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AUTONATION, INC.

AUTONATION, INC.

AutoNation Tower

110 SE Sixth Street

Fort Lauderdale, FL 33301

September 10, 2008

VIA EDGAR SUBMISSION

H. Christopher Owings

Assistant Director

Division of Corporation Finance

Mail Stop 3561

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    RE:

    AutoNation, Inc.

Form 10-K for Fiscal Year Ended December 31, 2007

Filed February 28, 2008

File No. 001-13107

Dear Mr. Owings:

     This letter responds to the comments that AutoNation, Inc. (the “Company”) received from the
Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated
August 5, 2008. For your convenience, we have set forth each of the Staff’s comments below
followed by our response to each comment.

Form 10-K for Fiscal Year Ended December 31, 2007

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies and Estimates, page 23

    1.

    We have reviewed your response to comment 1 in our letter dated April 17, 2008. Please
address the following items in your response:

    •

    Unlike your proposed goodwill critical accounting policy, we note that your proposed
franchise rights critical accounting policy in Attachment 2 does not indicate whether or
not an impairment charge would have been necessary had your discounted cash flow model
yielded a hypothetical 10% lower value. Please tell us and disclose in future filings if a
hypothetical 10% decline in your franchise rights valuations would have resulted in an
impairment charge during the historical periods presented and, if so, quantify the
hypothetical impairment charge. If you do not believe this disclosure would be useful or
appropriate, please explain your views to us in reasonable detail.

    •

    Regarding the valuation of your inventory and in light of the current challenges in the
automotive retail industry and the materiality of inventory to your balance sheet, please
consider including information similar to that in your response as to why material
inventory impairments have historically not been necessary. We believe this information
should be included somewhere appropriate in your filing since it would enable investors to
see the company through the eyes of management and provide them information about the
quality of, and potential variability of, your earnings and cash flow, so that investors
can ascertain the likelihood that past performance is indicative of future performance.

    •

    Regarding your reserve for chargebacks, it remains unclear to us that this reserve is
not subject to Rule 12-09 of Regulation S-X. Based on your disclosures in Note 1 to your
financial statements, it appears that you must refund at least a portion of the commission
revenues that you earn if the underlying contracts upon which you earned commission are
terminated prior to their expirations, and these estimated refunds are your chargebacks.
Based on this description, it appears to us that your chargeback reserve is effectively a
sales return reserve. Additionally, it appears that these chargebacks have a significant
impact on your results. For example, we note that the provision declined by $10.4 million
from fiscal 2006 to 2007, and that change represented approximately 12% of the change in
operating income for the same periods. Based on the above, it appears to us that you
should present a rollforward of this reserve either in your footnotes or in Schedule II,
and it also appears that any significant impact on your results, such as the impact on
operating income noted above, should be clearly discussed in your analysis of results of
operations within MD&A.

    Response:

    Franchise Rights

    Our franchise rights, which related to 28 franchises and totaled approximately $312 million at
June 30, 2007, are evaluated on a franchise-by-franchise basis. We note that we recorded
impairment charges of $2.2 million during 2007 related to rights under one franchise agreement.
If the fair value of each of our franchise rights had been determined to be a hypothetical 10%
lower as of the valuation date of June 30, 2007, the resulting incremental impairment charge
would have been less than $0.6 million. In future filings, we will discuss the effect of a
hypothetical 10% decline in the fair value of our franchise rights.

    Inventory

    We will include in future filings information similar to the information provided to the Staff
in our letter dated May 30, 2008, regarding inventory levels and why material inventory
impairments have historically not been necessary.

    Chargeback Liabilities

    We will include a rollforward of our estimated liability for each of the three years presented
in our financial statements either in our footnotes or in Schedule II. We will also discuss
changes in the chargeback liabilities that have a significant impact on our results of
operations in our MD&A.

2

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets, net, page 52

    2.

