5.9)


        Net income                       $194.8     $92.1    $291.8    $179.4


        Diluted earnings per share:
           Continuing operations          $0.40     $0.35     $0.72     $0.68
           Discontinued operations        $0.33    $(0.02)    $0.36    $(0.02)

           Net income                     $0.73     $0.34     $1.08     $0.65

        Weighted average common and
         common equivalent shares
         outstanding                      267.8     273.2     269.0     274.5

        Common shares outstanding         261.2     267.7     261.2     267.7



                                AUTONATION, INC.
                          UNAUDITED SUPPLEMENTARY DATA
                    ($ in millions, except per vehicle data)

               Operating Highlights           Three Months Ended June 30,
                                          2005      2004  $Variance %Variance
          Revenue:
            New vehicle                 $3,052.0  $2,966.5   $85.5      2.9
              Retail used vehicle          919.5     881.7    37.8      4.3
              Wholesale                    224.2     200.3    23.9     11.9
            Used vehicle                 1,143.7   1,082.0    61.7      5.7
            Parts and service              658.3     611.4    46.9      7.7
            Finance and insurance          160.8     154.2     6.6      4.3
            Other                           23.6      22.4     1.2
          Total revenue                 $5,038.4  $4,836.5  $201.9      4.2


          Gross profit:
            New vehicle                   $216.8    $209.8    $7.0      3.3
              Retail used vehicle          107.3     100.2     7.1      7.1
              Wholesale                      0.5       1.6    (1.1)
            Used vehicle                   107.8     101.8     6.0      5.9
            Parts and service              287.7     270.8    16.9      6.2
            Finance and insurance          160.8     154.2     6.6      4.3
            Other                           12.2      11.9     0.3
          Total gross profit               785.3     748.5    36.8      4.9

          Selling, general and
           administrative expenses         555.9     534.9   (21.0)    (3.9)

          Depreciation and amortization     20.5      19.5    (1.0)
          Other (income) expenses           (0.7)     (1.4)   (0.7)
           Operating income                209.6     195.5    14.1      7.2

          Floorplan interest expense       (28.8)    (20.3)   (8.5)
          Other interest expense           (15.4)    (19.7)    4.3
          Other interest expense - senior
           note repurchases                 (0.7)       --    (0.7)
          Interest income                    1.4       0.7     0.7
          Other gains (losses)               0.7      (1.0)    1.7
            Income from continuing
             operations before income
             taxes                        $166.8    $155.2   $11.6      7.5

          Retail vehicle unit sales:
               New                       104,164   104,201     (37)      --
               Used                       60,554    60,472      82      0.1
                                         164,718   164,673      45       --

          Revenue per vehicle retailed:
               New                       $29,300   $28,469    $831      2.9
               Used                      $15,185   $14,580    $605      4.1

          Gross profit per vehicle
           retailed:
               New                        $2,081    $2,013     $68      3.4
               Used                       $1,772    $1,657    $115      6.9
               Finance and insurance        $976      $936     $40      4.3


                                AUTONATION, INC.
                          UNAUDITED SUPPLEMENTARY DATA
                    ($ in millions, except per vehicle data)


               Operating Highlights            Six Months Ended June 30,
                                           2005      2004  $Variance %Variance


          Revenue:
            New vehicle                 $5,736.6  $5,678.7   $57.9      1.0
              Retail used vehicle        1,811.3   1,761.0    50.3      2.9
              Wholesale                    413.1     384.1    29.0      7.6
            Used vehicle                 2,224.4   2,145.1    79.3      3.7
            Parts and service            1,303.7   1,222.0    81.7      6.7
            Finance and insurance          307.6     301.4     6.2      2.1
            Other                           44.6      46.0    (1.4)
          Total revenue                 $9,616.9  $9,393.2  $223.7      2.4


          Gross profit:
            New vehicle                   $414.1    $405.3    $8.8      2.2
              Retail used vehicle          218.7     203.9    14.8      7.3
              Wholesale                      3.7       2.4     1.3
            Used vehicle                   222.4     206.3    16.1      7.8
            Parts and service              567.5     538.2    29.3      5.4
            Finance and insurance          307.6     301.4     6.2      2.1
            Other                           24.0      25.7    (1.7)
          Total gross profit             1,535.6   1,476.9    58.7      4.0

          Selling, general and
           administrative expenses       1,086.1   1,060.6   (25.5)    (2.4)

          Depreciation and amortization     40.8      38.0    (2.8)
          Other (income) expenses           (0.6)      0.4     1.0
           Operating income                409.3     377.9    31.4      8.3

