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AutoNation Reports Third-Quarter Earnings

Oct. 24, 2007

- Board authorized additional share repurchases of $250 million

FORT LAUDERDALE, Fla., Oct. 24 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2007 third- quarter net income from continuing operations of $77 million or $0.39 per share, compared to year-ago net income from continuing operations of $85 million or $0.40 per share. Results for the third quarter of 2007 reflected a decline in new vehicle retail sales especially in California and Florida, partially offset by tax adjustments and continued share repurchases.

Third-quarter 2007 revenue totaled $4.6 billion, compared to $4.9 billion in the year-ago period, driven primarily by lower new vehicle sales. In the third-quarter, industry new vehicle retail sales for California and Florida were off approximately 11% compared to last year, based on CNW Research data. AutoNation's decline for new vehicle unit sales for California and Florida was 11%. Together, California and Florida represent approximately 50% of the Company's new vehicle business and 20% of the industry retail new vehicles sold in the U.S.

Commenting on the third-quarter, Mike Jackson, Chairman and Chief Executive Officer, said, "The third quarter was a challenging economic environment for new vehicle sales driven largely by continued weakness in the housing market in our key markets of Florida and California." Mr. Jackson also noted. "We expect to continue to see a challenging new vehicle retail market as long as the housing market difficulties persist. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term."

For the nine-month period ended September 30, 2007, the Company reported net income from continuing operations of $238 million or $1.16 per share, compared to $257 million or $1.09 per share in the prior year.

AutoNation also announced earlier it has signed an agreement to acquire Don Mackey BMW in Tucson, Arizona. The store will be renamed BMW Tucson after the anticipated completion of the transaction in January 2008. BMW Tucson will become the 22nd new vehicle franchise owned by AutoNation in Arizona and AutoNation's 13th BMW dealership nationwide. Terms of the all-cash transaction, which is subject to customary conditions and approvals, were not disclosed. AutoNation estimates that revenue generated by the dealership in 2007 will total approximately $45 million.

Separately, the Company's Board of Directors has authorized an additional $250 million for the repurchase of its common stock. The Company has $11.6 million remaining under the $500 million share repurchase program authorized in April 2007.

The third quarter conference call may be accessed at 11:00 a.m. Eastern Time today by phone at 800-230-1059 or via the Internet (audio webcast) at http://www.AutoNation.com by clicking on the "About Us" link then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 2:30 p.m. Eastern Time October 24, 2007 through October 31, 2007 by calling 800-475-6701 (access code # 885245).

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and has been named America's Most Admired Automotive Retailer by FORTUNE Magazine in five of the last six years. A component of the Standard and Poor's 500 Index, AutoNation owns and operates 325 new vehicle franchises in 16 states. For additional information, please visit http://corp.AutoNation.com or www.AutoNation.com, where more than 80,000 vehicles are available for sale along with AutoNation's E-Vehicle program.

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 long-term growth targets.

NON-GAAP FINANCIAL MEASURES

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 three and nine month periods ended September 30, 2007 and 2006, 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 CONDENSED CONSOLIDATED INCOME STATEMENTS
                      ($ in millions, except per share data)

                                       Three Months Ended   Nine Months Ended
                                         September 30,        September 30,
                                         2007      2006      2007       2006

        Revenue:
           New vehicle                 $2,681.0  $2,887.2  $7,750.8  $8,374.4
           Used vehicle                 1,094.8   1,151.8   3,275.8   3,421.7
           Parts and service              655.5     636.6   1,957.8   1,918.5
           Finance and insurance, net     153.4     162.4     452.7     477.3
           Other                           17.1      17.0      51.3      56.0
        Total revenue                   4,601.8   4,855.0  13,488.4  14,247.9

        Cost of sales:
           New vehicle                  2,492.0   2,675.6   7,202.8   7,757.9
           Used vehicle                 1,006.3   1,050.8   2,989.5   3,106.1
           Parts and service              368.7     356.1   1,100.8   1,071.6
           Other                            8.0       7.7      21.1      24.8
        Total cost of sales             3,875.0   4,090.2  11,314.2  11,960.4

        Gross profit                      726.8     764.8   2,174.2   2,287.5

        Selling, general and
         administrative expenses          518.1     541.4   1,550.6   1,612.0
        Depreciation and amortization      22.3      20.8      64.9      60.6
        Other expenses (income), net        0.1      (0.3)      1.6      (0.2)