    We have reviewed your response to comment 3 in our letter dated April 17, 2008. We also
acknowledge your segment-related response included in your response letter filed on January 6,
2006 during our prior review of your December 31, 2004 Form 10-K. Given that internal
reporting often changes over time, and to help us better understand your conclusions regarding
your goodwill impairment testing, please provide us with the following updated information
regarding your operating segments:

    •

    Please provide us with an updated description of how your company is structured and how
operating performance is evaluated to help us better understand how you determine that the
company has only one operating segment under the guidance in SFAS 131.

    •

    If your chief operating decision maker (“CODM”) solely consists of your CEO, please
tell us how you considered whether other members of management were part of your CODM.

    •

    Please explain the nature and contents of the financial information regularly reviewed
by your CODM for assessing performance and allocating resources, and provide us with a
representative copy of these reports. We note that these reports previously consisted of a
quarterly analyst book, monthly operating results, quarterly operating results, and peer
performance reports.

    •

    If discrete financial information below the consolidated level is included in the
reports reviewed by your CODM, please specifically address how you considered whether this
lower level of information represented operating segments.

    •

    Lastly, please describe the processes and persons involved in deciding to open or close
individual stores.

    Response:

    Subsequent to the filing of our response letter dated January 6, 2006, we concluded on each of
our annual goodwill impairment test dates that there had been no significant changes in the
Company’s operating and reporting structure and that the Company had one operating segment
under the guidance in SFAS 131. Below please find a description of such structure from January
6, 2006 through the quarter ended June 30, 2008, the period in which we completed our most
recent goodwill impairment testing.

    Description of Company Structure

    Our Chief Executive Officer (“CEO”) managed our business operations using a matrix form of
organization. The matrix form of organization included (1) our field management structure,
which was organized into regions and markets and consisted of our region presidents, market
presidents, and general managers, and (2) our functional management structure, which was led by
our Senior Vice President of Sales and supported our new vehicles, used vehicles, parts and
service, and finance and insurance product lines. At the direction of our CEO, our Chief
Operating Officer (“COO”),
together with our functional leaders, region presidents, market presidents, and general
managers, executed our business strategy using standardized processes and centralized
functions.

3

    Our field management structure was segregated into manageable geographic subsets for purposes
of achieving efficient management of our store operations and executing centralized initiatives
at our individual stores, and was not based on any special economic circumstances at any level
of our organization. Our field management structure generally managed our day-to-day
operations and executed Company-wide initiatives in furtherance of our business strategy, as
set by our CEO with input from our COO and other members of senior management.

    We continued to centralize our business operations through the implementation of management
practices such as:

    •

    centrally-located dealer management and other systems utilized by the stores,

    •

    centralized cash management, floorplan financing, and other financing and investing
activities,

    •

    standardized accounting policies and procedures,

    •

    centralized capital expenditure plans,

    •

    centralized store acquisition and divestiture plans,

    •

    common inventory control procedures,

    •

    common compensation plans,

    •

    common marketing plans, and

    •

    standardized sales practices.

    Additionally, we continued to centralize certain accounting and administrative functions for
all stores into a shared services center.

    The field management structure was changeable and could be configured to meet the Company’s
needs. For example, prior to 2004, our stores were organized into ten districts, which were
reconfigured into five regions in 2004, and subsequently reconfigured into four regions in
2007. These changes were made with minimal or no disruptions to store operations. We also
changed our market structure periodically. This flexibility in structure was made possible
since our store operations were not impacted by changes in the field management structure. Our
stores offered the same product lines and used standardized processes and centralized
functions.

    Our functional management structure supported our new vehicles, used vehicles, parts and
service, and finance and insurance product lines across all of our stores. These product lines
were financially interdependent. For example, new vehicle sales provided trade-in vehicles
that could be sold as used vehicles. New and used vehicle sales generated finance and
insurance revenue, as well as parts and service revenue.

