UPDATE 2-AutoNation reports earnings beat, Toyota progress

* Q4 EPS ex-items 29 cents vs Street view 27 cents

* Revenue rises 8 pct to $2.8 bln; Street view $2.67 bln

* AutoNation shares up 1.4 pct in premarket trade
(Adds details from CEO interview on Toyota repair program,
outlook, byline)

By David Bailey

DETROIT, Feb 11 (BestGrowthStock) – AutoNation Inc (AN.N: ), the
largest U.S. auto dealership group, on Thursday posted
quarterly results that exceeded analysts’ expectations and said
Toyota Motor Corp was making progress in its repair program.

The dealership group, whose shares were up 1.4 percent in
premarket trade, also said that a fourth-quarter increase in
new vehicle sales revenue, its first in five years, provided
evidence that the U.S. economy was in a gradual recovery.

AutoNation expects the impact on its earnings from Toyota’s
(7203.T: ) massive recall campaign to be less than 1 cent per
share in the first quarter and nil in the second quarter, Chief
Executive Mike Jackson said.

“February will be a disrupted month from a sales point of
view,” Jackson told Reuters in a telephone interview.

However, sales should hit their “stride again in March,
April and in that period of time Toyota should have recovered
the majority of share it has lost during this disruptive
period,” Jackson said.

He said AutoNation had already repaired accelerator pedals
for customers who showed the greatest concern and had repaired
about 25 percent of the dealer Toyota inventory and resumed
sales of some new Toyota vehicles.

AutoNation expects to have completed repairs on all of its
dealer inventory within a week to 10 days, Jackson said.

“It will take several months to repair all of those
vehicles of customers who schedule appointments and come in and
then we will have to have a significant effort to try to
encourage everyone to come in,” Jackson said.

Net income slipped to $61.7 million, or 35 cents per share,
in the fourth quarter, from $67.1 million, or 38 cents per
share, a year earlier. Revenue rose 8 percent to $2.8 billion.

Excluding one-time items, AutoNation reported earnings from
continuing operations of 29 cents per share. Analysts on
average expected 27 cents, according to Thomson Reuters
I/B/E/S.

AutoNation reported a fourth-quarter year-over-year
increase in new vehicle sales revenue for the first time in
five years, providing more evidence that the U.S. economy is in
recovery, Jackson said.

“We have a bottom,” he said. “The first signs of the
recovery have begun. The absolute level of sales are still low
in historical terms, but they are moving in the right
direction.”

AutoNation expects U.S. auto industry sales of about 11.5
million vehicles in 2010, representing about a 15 percent
increase over 2009 excluding the U.S. government “cash for
clunkers” program that propped up sales last year, Jackson
said.

Shares of AutoNation were at $18.49 in premarket trade, up
from $18.43 at the close Wednesday on the New York Stock
Exchange.

Stock Market Trading

(Reporting by David Bailey; editing by John Wallace, Dave
Zimmerman)

UPDATE 2-AutoNation reports earnings beat, Toyota progress