Good morning, ladies and gentlemen, and welcome to Group 1 Automotive 2010 Third Quarter Financial Results Conference Call. Please be advised that this call is being recorded. ':

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Thank you, Lance, and good morning, everyone. I am pleased to report that our results for the third quarter of 2010 were extremely positive in almost every area. Most noteworthy was the continuation of very powerful sales performance in almost every area of our business. This sales performance generated an overall revenue increase of more than 17% for the quarter, which continues to leverage the aggressive cost reduction actions our company took last year. I am also pleased at our major balance sheet improvements throughout the first nine months of this year. Our current cash position is extremely strong for a company of our size. And our long-term debt to equity position is one of the best in our recent corporate history. John will provide more details during his presentation. As I just mentioned, our sales performance remained strong in the third quarter. Retail used vehicle and parts and service performances were exceptional and well beyond our projections. In the current challenging economic conditions, many customers see more value in used vehicles. We have been capitalizing on this trend as evidenced by our third quarter retail used vehicle revenue increase of 33.7%; 29% on a same-store basis. This substantial increase was driven by a 24% lift in retail used vehicle unit sales on a consolidated basis and 21% more unit sales on a same-store basis. ': With that comparison in mind, industry retail sales actually decreased slightly during the third quarter whereas our new vehicle unit sales increased 2% on a same-store basis and 5.3% on a consolidated basis. After nine months in the calendar year, our new vehicle revenues are up 17.5% on a same-store basis. ': Biggest factors currently affecting these margin levels are the overall competitiveness of the market and extremely low vehicle margins for several volume…

Thank you, Earl, and good morning, everyone. For the third quarter of 2010, our adjusted net income increased to 19.3 million or $0.84 per diluted share. This result excludes $1 million after-tax non-cash asset impairment charges and a 761,000 after-tax gain on the sale of a non-operating real estate holding. On a comparable basis, adjusted net income increased 2.5 million or 14.6% from 16.8 million in the third quarter of 2009, which excludes the following: a 461,000 non-cash after-tax impairment charge primarily related to our real estate holdings that are held for sale; a 393,000 after-tax gain on the reduction of a portion of our 2.25 convertible notes; and a 1.6 million after-tax gain for an income tax benefit related to tax elections that reduced the tax liability for the prior period items. As a reminder, comparisons to the third quarter of 2009 for most of our operating metrics were made tougher by the significant impact that U.S. Government sponsored Cash for Clunkers program had on our results last year. For example, the Cash for Clunkers program drove heavy new and used retail vehicle volumes and significantly skewed the mix of vehicles sold towards small cars. The additional incentive money and the short-term spike in demand also significantly inflated new and used margins during the program period. During the third quarter, on a consolidated basis, revenues increased 215 million or 17.2% to 1.5 billion compared to the same period a year ago, reflecting increases in each of our business segments. Specifically, our new vehicle revenues improved 12.9% to 822.1 million on 5.3% more units, and used vehicle retail revenues increased 33.7% to 340.6 million on 24.2% more units. New and used vehicle retail gross margins declined 100 and 130 basis points respectively. Given the difficult comparisons from the Cash for…

': ': Our team has worked hard during the last two years to make these improvements and is looking forward to demonstrating the full leverage of these efforts as sales increase in the coming years. ':

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No, I think the assumption you implied is true, over time some of this used demand will morph back into the new vehicle market and price relativities will push some of that as well as increasing consumer confidence, but right now consumers are just very cautious and very practical, and there are a lot of very good high quality customers that are opting for used instead of new right now because of economic uncertainty or housing issues or unemployment issues or whatever the major macroeconomic factors are. But over time, I think clearly some of that demand will get back over on the new vehicle side.

And then just one last question on parts and service. You guys had a good performance in the quarter. And it was I think a lot better than some of your peers to-date. I was just curious what you are seeing in your local markets versus competition and if competition has really been taken out as dealerships have been closed? Because it appears there has been a drastic reduction in the number of service bays even though there might be an aggregate reduction in parts and service business, the cars per service bay may have gone up in some of the markets that you operate in. Have you seen anything like that, are there any other sort of exogenous factors that are explaining the strength in your parts and service business?

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And I would add to that, not only the 7% growth but also we grew margins in what is the competitive environment that Earl described at 54.3%. To be able to grow the margins 60 basis points on a sequential basis, we feel pretty good about that.

Our next question comes from the Rick Nelson with Stephens.