4

    Paragraph 10 of SFAS 131 defines an operating segment as a component of an enterprise:

    (a)

    That engages in business activities from which it may earn revenues and
incur expenses (including revenues and expenses relating to transactions with other
components of the same enterprise),

    (b)

    Whose operating results are regularly reviewed by the enterprise’s chief
operating decision maker to make decisions about resources to be allocated to the
segment and assess its performance, and

    (c)

    For which discrete financial information is available.

    We concluded that our CODM (as defined below) allocated resources and evaluated our operating
performance based primarily on consolidated financial information and that, as a result, we had
one operating and reporting segment, automotive retailing, under the guidance in SFAS 131. For
a further discussion of the financial information regularly reviewed by our CEO, please see
“Financial Information Reviewed by CODM” below.

    Determination of Chief Operating Decision Maker

    Our CEO (also referred to as our “CODM”) was our “chief operating decision maker” under SFAS
131. We considered whether other members of management were part of our CODM. Although our
CEO consulted with our COO, Chief Financial Officer, and General Counsel, our CEO (along with
the Company’s Board of Directors, as required) decided where to lead our Company with respect
to significant strategic, operational, financial, and resource allocation matters. Our COO
executed these decisions through our matrix form of organization. The field and functional
management structures were not major contributing factors in this process.

    Financial Information Reviewed by CODM

    In assessing performance and deciding how to allocate resources, our CODM regularly reviewed
consolidated financial information for the Company. Our CODM also considered other
information, including information regarding the U.S. economy and the automotive retail
industry. Our CODM also periodically received selected disaggregated financial information to
assist in analyzing our consolidated operating results or evaluating certain projects.

    The financial information reviewed by our CODM included:

    •

    Flash Report, which summarized our consolidated income and new and used units
retailed for the monthly and quarterly periods compared to forecasted, budgeted, and
prior year results.

    •

    Monthly Operating Summary, which summarized monthly operating results for the
Company.

    •

    Board of Directors Review Package, which was developed for our Board of Directors and
summarized quarterly financial information for the Company and automotive retail
industry.

    •

    Earnings Release Conference Call Preparation Book, which primarily contained
consolidated financial information and other financial analyses to provide the CODM with
supporting information for earnings release conference calls.

5

    •

    Quarterly Analyst Book, which primarily contained consolidated income statement and
selected balance sheet information, as well as other financial analyses. This book was
compiled to provide the CODM with supporting information for board meetings, analyst
calls, and interviews.

    •

    Monthly Operating Results (“MOR Reports”) and Quarterly Operating Results (“QOR
Reports”), which contained selected consolidated financial information, as well as
disaggregated financial information based on product lines, brands, and regions. We
note that Store Operating Reports on an individual store basis were issued in connection
with the MOR and QOR Reports. Also, the format of the MOR and QOR Reports was
substantially the same, except that QOR Reports included quarterly data.

    Since these reports were distributed to and used by others in the Company in addition to our
CODM, the reports contained certain disaggregated financial information to present our
operating results in various ways. The MOR and QOR Reports were prepared to provide a single
source document for operational financial information related to the Company’s performance.
They were used by various members of management and staff for analytical purposes. While our
CODM received the MOR Reports monthly and the QOR Reports quarterly, he relied primarily on
consolidated information to assess performance and to allocate resources.

    A representative copy of each of the reports described above will be provided to the Staff
under separate cover by counsel for the Company on a confidential and supplemental basis
pursuant to Rule 12b-4 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). In accordance with Rule 12b-4 under the Exchange Act, counsel for the Company have
requested that these materials be returned promptly following completion of the Staff’s review
thereof. By separate letter, counsel for the Company have also requested confidential
treatment of these materials pursuant to the provisions of 17 C.F.R. § 200.83.

    Financial Information Below Consolidated Level

    The reports described above contained disaggregated financial information based on product
lines, brands, and regions in addition to consolidated financial information for the Company.
The disaggregated financial information was included in those reports to avoid inefficiencies
of having to generate numero