        Operating income                  186.3     202.9     557.1     615.1

        Floorplan interest expense        (34.0)    (36.1)    (99.5)   (102.7)
        Other interest expense            (29.6)    (27.2)    (82.6)    (64.4)
        Other interest expense -
         senior note repurchases              -         -         -     (34.5)
        Interest income                     0.8       0.9       2.6       7.5
        Other gains (losses), net          (0.9)      0.5       0.1       1.2

        Income from continuing
         operations before income
         taxes                            122.6     141.0     377.7     422.2

        Provision for income taxes         46.1      55.6     139.4     165.7

        Net income from continuing
         operations                        76.5      85.4     238.3     256.5

        Loss from discontinued
         operations, net of income
         taxes                             (4.4)     (3.6)    (11.3)    (14.8)


        Net income                        $72.1     $81.8    $227.0    $241.7


        Diluted earnings (loss) per
         share:
           Continuing operations          $0.39     $0.40     $1.16     $1.09
           Discontinued operations       $(0.02)   $(0.02)   $(0.05)   $(0.06)

           Net income                     $0.37     $0.38     $1.10     $1.03


        Weighted average common shares
         outstanding                      197.5     215.0     205.6     235.0

        Common shares outstanding, net
         of treasury stock                183.9     207.7     183.9     207.7



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

                Operating Highlights        Three Months Ended September 30,
                                                                  $       %
                                             2007      2006  Variance Variance

          Revenue:
            New vehicle                    $2,681.0  $2,887.2  $(206.2)  (7.1)
              Retail used vehicle             869.2     922.9    (53.7)  (5.8)
              Wholesale                       225.6     228.9     (3.3)  (1.4)
            Used vehicle                    1,094.8   1,151.8    (57.0)  (4.9)
            Parts and service                 655.5     636.6     18.9    3.0
            Finance and insurance, net        153.4     162.4     (9.0)  (5.5)
            Other                              17.1      17.0      0.1
          Total revenue                    $4,601.8  $4,855.0  $(253.2)  (5.2)


          Gross profit:
            New vehicle                      $189.0    $211.6   $(22.6) (10.7)
              Retail used vehicle              89.7     103.2    (13.5) (13.1)
              Wholesale                        (1.2)     (2.2)     1.0
            Used vehicle                       88.5     101.0    (12.5) (12.4)
            Parts and service                 286.8     280.5      6.3    2.2
            Finance and insurance             153.4     162.4     (9.0)  (5.5)
            Other                               9.1       9.3     (0.2)
          Total gross profit                  726.8     764.8    (38.0)  (5.0)

          Selling, general and
           administrative expenses            518.1     541.4     23.3    4.3

          Depreciation and amortization        22.3      20.8     (1.5)
          Other expenses (income), net          0.1      (0.3)    (0.4)
           Operating income                   186.3     202.9    (16.6)  (8.2)

          Floorplan interest expense          (34.0)    (36.1)     2.1
          Other interest expense              (29.6)    (27.2)    (2.4)
          Other interest expense - senior
           note repurchases                       -         -        -
          Interest income                       0.8       0.9     (0.1)
          Other gains (losses), net            (0.9)      0.5     (1.4)
            Income from continuing
             operations before income
             taxes                           $122.6    $141.0   $(18.4) (13.0)

          Retail vehicle unit sales:
               New                           87,773    97,405   (9,632)  (9.9)
               Used                          53,441    58,091   (4,650)  (8.0)
                                            141,214   155,496  (14,282)  (9.2)

          Revenue per vehicle retailed:
               New                          $30,545   $29,641     $904    3.0
               Used                         $16,265   $15,887     $378    2.4

          Gross profit per vehicle
           retailed:
               New                           $2,153    $2,172     $(19)  (0.9)
               Used                          $1,678    $1,777     $(99)  (5.6)
               Finance and insurance         $1,086    $1,044      $42    4.0



              Operating Highlights         Nine Months Ended September 30,
                                                                $        %
                                          2007       2006    Variance Variance
         Revenue:
           New vehicle                   $7,750.8   $8,374.4  $(623.6)  (7.4)
             Retail used vehicle          2,618.9    2,748.5   (129.6)  (4.7)
             Wholesale                      656.9      673.2    (16.3)  (2.4)
           Used vehicle                   3,275.8    3,421.7   (145.9)  (4.3)
           Parts and service              1,957.8    1,918.5     39.3    2.0
           Finance and insurance, net       452.7      477.3    (24.6)  (5.2)
           Other                             51.3       56.0     (4.7)
         Total revenue                  $13,488.4  $14,247.9  $(759.5)  (5.3)