Congratulations on a really nice quarter. Can you, Earl, comment on the acquisitions and how you evaluate that versus alternatives of debt pay down, et cetera?

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Thank you. Where do you stand with Toyota today on the acquisition front? Do you have the green light there?

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Right. What do you think is driving that? Are the incentives any more aggressive?

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': It does appear that rental companies and fleets are buying a lot more cars all of a sudden, and that could put a little softness into some parts of the used vehicle pricing market. But, overall, I would hope we could hold at a minimum somewhere closer to current margins we have and work it up from there.

Our next question comes from Adi Oberoi with Goldman Sachs.

I just had a quick question on used margins, just following up on some of the previous comments that you have made. So is it fair to say that acquisition, high acquisition cost is the only thing that is holding you guys from the double-digit margins that you guys used to post a few quarters back, on the used side?

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Got it. And on the collision business, your collision business was up 10% year-on-year. Are you guys seeing some deferred maintenance in that segment coming back?

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Yes. That would be our goal and our priority.

Our next question comes from Matt Nemer with Wells Fargo.

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And just remind us are there any components in service that are variable related to the current quarter new and used vehicle business, i.e., PDI or anything like that?

Matt, this is John again. On a revenue basis, no. The only benefit within parts and service is it does help improve the margin results. But there is no revenue impact for us.

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And actually if I could just sneak one more in, as we look to 2011, Earl, could you just maybe give us a quick preview of what your strategic priorities are in terms of maybe operating changes or enhancements that you plan on making to the business?

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Our next question comes from Scott Stember with Sidoti & Company. Scott Stember - Sidoti & Company: Can you just talk about some of your bigger brands, how they performed in the quarter, such as Toyota, Nissan and BMW?

Yeah, Scott, Toyota sales for the quarter were down 2.9% and were up 10.2% for the year. Our best sales increases were Mercedes at 24.5%; General Motors at 20%; Ford at 13.4%; Nissan up 5%; Honda up 1.8%; BMW up 1.9%. Our Chrysler business was down 10.7%. That covers most of the major brands. Scott Stember - Sidoti & Company: Great. And can you talk about some of your geographies, namely Texas?

': ': Scott Stember - Sidoti & Company: And, John, I missed what the parts and service of the customer pay same-store sales increase was?

Yeah, on a customer pay basis, we were up 4.9%. Scott Stember - Sidoti & Company: ': ': ':

In parts and service? Scott Stember - Sidoti & Company: Yes.

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Our next question comes from Himanshu Patel with JPMorgan.

I am wondering if you could go back a little bit to the discussion on used vehicle sales outlook going forward. If you sort of assume new vehicle sales do grow at a nice clip of 10% a year or so. Is there a general rule of thumb that you are thinking about as to the pace of used car sales growth in that sort of context?

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Okay. And then separate question, any shift in the last quarter or even in the last couple of months in how deep the various captives are starting to buy now?

Not that I have been aware of, though the credit performance in the third quarter and so far this month has been fairly stable with our brands. So, clearly much better than it was a year ago, but no step function changes that I have witnessed.

And, I guess, Earl, maybe, if you could just elaborate on the subprime opportunity. I mean do you feel like as it particularly pertains to the new car market, is that a segment where the customer is just underserved right now and should someone get into that market more aggressively? Could that help some of the volumes that you see on the new car side?

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Our next question comes from Ravi Shanker with Morgan Stanley.

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The overwhelming factor was the gross profit we put on the books. And, again, some of it was not done at a high margin percentage rate. But have 30% revenue increases on used and 13% on new and so forth. That was the real key, while not adding the expense back in quite as quickly. ':

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Right. And then something else you said early in this call was you own about a third of your real estate right now. Do you have a long-term target there and how do you see that evolving in the next few years?

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We do have a follow-up question from Adi Oberoi with Goldman Sachs.

Sorry, can you hear me? This is Pat Archambault here from Goldman. Just wanted to follow up actually on the geography question, could you just give us a little bit of an overview how California, sort of Florida, you did mention Texas already, but how I guess the Eastern region, Florida and California also trended?

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Pat, just I guess to add a little flavor to that, this is John, we saw pretty good strength along the Atlantic Coast, New York, and then the Gulf Coast. We saw good strength in Tulsa in particular. Central Texas, Dallas and California, which Earl mentioned, would be basically the markets I would highlight as areas of strength.

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Thanks, everyone for joining us today. We look forward to updating you on our 2010 fourth quarter earnings results in February. Have a good day.

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