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[GPI Letterhead]

October 6, 2005

Via EDGAR and Facsimile to (202) 772-9203

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E., Stop 3561

Washington, D.C. 20549

    Attn:

    Mr. Michael Moran

    Re:

    Group 1 Automotive, Inc.

Form 10-K for Fiscal Year Ended December 31, 2004

Filed March 16, 2005

File No. 1-13461

Ladies and Gentlemen:

     On behalf of Group 1 Automotive, Inc. (the “Company”), this letter sets forth the Company’s
responses to the comments of the staff (the “Staff”) of the Securities and Exchange Commission (the
“Commission”) in its comment letter dated September 16, 2005 (the “Comment Letter”) with respect to
the Company’s Annual Report on Form 10-K for the Year Ended December 31, 2004 (the “Form 10-K”).
For your convenience, the comments provided by the Staff have been included in bold face, in the
order presented in the Comment Letter, before the Company’s response to each comment.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation,
page 25

Floorplan Interest Expense, page 37

    1.

    Please expand your disclosure to discuss the relationship between floorplan interest
expense and manufacturer interest assistance including why you are eligible to receive
assistance in excess of your incurred interest expense. In your discussion, quantify the
amounts of interest assistance recognized and interest expense incurred and the effects on
your cost of sales, gross profit, operating income and net income for each of the three
years ending December 31, 2004. Disclose the basis for the amount of interest assistance
received. Describe the impact this interest assistance has on your liquidity and capital
resources in these periods and include any risks of concentration, performance or
cancellation provisions that are reasonably likely to result in the termination or a
material reduction in availability of this manufacturer assistance. See Item 303(a)(1)
and (2) of Regulation S-K.

Securities and Exchange Commission

October 6, 2005

Page 2

Response: Please note that a significant portion of the requested disclosure is included in
the Form 10-K on page 30 under Results of Operations—New Vehicle Retail Data. We have
also included in the Form 10-K disclosure regarding this interest assistance on:

    •

    page 17 under Risk Factors—Changes in interest rates could adversely impact our
profitability;

    •

    page 37 under Results of Operations—Floorplan interest expense;

    •

    page 43 under Item 7A. Quantitative and Qualitative Disclosures about Market
Risk;

    •

    page F-8 under Notes to Consolidated Financial Statements—Note 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES: Inventories; and

    •

    page F-17 under Notes to Consolidated Financial Statements—Note 7. CREDIT
FACILITIES.

In response to this comment we propose to revise our discussion in the third paragraph on
page 30 of the Form 10-K in future applicable filings as follows (revisions indicated by
underlining):

“Most manufacturers offer interest assistance to offset floorplan interest
charges incurred in connection with inventory purchases. This assistance
varies by manufacturer, but in general provides for a defined amount regardless
of our actual floorplan rate or the period of time for which the inventory is
financed. The amount of interest assistance we recognize in a given period is
primarily a function of the specific terms of the respective manufacturers’
interest assistance programs and wholesale interest rates, the average wholesale
price of inventory sold, and our level of inventory turn. For these
reasons, this assistance has ranged from approximately 105% to 160% of our
total floorplan interest expense over the past three years. We record these
incentives as a reduction of new vehicle cost of sales as the vehicles are sold,
which therefore impact the gross profit and gross margin detailed above. The
total assistance recognized in cost of goods sold during the years ended
December 31, 2004, 2003 and 2002, was $33.2 million, $27.4 million and $26.7
million, respectively.”

We do not believe it to be reasonably likely that there would be a termination or a material
reduction in the availability of this assistance and therefore have not included such
disclosure in the discussion of Liquidity and Capital Resources beginning on page 38.

Liquidity and Capital Resources, page 38

    2.

    Please tell us how the tabular information that reflects $918 million in credit
facilities outstanding reconciles to $932 million presented in your consolidated

Securities and Exchange Commission

October 6, 2005

Page 3

balance sheet as of December 31, 2004. Also, please advise or revise your table of contractual
obligations to include interest payments associated with your contractual obligations in
future filings. In your response, please show us what your revised disclosure will look
like.

Response: The $932 million of outstanding borrowings presented in the consolidated balance
sheet includes $20.2 million of borrowings under miscellaneous immaterial arrangements with
captive finance companies as disclosed under Notes to Consolidated Financial Statements—Note
7. CREDIT FACILITIES. The $932 million excludes $6.5 million of letters of credit that are
included in the $918 million disclosed in the tabular information provided on page 40, as
noted in footnote 1 to that table.

