UPDATE 3-AutoNation earnings up, sees continued improvement

* Sees broad-based US auto industry sales recovery

* Continuing ops earnings $0.34/share vs consensus $0.32

* Revenue rose 18.6 percent to $2.85 billion

* Shares down more than 2 pct

(Recasts; adds comments from analysts conference call)

By Bernie Woodall

DETROIT, April 22 (BestGrowthStock) – AutoNation Inc (AN.N: ) posted
higher-than-expected quarterly earnings on Thursday and said a
U.S. auto industry recovery was well under way, but it will
take three or four years to return to pre-recession levels.

AutoNation, the largest U.S. auto dealership group, said on
Thursday new and used vehicle sales rose sharply in the quarter
and that economic factors such as credit, employment, housing
and stock and bond markets were stabilizing or improving.

“This recovery will continue throughout the year because
all the major structural issues that we look at are improving,”
Chief Executive Officer Mike Jackson told Reuters.

Jackson said annual U.S. industrywide sales will return to
16 million vehicles — the 2007 level — within four years.

Housing will be a key precursor to a return to those
pre-recession levels, Jackson said.

“You have to watch these housing figures closely,” Jackson
said in a call with industry analysts. “When you see the
combination of increased unit volume plus the beginning of
valuations going up and the resumption of new housing
construction, which will be crucial for truck sales. That’s
what we’re watching for.”

AutoNation left its full-year U.S. auto industry sales
forecast intact at about 11.5 million to 12 million vehicles.

AutoNation’s shares edged up more than 2 percent by midday
on Thursday, to $20.30 per share.

Net income rose to $55.2 million, or 32 cents per share, in
the first quarter from $34.6 million, or 20 cents per share, a
year earlier.

AutoNation reported earnings of 34 cents per share from
continuing operations. Analysts on average expected a profit of
32 cents on that basis, according to Thomson Reuters I/B/E/S.

Revenue rose 18.6 percent to $2.85 billion, beating
analysts’ estimates of $2.77 billion.

AutoNation’s sales of Toyota vehicles jumped 6 percent in
the quarter from a year earlier, boosted by incentives that
started in March, Jackson said.

Jackson said another indication of what he called “a real
recovery” is that, for the second consecutive quarter, sales
were up by double-digits in every region where AutoNation
operates, led by Florida.

About 34 percent of revenue for AutoNation, based in Fort
Lauderdale, Florida, are from its franchises there.

Sales were up 29 percent in Florida and up 12 percent in
California, said Mike Maronne, chief operating officer for
AutoNation. About 30 percent of the group’s stores are in
Florida and 20 percent each in Texas and California.

Sales in Florida are linked to home sales in other regions.
If consumers cannot sell homes outside Florida, they are less
likely to move to the Sunshine State, Jackson said.

Toyota Motor Corp (7203.T: ) added broad incentives to try to
reverse a two-month sales slide linked to massive safety
recalls in the United States that also halted some production.
The incentives, a record level for Toyota, sparked a 41 percent
jump in U.S. sales last month.

Jackson expected Toyota to continue incentives close to
current levels for at least the next two months, but to taper
off later in the year.

U.S. auto sales have been declining for four years and hit
10.4 million vehicles in 2009, the lowest since the early
1980s, during the severe recession. The industry had sold
nearly 17 million units as recently as 2005.

Analysts and industry experts expect a gradual recovery
starting in 2010.

“It still will be a long journey for the industry back to
16 million units … but it is under way,” Jackson said, adding
that it could be three or four years.

AutoNation shares were down 2.26 percent at $20.30 in
afternoon trading.

Stock Market Research Tools

(Additional reporting by David Bailey; editing by Lisa Von
Ahn and Andre Grenon)

UPDATE 3-AutoNation earnings up, sees continued improvement