          Floorplan interest expense       (54.2)    (36.9)  (17.3)
          Other interest expense           (33.0)    (39.0)    6.0
          Other interest expense - senior
           note repurchases                (15.1)       --   (15.1)
          Interest income                    2.9       1.4     1.5
          Other gains (losses)              (0.2)     (1.4)    1.2
            Income from continuing
             operations before income
             taxes                        $309.7    $302.0    $7.7      2.5

          Retail vehicle unit sales:
               New                       195,748   198,800  (3,052)    (1.5)
               Used                      120,173   121,396  (1,223)    (1.0)
                                         315,921   320,196  (4,275)    (1.3)

          Revenue per vehicle retailed:
               New                       $29,306   $28,565    $741      2.6
               Used                      $15,072   $14,506    $566      3.9

          Gross profit per vehicle
           retailed:
               New                        $2,115    $2,039     $76      3.7
               Used                       $1,820    $1,680    $140      8.3
               Finance and insurance        $974      $941     $33      3.5



                                          Three Months Ended  Six Months Ended
               Operating Percentages            June 30,          June 30,
                                           % 2005   % 2004   % 2005   % 2004

          Revenue mix percentages:
            New vehicle                      60.6     61.3     59.7     60.5
            Used vehicle                     22.7     22.4     23.1     22.8
            Parts and service                13.1     12.6     13.6     13.0
            Finance and insurance             3.2      3.2      3.2      3.2
            Other                             0.4      0.5      0.4      0.5
                                            100.0    100.0    100.0    100.0

          Gross profit mix percentages:
            New vehicle                      27.6     28.0     27.0     27.4
            Used vehicle                     13.7     13.6     14.5     14.0
            Parts and service                36.6     36.2     37.0     36.4
            Finance and insurance            20.5     20.6     20.0     20.4
            Other                             1.6      1.6      1.5      1.8
                                            100.0    100.0    100.0    100.0

          Operating items as a percentage
           of revenue:
            Gross profit:
               New vehicle                    7.1      7.1      7.2      7.1
               Used vehicle - retail         11.7     11.4     12.1     11.6
               Parts and service             43.7     44.3     43.5     44.0
               Total                         15.6     15.5     16.0     15.7
            Selling, general and
             administrative expenses         11.0     11.1     11.3     11.3
            Operating income                  4.2      4.0      4.3      4.0

          Operating items as a percentage
           of total gross profit:
            Selling, general and
             administrative expenses         70.8     71.5     70.7     71.8
            Operating income                 26.7     26.1     26.7     25.6



                               AUTONATION, INC.
                    UNAUDITED SUPPLEMENTARY DATA, Continued
                    ($ in millions, except per share data)

                                           Three Months   Six Month Ended
              Cash Flow Information       Ended June 30,      June 30,
                                           2005    2004    2005     2004
          Capital expenditures, excluding
           property operating lease
           buy-outs                        $36.8   $33.3    $57.3    $54.7
          Property operating lease
           buy-outs                        $10.3    $ --    $10.3    $77.7
          Stock repurchases                $77.7   $49.8   $148.6   $107.9
          Acquisitions                      $5.9   $66.5     $8.0   $154.4
          Proceeds from exercises of
           stock options                   $29.6   $37.2    $52.7    $49.9
          Senior note repurchases           $6.4    $ --   $112.4     $ --


          Floorplan Assistance       Three Months Ended     Six Month Ended
               and Expense                  June 30,             June 30,
                                    2005   2004 Variance  2005  2004  Variance

         Floorplan assistance
          (included in cost of
          sales)                    $31.5  $29.9   $1.6  $58.6  $56.0    $2.6
         Floorplan interest expense (28.8) (20.3)  (8.5) (54.2) (36.9)  (17.3)

          Net floorplan benefit      $2.7   $9.6  $(6.9)  $4.4  $19.1  $(14.7)



      Balance Sheet and Other Highlights


                                       June 30,    December 31,     June 30,
                                         2005         2004            2004

         Cash and cash equivalents       $47.8          $107.7        $60.6
         Inventory                    $2,623.6        $2,588.7     $3,227.3
         Floorplan notes payable      $2,382.6        $2,470.0     $3,055.7
         Non-vehicle debt               $677.3          $812.6       $821.8
         Equity                       $4,476.6        $4,263.1     $4,083.0

         New days supply (industry
          standard of selling
          days, including fleet)       51 days         53 days      74 days
         Used days supply (trailing
          30 days)                     42 days         37 days      44 days