We will include estimated interest payments in the table of contractual obligations in
future filings. We expect our revised disclosure to appear as follows:

    Payments Due by Period

    Contractual Obligations

    Total

    < 1 Year

    1-3 Years

    3-5 Years

    Thereafter

    (in thousands)

    Floorplan notes payable

    $
    848,260

    $
    848,260

    $
    —

    $
    —

    $
    —

    Long-term debt obligations(1)

    248,301

    1,054

    92,102

    1,743

    153,402

    Estimated interest payments on
floorplan notes
payable(2)

    4,811

    4,811

    —

    —

    —

    Estimated interest payments on
long-term debt obligations(3)

    117,997

    16,802

    26,945

    24,750

    49,500

    Operating leases

    562,283

    61,508

    121,141

    100,938

    278,696

    Purchase commitments(4)

    52,347

    47,973

    4,374

    —

    —

    Total

    $
    1,833,999

    $
    980,407

    $
    244,562

    $
    127,431

    $
    481,598

    (1)

    Includes borrowings on the Acquisition Line and outstanding letters of credit.

    (2)

    Estimated interest payments were calculated using the floorplan balance and weighted average
interest rate at December 31, 2004 and the assumption that these liabilities would be settled within 60 days
which approximates our inventory days supply.

    (3)

    Estimated interest payments on long-term debt obligations includes fixed rate interest on our 8
1/4% Senior Subordinated Notes due 2013 plus variable rate interest on our Acquisition Line. The future
variable rate interest was calculated using the Acquisition Line balance and current interest rate at December 31,
2004, and the assumption that this balance was held to contractual maturity of June 30, 2006.

    (4)

    Includes capital expenditures, acquisition commitment and other.

Item 8 Financial Statements and Supplementary Data, page 43 General

    3.

    We note that you have two reinsurance subsidiaries committed to the administration of
your insurance service offerings. Please tell us why you have not included the
supplemental information concerning property-casualty insurance operations, or Schedule V,
for these subsidiaries. Reference is made to Rule 5-04(c) and Rule 12-18 of Regulation
S-X.

Securities and Exchange Commission

October 6, 2005

Page 4

    Response: The Company’s reinsurance subsidiaries reinsure only the credit life and accident and
health insurance policies sold by the Company’s dealerships. These subsidiaries do not underwrite any
external policies.

    Additionally, the Company is self-insured for a portion of the claims related to its
property-casualty insurance program.

    According to Rule 5-04(c), Schedule V may be omitted if reserves for unpaid
property-casualty claims and claims adjustment expenses of the registrant and its
consolidated subsidiaries, in the aggregate, do not exceed one-half of consolidated
stockholders’ equity as of the beginning of the fiscal year.

    As of January 1, 2004, the Company had $32.5 million accrued for unpaid claims under both
its reinsurance and property-casualty self-insured programs, or 6.3% of consolidated
stockholders’ equity of $518.1 million. For this reason, the Company did not include
Schedule V with its filing.

    4.

    Tell us if your captive insurance subsidiaries have restricted shareholders’ equity due
to either statutory requirements or terms and conditions of reinsurance agreements. If so,
please tell is if the restricted shareholders’ equity of your insurance subsidiaries
exceeds 25% of consolidated shareholders’ equity as of the most recent balance sheet date
and whether you are required to disclose the financial information in Schedule I. See Rule
5-04(c) of Regulation S-X.

    Response: Our captive insurance subsidiaries had restricted net assets, as defined by Rule
4-08(e)(3), totaling $11.5 million as of December 31, 2004. This did not exceed 25% of
consolidated shareholders’ equity as of that date ($567.2 million) and thus we were not
required to disclose the financial information in Schedule I.

    5.

    Please advise or revise your future filings to include a schedule for all existing
valuation and qualifying accounts. See Rule 12-09 of Regulation S-X.

    Response: Allowance for doubtful accounts and notes receivable is our only account that would be
considered a valuation or qualifying account. As of December 31, 2004 and 2003, the Company
had allowances for doubtful accounts and notes receivable of $2.3 million and $2.2 million,
respectively, and disclosed such information under Notes to Consolidated Financial
Statements—Note 5. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS. These allowances represented
2.8% and 3.4% of gross accounts and notes receivable. Additionally, we disclose our
provision for doubtful accounts as a separate line item in our consolidated cash flow
statement.

    Rule 4-02 of Regulation S-X provides that immaterial items need not be disclosed. The
Company, after considering the extent to which its allowances were already disclosed,
did not consider this information material enough to warrant disclosure in Schedule II.