         Gross profit:
           New vehicle                      $548.0     $616.5   $(68.5) (11.1)
             Retail used vehicle             284.0      314.7    (30.7)  (9.8)
             Wholesale                         2.3        0.9      1.4
           Used vehicle                      286.3      315.6    (29.3)  (9.3)
           Parts and service                 857.0      846.9     10.1    1.2
           Finance and insurance             452.7      477.3    (24.6)  (5.2)
           Other                              30.2       31.2     (1.0)
         Total gross profit                2,174.2    2,287.5   (113.3)  (5.0)

         Selling, general and
          administrative expenses          1,550.6    1,612.0     61.4    3.8

         Depreciation and amortization        64.9       60.6     (4.3)
         Other expenses (income), net          1.6       (0.2)    (1.8)
          Operating income                   557.1      615.1    (58.0)  (9.4)

         Floorplan interest expense          (99.5)    (102.7)     3.2
         Other interest expense              (82.6)     (64.4)   (18.2)
         Other interest expense - senior
          note repurchases                       -      (34.5)    34.5
         Interest income                       2.6        7.5     (4.9)
         Other gains (losses), net             0.1        1.2     (1.1)
           Income from continuing
            operations before income
            taxes                           $377.7     $422.2   $(44.5) (10.5)

         Retail vehicle unit sales:
              New                          252,190    280,423  (28,233) (10.1)
              Used                         159,811    171,344  (11,533)  (6.7)
                                           412,001    451,767  (39,766)  (8.8)

         Revenue per vehicle retailed:
              New                          $30,734    $29,863     $871    2.9
              Used                         $16,387    $16,041     $346    2.2

         Gross profit per vehicle
          retailed:
              New                           $2,173     $2,198     $(25)  (1.1)
              Used                          $1,777     $1,837     $(60)  (3.3)
              Finance and insurance         $1,099     $1,057      $42    4.0



                                        Three Months Ended   Nine Months Ended
               Operating Percentages       September 30,       September 30,
                                          %  2007  %  2006   %  2007  %  2006

          Revenue mix percentages:
            New vehicle                      58.3     59.5     57.5     58.8
            Used vehicle                     23.8     23.7     24.3     24.0
            Parts and service                14.2     13.1     14.5     13.5
            Finance and insurance, net        3.3      3.3      3.4      3.3
            Other                             0.4      0.4      0.3      0.4
                                            100.0    100.0    100.0    100.0

          Gross profit mix percentages:
            New vehicle                      26.0     27.7     25.2     27.0
            Used vehicle                     12.2     13.2     13.2     13.8
            Parts and service                39.5     36.7     39.4     37.0
            Finance and insurance            21.1     21.2     20.8     20.9
            Other                             1.2      1.2      1.4      1.3
                                            100.0    100.0    100.0    100.0

          Operating items as a percentage
           of revenue:
            Gross profit:
               New vehicle                    7.0      7.3      7.1      7.4
               Used vehicle - retail         10.3     11.2     10.8     11.4
               Parts and service             43.8     44.1     43.8     44.1
               Total                         15.8     15.8     16.1     16.1
            Selling, general and
             administrative expenses         11.3     11.2     11.5     11.3
            Operating income                  4.0      4.2      4.1      4.3

          Operating items as a percentage
           of total gross profit:
            Selling, general and
             administrative expenses         71.3     70.8     71.3     70.5
            Operating income                 25.6     26.5     25.6     26.9



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

    Capital Expenditures/Stock          Three Months Ended  Nine Months Ended
     Repurchases                           September 30,     September 30,
                                            2007    2006    2007      2006

         Capital expenditures              $49.8   $87.6   $129.0    $136.5
         Acquisitions                       $3.4   $21.1     $4.2     $88.5
         Proceeds from exercises of stock
          options                           $3.3   $10.5    $91.9     $62.1
         Stock repurchases:
           Aggregate purchase price       $340.9  $118.7   $580.8  $1,337.3
           Shares repurchased (in
            millions)                       18.2     6.0     29.3      59.1



        Floorplan Assistance and   Three Months Ended     Nine Months Ended
         Expense                     September 30,          September 30,
                                   2007   2006 Variance  2007   2006  Variance