     Brand Mix - New Vehicle Revenue %
                                    Three Months Ended     Six Months Ended
                                         June 30,              June 30,
                                     2005        2004      2005        2004

     Detroit 3:
       Ford (Ford, Lincoln-Mercury)  18.0        20.5      18.4        21.1
       General Motors (Chevrolet,
        Pontiac, Buick, Cadillac,
        GMC)                         18.6        19.8      17.6        19.4
       Chrysler (Chrysler, Jeep,
        Dodge)                        8.8         9.6       8.8         9.3
         Detroit 3 total             45.4        49.9      44.8        49.8

     Premium Luxury:
       Mercedes                       8.8         8.3       8.9         8.5
       BMW                            4.6         4.8       4.7         4.4
       Lexus                          3.0         3.1       3.1         3.2
       Other premium luxury
        (Jaguar, Rolls Royce)         1.1         1.1       1.0         1.1
         Premium Luxury total        17.5        17.3      17.7        17.2

    Imports:
      Honda                           7.8         7.3       7.7         7.2
      Toyota                         12.4        11.4      12.5        11.3
      Nissan                          9.7         8.6      10.0         8.8
      Other imports                   7.2         5.5       7.3         5.7
        Import total                 37.1        32.8      37.5        33.0
                                    100.0       100.0     100.0       100.0


                                AUTONATION, INC.
                    UNAUDITED SUPPLEMENTARY DATA, Continued
                     ($ in millions, except per share data)

         Comparable Basis Reconciliations
                                               Three Months Ended June 30,
                                                           Diluted Earnings
                                             Net Income        Per Share
                                            2005     2004     2005     2004

         As reported                       $194.8    $92.1    $0.73   $0.34

          Discontinued operations - store
           divestitures, net of income
           taxes                              6.7      4.4    $0.03    0.02
          Discontinued operations - tax
           adjustments                      (95.7)      --   $(0.36)     --

         From continuing operations, as
          reported                         $105.8    $96.5    $0.40   $0.35



                                                Six Months Ended June 30,
                                             Net Income    Diluted Earnings
                                                               Per Share

                                             2005     2004     2005    2004

         As reported                       $291.8   $179.4    $1.08   $0.65

          Discontinued operations - store
           divestitures, net of income
           taxes                             10.3      5.9    $0.04    0.02
          Discontinued operations - tax
           adjustments                     (107.4)      --   $(0.40)     --

         From continuing operations, as
          reported                          194.7    185.3    $0.72   $0.68


          Senior note repurchases             9.1              0.03


         Adjusted                          $203.8   $185.3    $0.76   $0.68




         Business Assumptions Impacting Long-term Average EPS Growth Target
         of 10% to 12% Per Year:

         U.S. light vehicle annual unit    intensely competitive, high 16
          sales                             million units
         SGA % reduction (over 2005 and
          2006)
          (SGA % of gross profit less
          floorplan interest expense)      approximately 110 bp

         Continued opportunistic           share repurchase, debt reduction,
          redeployment of cash flow         capital expenditures and
                                            acquisitions
         Targeted return on incremental
          invested capital                 approximately 15% after-tax




                                AUTONATION, INC.
                            UNAUDITED SAME STORE DATA
                    ($ in millions, except per vehicle data)


       Operating Highlights
                                            Three Months Ended June 30,
                                      2005       2004    $Variance %Variance


    Revenue:
         New vehicle                $3,023.9   $2,965.9    $58.0      2.0
           Retail used vehicle         912.4      881.5     30.9      3.5
           Wholesale                   220.7      199.2     21.5     10.8
         Used vehicle                1,133.1    1,080.7     52.4      4.8
         Parts and service             652.6      611.2     41.4      6.8
         Finance and insurance         159.9      154.1      5.8      3.8
         Other                           8.8        8.8       --       --
    Total revenue                   $4,978.3   $4,820.7   $157.6      3.3


    Gross profit:
         New vehicle                  $214.6     $209.8     $4.8      2.3
           Retail used vehicle         106.7      100.2      6.5      6.5
           Wholesale                    (0.2)       0.5     (0.7)
         Used vehicle                  106.5      100.7      5.8      5.8
         Parts and service             284.8      270.7     14.1      5.2
         Finance and insurance         159.9      154.1      5.8      3.8
         Other                           6.9        7.2     (0.3)    (4.2)
    Total gross profit                $772.7     $742.5    $30.2      4.1