Securities and Exchange Commission

October 6, 2005

Page 5

Consolidated Statements of Operations, page F-4

    6.

    Please tell us how you determined the twenty dealership franchises, disposed in the
past five years and possessing approximately $267.2 million of annual revenues, do not
qualify for treatment as assets held for sale or discontinued operations in previous
filings. Include the criteria in paragraphs 30 and 42 of SFAS No. 144 in your response.

    Response: We recognize that a dealership franchise qualifies for held for sale and
discontinued operations treatment as it meets the criteria in paragraphs 30 and 42 of SFAS
No. 144. However, as with all pronouncements promulgated by the FASB, the provisions of
SFAS No. 144 need not be applied to immaterial items. We determine the materiality of
transactions for recognition or disclosure under all pronouncements using the principles
outlined in SAB 99. To determine the materiality of our dispositions, and the need for
disclosure as both held for sale and discontinued operations, we consider both quantitative
and qualitative factors.

    From a quantitative perspective, drawing on the guidance regarding the significance of
dispositions contained within Rule 11-01 of Regulation S-X, we have adopted a policy whereby
we compare the measures set forth in Rule 1-02(w) of Regulation S-X for our
dealership/franchise dispositions, both individually and in the aggregate, to the applicable
consolidated measures. Additionally, we compare our dispositions’ prior year revenues, both
individually and in the aggregate, to the prior year’s consolidated revenues. However, we
have taken a slightly more conservative approach than the 20% threshold of Rule 11-01,
instead using 10% for individual dealership/franchise dispositions and 20% for
dispositions in the aggregate. Below is a summary of the magnitude of our dispositions in
the aggregate relative to these thresholds, none of which we considered to be quantitatively
material.

    Investment in

    Assets

    Pretax Inc

    Revenues

    Year of

    as a % of

    as a % of

    as a % of

    as a % of

    Disposition(s)

    Total Assets

    Total Assets

    Total Pretax Inc

    Total Revenues

    2004

    N/A

    N/A

    N/A

    N/A

    2003

    0.0
    %

    0.9
    %

    0.9
    %

    1.8
    %

    2002

    0.5
    %

    1.4
    %

    1.1
    %

    1.3
    %

    2001

    0.1
    %

    2.5
    %

    2.2
    %

    2.9
    %

    2000

    0.0
    %

    0.0
    %

    0.0
    %

    1.4
    %

Note: All percentages represent relative size of aggregate dispositions in a given year

In conjunction with these quantitative measures, we analyze the qualitative materiality
of our dispositions on a case by case basis. Our business is such that the frequent sale of
underperforming franchises is expected as part of our overall business strategy.
Furthermore, we are not exiting a line of business, but rather disposing of individual dealerships or
franchises

Securities and Exchange Commission

October 6, 2005

Page 6

that are part of larger geographic
“platforms.” We would also note for the Staff that 14 of the 20 dispositions made
represented dispositions of one franchise among several operating out of a multi-franchise dealership location.
None of these 20 dispositions represented the disposition of a platform.

After having assessed the quantitative and qualitative materiality of these dispositions
both individually and in the aggregate, we deemed them immaterial for disclosure as either
held for sale or as discontinued operations.

It
should also be noted that, although not disclosed as part of the primary financial
statements, disclosure of our
dispositions beyond that which is required by SFAS No. 144 is made
within the tables contained in Management’s Discussion and Analysis.

Consolidated Statements of Cash Flows, page F-6

    7.

    Please clarify how you derived cash flows related to floorplan notes payable and net
borrowings on the revolving credit facility for the year ended December 31, 2004. The
consolidated balance sheets reveal a $244,956,000 cash inflow from floorplan notes payable,
less the floorplan notes acquired in fiscal 2004 business combinations. The cash inflow
from floorplan notes currently presented is $73,509,000. In addition the $84,000,000 cash
inflow from the acquisition line appears to be represented by $255,447,000 of cash inflows
from the credit facility. Although the currently presented cash flow amounts equal the
aggregate changes in the balance sheet, it appears there are significant reclassifications
between cash flow categories. Please provide your calculation for the cash inflows for
floorplan notes payable and the revolving credit facility as well as reclassifying
adjustments and the applicable accounting pronouncements that support the present
accounting treatment.

    Response: Borrowings under our floorplan credit agreement generally require vehicle
identification numbers to secure the loans. As disclosed in the first paragraph on page 40
under Liquidity and Capital Resources—Working Capital, an additional feature of our credit
facility allows for us to pay down the gross floorplan borrowings in aggregate with idle
cash that reduces our debt outst