        Floorplan assistance
         earned (included in cost
         of sales)                 $28.0  $29.0  $(1.0)  $77.2   $84.0  $(6.8)
        Floorplan interest expense (34.0) (36.1)   2.1   (99.5) (102.7)   3.2

          Net inventory carrying
           cost                    $(6.0) $(7.1)  $1.1  $(22.3) $(18.7) $(3.6)



      Balance Sheet and Other Highlights

                                    September 30,   December 31, September 30,
                                       2007            2006          2006

         Cash and cash equivalents       $28.4           $52.8        $31.0
         Inventory                    $2,230.1        $2,306.3     $2,299.7
         Total floorplan notes
          payable                     $2,033.7        $2,214.2     $2,065.7
         Non-vehicle debt             $1,731.7        $1,571.5     $1,501.8
         Equity                       $3,476.8        $3,712.7     $3,660.5
         New days supply (industry
          standard of selling
          days, including fleet)       49 days         51 days      51 days

         Used days supply (trailing
          30 days)                     43 days         42 days      38 days



    Brand Mix - New Vehicle Revenue %
                             Three Months Ended        Nine Months Ended
                                September 30,             September 30,
                             % 2007      % 2006        % 2007       % 2006

    Detroit 3:
      Ford, Lincoln-Mercury   14.0         17.6         14.6         17.2
      Chevrolet, Pontiac,
       Buick, Cadillac, GMC   13.9         14.6         13.5         14.0
      Chrysler, Jeep, Dodge    7.4          7.0          7.1          7.5
        Detroit 3 total       35.3         39.2         35.2         38.7

    Import Premium Luxury:
      Mercedes                11.4         11.1         11.6         11.3
      BMW                      6.0          4.4          6.2          4.8
      Lexus                    3.6          3.1          3.8          3.3
      Other premium luxury
       (Land Rover, Porsche)   2.9          2.2          3.0          2.5
        Premium Luxury total  23.9         20.8         24.6         21.9

    Volume Imports:
      Honda                    9.5          8.7          9.2          8.7
      Toyota                  15.7         15.1         15.4         14.4
      Nissan                   9.6          9.7          9.5         10.0
      Other imports            6.0          6.5          6.1          6.3
        Import total          40.8         40.0         40.2         39.4

                             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 September 30,
                                                             Diluted Earnings
                                               Net Income        Per Share
                                             2007     2006     2007     2006

         As reported                         $72.1    $81.8    $0.37   $0.38

           Discontinued operations, net of
            income taxes                       4.4      3.6    $0.02   $0.02


         From continuing operations, as
          reported                            76.5     85.4   $ 0.39   $0.40
           Income tax adjustments             (3.4)       -   $(0.02)  $   -

         Adjusted                            $73.1    $85.4    $0.37   $0.40


                                            Nine Months Ended September 30,
                                               Net Income    Diluted Earnings
                                                                Per Share
                                             2007     2006     2007     2006

         As reported                        $227.0   $241.7    $1.10   $1.03

           Discontinued operations, net of
            income taxes                      11.3     14.8    $0.05   $0.06
         From continuing operations, as
          reported                           238.3    256.5    $1.16   $1.09


           Income tax adjustments            (12.0)       -   $(0.06)  $   -
           Senior note repurchases               -     20.9   $    -   $0.09

         Adjusted                           $226.3   $277.4   $ 1.10   $1.18

         * Please refer to the "Non-GAAP Financial Measures" section of the
         Press Release.



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

    U.S. light vehicle annual unit sales    intensely competitive, low 16
                                             million units

    Continued opportunistic redeployment    share repurchase, capital
     of cash flow                            expenditures and acquisitions

    Targeted return on incremental          approximately 15% after-tax
     invested capital



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

                 Operating Highlights        Three Months Ended September 30,
                                                                 $       %
                                             2007      2006  Variance Variance
           Revenue:
               New vehicle                 $2,633.5  $2,887.2  $(253.7)  (8.8)
                 Retail used vehicle          844.5     922.9    (78.4)  (8.5)
                 Wholesale                    220.3     228.4     (8.1)  (3.5)
               Used vehicle                 1,064.8   1,151.3    (86.5)  (7.5)
               Parts and service              637.8     636.6      1.2    0.2
               Finance and insurance, net     152.3     163.0    (10.7)  (6.6)
               Other                            5.6       6.9     (1.3)
           Total revenue                   $4,494.0  $4,845.0  $(351.0)  (7.2)