    Retail vehicle unit sales:
         New                         103,376    104,178     (802)    (0.8)
         Used                         60,215     60,462     (247)    (0.4)
                                     163,591    164,640   (1,049)    (0.6)

    Revenue per vehicle retailed:
         New                         $29,251    $28,470     $781      2.7
         Used                        $15,152    $14,579     $573      3.9

    Gross profit per vehicle retailed:
         New                          $2,076     $2,014      $62      3.1
         Used                         $1,772     $1,657     $115      6.9
         Finance and insurance          $977       $936      $41      4.4


                                AUTONATION, INC.
                            UNAUDITED SAME STORE DATA
                    ($ in millions, except per vehicle data)


       Operating Highlights
                                            Six Months Ended June 30,
                                      2005       2004    $Variance %Variance


    Revenue:
         New vehicle                  $5,648.5  $5,674.7  $(26.2)    (0.5)
           Retail used vehicle         1,786.6   1,759.7    26.9      1.5
           Wholesale                     402.0     382.2    19.8      5.2
         Used vehicle                  2,188.6   2,141.9    46.7      2.2
         Parts and service             1,286.4   1,220.8    65.6      5.4
         Finance and insurance           304.7     301.7     3.0      1.0
         Other                            17.1      17.5    (0.4)    (2.3)
    Total revenue                     $9,445.3  $9,356.6   $88.7      0.9


    Gross profit:
         New vehicle                    $407.2    $405.3    $1.9      0.5
           Retail used vehicle           216.4     203.8    12.6      6.2
           Wholesale                       2.4       1.3     1.1
         Used vehicle                    218.8     205.1    13.7      6.7
         Parts and service               558.9     537.7    21.2      3.9
         Finance and insurance           304.7     301.7     3.0      1.0
         Other                            13.5      14.3    (0.8)    (5.6)
    Total gross profit                $1,503.1  $1,464.1   $39.0      2.7




    Retail vehicle unit sales:
         New                           193,487   198,634  (5,147)    (2.6)
         Used                          119,090   121,280  (2,190)    (1.8)
                                       312,577   319,914  (7,337)    (2.3)

    Revenue per vehicle retailed:
         New                           $29,193   $28,569    $624      2.2
         Used                          $15,002   $14,509    $493      3.4

    Gross profit per vehicle retailed:
         New                            $2,105    $2,040     $65      3.2
         Used                           $1,817    $1,680    $137      8.2
         Finance and insurance            $975      $943     $32      3.4



                                         Three Months Ended  Six Months Ended
                Operating Percentages         June 30,            June 30,
                                           % 2005  % 2004     % 2005  % 2004

    Revenue mix percentages:
         New vehicle                         60.7    61.5       59.8    60.6
         Used vehicle                        22.8    22.4       23.2    22.9
         Parts and service                   13.1    12.7       13.6    13.0
         Finance and insurance                3.2     3.2        3.2     3.2
         Other                                0.2     0.2        0.2     0.3
                                            100.0   100.0      100.0   100.0


    Gross profit mix percentages:
         New vehicle                         27.8    28.3       27.1    27.7
         Used vehicle                        13.8    13.6       14.6    14.0
         Parts and service                   36.9    36.5       37.2    36.7
         Finance and insurance               20.7    20.8       20.3    20.6
         Other                                0.8     0.8        0.8     1.0
                                            100.0   100.0      100.0   100.0


    Operating items as a percentage of
     revenue:
        Gross Profit:
          New vehicle                         7.1     7.1        7.2     7.1
          Used vehicle - retail              11.7    11.4       12.1    11.6
          Parts and service                  43.6    44.3       43.4    44.0
          Total                              15.5    15.4       15.9    15.6

SOURCE  AutoNation, Inc.
    -0-                             07/28/2005
    /CONTACT:  Marc Cannon, AutoNation, Inc., +1-954-769-3146, or
cannonm@autonation.com/
    /Photo:  http://www.newscom.com/cgi-bin/prnh/20001017/AUTONATIONLOGO
              AP Archive:  http://photoarchive.ap.org
              PRN Photo Desk, photodesk@prnewswire.com/
    /Company News On-Call:  http://www.prnewswire.com/comp/750525.html /
    /Web site:  http://corp.autonation.com
                http://www.AutoNation.com /
    (AN)

CO:  AutoNation, Inc.
ST:  Florida
IN:  AUT
SU:  ERN CCA

DS-MR
-- FLTH003 --
0393 07/28/2005 07:00 EDT http://www.prnewswire.com
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