           Gross profit:
               New vehicle                   $185.1    $211.7   $(26.6) (12.6)
                 Retail used vehicle           87.7     103.2    (15.5) (15.0)
                 Wholesale                     (1.7)     (2.8)     1.1
               Used vehicle                    86.0     100.4    (14.4) (14.3)
               Parts and service              278.1     280.0     (1.9)  (0.7)
               Finance and insurance          152.3     163.0    (10.7)  (6.6)
               Other                            6.0       6.1     (0.1)
           Total gross profit                $707.5    $761.2   $(53.7)  (7.1)

           Retail vehicle unit sales:
                  New                        87,209    97,405  (10,196) (10.5)
                  Used                       53,043    58,091   (5,048)  (8.7)
                                            140,252   155,496  (15,244)  (9.8)

           Revenue per vehicle retailed:
                  New                       $30,198   $29,641     $557    1.9
                  Used                      $15,921   $15,887      $34    0.2

           Gross profit per vehicle
            retailed:
                  New                        $2,122    $2,173     $(51)  (2.3)
                  Used                       $1,653    $1,777    $(124)  (7.0)
                  Finance and insurance      $1,086    $1,048      $38    3.6



                Operating Highlights        Nine Months Ended September 30,
                                                                 $        %
                                            2007      2006   Variance Variance
           Revenue:
               New vehicle                $7,647.0   $8,374.4  $(727.4)  (8.7)
                 Retail used vehicle       2,580.1    2,748.5   (168.4)  (6.1)
                 Wholesale                   641.9      671.4    (29.5)  (4.4)
               Used vehicle                3,222.0    3,419.9   (197.9)  (5.8)
               Parts and service           1,923.3    1,918.6      4.7    0.2
               Finance and insurance,
                net                          452.2      478.2    (26.0)  (5.4)
               Other                          19.1       21.9     (2.8)
           Total revenue                 $13,263.6  $14,213.0  $(949.4)  (6.7)

           Gross profit:
               New vehicle                  $539.0     $616.5   $(77.5) (12.6)
                 Retail used vehicle         280.9      314.6    (33.7) (10.7)
                 Wholesale                     0.5       (0.9)     1.4
               Used vehicle                  281.4      313.7    (32.3) (10.3)
               Parts and service             839.3      845.2     (5.9)  (0.7)
               Finance and insurance         452.2      478.2    (26.0)  (5.4)
               Other                          19.5       18.6      0.9
           Total gross profit             $2,131.4   $2,272.2  $(140.8)  (6.2)

           Retail vehicle unit sales:
                  New                      250,629    280,423  (29,794) (10.6)
                  Used                     159,038    171,344  (12,306)  (7.2)
                                           409,667    451,767  (42,100)  (9.3)

           Revenue per vehicle retailed:
                  New                      $30,511    $29,863     $648    2.2
                  Used                     $16,223    $16,041     $182    1.1

           Gross profit per vehicle
            retailed:
                  New                       $2,151     $2,198     $(47)  (2.1)
                  Used                      $1,766     $1,836     $(70)  (3.8)
                  Finance and insurance     $1,104     $1,059      $45    4.2



                                        Three Months Ended  Nine Months Ended
                 Operating Percentages     September 30,      September 30,
                                          %  2007  %  2006   %  2007  %  2006

            Revenue mix percentages:
                New vehicle                  58.6     59.6     57.7     58.9
                Used vehicle                 23.7     23.8     24.3     24.1
                Parts and service            14.2     13.1     14.5     13.5
                Finance and insurance,
                 net                          3.4      3.4      3.4      3.4
                Other                         0.1      0.1      0.1      0.1
                                            100.0    100.0    100.0    100.0


            Gross profit mix percentages:
                New vehicle                  26.2     27.8     25.3     27.1
                Used vehicle                 12.2     13.2     13.2     13.8
                Parts and service            39.3     36.8     39.4     37.2
                Finance and insurance        21.5     21.4     21.2     21.0
                Other                         0.8      0.8      0.9      0.9
                                            100.0    100.0    100.0    100.0

            Operating items as a
             percentage of revenue:
                Gross Profit:
                   New vehicle                7.0      7.3      7.0      7.4
                   Used vehicle - retail     10.4     11.2     10.9     11.4
                   Parts and service         43.6     44.0     43.6     44.1
                   Total                     15.7     15.7     16.1     16.0

SOURCE AutoNation, Inc.

CONTACT:
Marc Cannon of AutoNation, Inc.
+1-954-769-3146
cannonm@autonation.com

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