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December 8, 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 November 15, 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.

Consolidated Statements of Cash Flows, page 6

    1.

    We note your response to comment 8 in our letter dated September 16, 2005. Please
advise or revise your financial statements to present the cash flows related to flooplan
notes payable in accordance with paragraph 23.a. of SFAS No. 95 which requires payments to
suppliers to acquire goods for resale be classified as operating activities. Therefore,
cash flows related to lenders unaffiliated with the supplier should be classified as
financing activities and when the lender is affiliated with the manufacturer, those
borrowings and repayments should be included in operating activities. Specifically, please
revise the following:

    •

    Cash receipts and payments on notes payable for new inventory purchases
originating from manufacturer affiliated lenders should be presented within
operating activities and include direct advances from the financial institution to
the manufacturers;

Securities and Exchange Commission

December 8, 2005

Page 2

    •

    Cash receipts and payments on notes payable for inventory purchases from a
manufacturer unaffiliated with the lender should be presented within financing
activities;

    •

    The balance sheet should separately present amounts attributable to trade
creditors (manufacturer affiliated) and non-trade (unaffiliated) notes payable as
of your balance sheet dates. See Rule 5-02(19)(a) of Regulation S-X;

    •

    Borrowings and repayments on debt should be reported gross unless the criteria
for net reporting are met. See paragraph 13 of SFAS No. 95; and

    •

    Please provide disclosure in the notes to the financial statements clarifying
the revised balance sheet and statement of cash flows presentation and to further
describe your financing arrangements including how cash disbursements are processed
and if you have discretion to receive cash directly from any of the lenders

In your response, please show us what your disclosure will look like revised.

Response to bullets one and two above: We respect the Staff’s interpretation of SFAS No. 95 (the
Statement); however, we continue to believe that our historical presentation of non-affiliated
floor plan borrowing has been based on a sound interpretation of the Statement, specifically
paragraph 23.a., and is in accordance with consistently-applied industry practice. In addition to
our previously provided responses, we submit the following for your further consideration:

    a.

    We believe that our current interpretation falls within the ambit of
the Statement and refer the Staff to the following paragraphs:

    i.

    Paragraph 21 of the Statement states “cash flows
from operating activities are generally the cash effects of transactions
and other events that enter into the determination of net income.” The
transactions associated with our non-affiliated floor plan borrowings
clearly enter into the determination of our net income as the underlying
activity is the procurement of inventory which turns into cost of goods
sold in relatively short time periods;

    ii.

    We want to clarify and reiterate our reference to
Paragraph 87 noted in our original response, which acknowledges “...the
most appropriate classification of items will not always be clear. In
those circumstances, the appropriate classification generally should
depend on the nature of the activity that is likely to be the predominate
source of cash flows for the item.” Given the fact that both our
manufacturer affiliated and non-affiliated borrowing agreements require
the repayment of the underlying borrowings within 10 calendar days of
selling the applicable unit in

Securities and Exchange Commission

December 8, 2005

Page 3

inventory (such reduction of inventory being reflected as an operating cash
flow activity), we believe that the nature of the activity at hand is
clearly one reflective of operating cash flow.

    iii.

    Finally, we would ask that the Staff consider the
discussion put forth in paragraphs 93 to 95 of the Statement, which we
have included below. We believe that the treatment of the Company’s
inventory financing analogous to the examples presented below is relevant
to our interpretation of how to apply the Statement to our situation
(italics added for emphasis):

Installment Sales and Purchases

93.   A somewhat difficult classification issue arises for
installment sales and purchases of inventory by an enterprise
for which cash inflows or outflows may occur several years after
the date of the transaction. Those transactions can be viewed
as having aspects of both operating and investing activities
(for a sale by the enterprise) or operating and financing
activities (for a purchase by the enterprise). The Exposure
Draft treated cash flows stemming from installment sales and
purchases in accordance with that view. Only cash flows
occurring “soon before or after” the time of sale or purchase
would have been operating cash flows. Subsequent principal
payments on the related notes would have been investing cash
inflows or financing cash outflows.

94.   Some respondents to the Exposure Draft suggested that
the classification of a cash receipt or payment should be
determined by the original purpose for which it is received or
paid. Thus, all cash flows related to the sale or purchase of
inventory would be operating cash flows regardless of when they
were received or paid. Those respondents generally pointed out
that, under the approach in the Exposure Draft, cumulative net
cash flow from operating activities over the life of an
enterprise that finances most of its sales under installment
plans might be negative. They considered that to be an
inappropriate and confusing result.

95.   The Board agreed that all cash collected from customers
or paid to suppliers from the sale or purchase of inventory
should be classified as operating cash flows. That
classification is consistent with the notion that operating cash
flows generally should include items that are included in net
income.

Securities and Exchange Commission

December 8, 2005

Page 4

We recognize that in paragraph 95 reference is made specifically to payments to
suppliers, however we continue to believe that our current interpretation that all
of our inventory purchase borrowings should be treated as operating activity meets
the “spirit” of the Statement.

    b.

    In addition to our reliance on the above noted paragraphs within the
Statement, we also look to the FASB’s Concept Statement 5, paragraph 20 with
respect to the potential disparate treatment between affiliated and non-affiliated
borrowings (italics added for emphasis):

Classification in financial statements facilitates analysis by grouping
items with essentially similar characteristics and separating items with
essentially different characteristics. Analysis aimed at objectives such as
predicting amounts, timing, and uncertainty of future cash flows requires
financial information segregated into reasonably homogeneous groups. For
example, components of financial statements that consist of items that have
similar characteristics in one or more respects, such as continuity or
recurrence, stability, risk, and reliability, are likely to have more
predictive value than if their characteristics are dissimilar.

We believe that borrowings from non-affiliated lenders do have essentially similar
characteristics as borrowings from manufacturer-affiliated lenders as the underlying
term and tenor of all such borrowings are similar. Although paragraph 23 a. makes
reference only to “...payments made to suppliers for those materials or goods” as
being operating in nature, we cannot determine whether the FASB contemplated an
entity having two essentially similar borrowing facilities that each comprised a
material portion of such borrowings, or whether their assumption was that all such
borrowings would either be supplier funded or third-party funded thereby not
treating such similar items differently within an entity’s statement of cash flows.
We believe disaggregating, within the Company’s Consolidated Statement of Cash
Flows, such similar liabilities renders the resulting statement less useful and
makes understanding the true nature of the Company’s free cash flow inherently more
difficult.

    c.

    We are not sure how we would apply the Staff’s interpretation of the
Statement to borrowings under our current Revolving Credit Facility. Approximately
24% of such borrowings, on a pro-rata basis, are made by manufacturer-affiliated
lenders. We are unsure whether to (1) treat part of all borrowings as
manufacturer-affiliated, (2) treat no part of such borrowings as
manufacturer-affiliated because the funding by the lenders into the facility are
not tied to any specific units in our inventory (it is the Company’s borrowings
from the facility which are tied to specific units), or (3) treat all such
borrowings as manufacturer-affiliated because a pro-rata portion of every borrowing
funded would be manufacturer-affiliated. We are concerned that any allocation to
accomplish the treatment set forth in (1) could be arbitrary and not comparable to
other registrants who might have a

Securities and Exchange Commission

December 8, 2005

Page 5

similar facility yet choose a different allocation methodology. We don’t believe
the treatment set forth in (2) is correct as there is manufacturer-affiliated
lending involved. This leaves the treatment set forth in (3) as the most logical
conclusion. We believe this is an example of the complexity introduced by treating
borrowings with “essentially similar characteristics” differently and how two
parties with essentially the same financing structure may arrive at very different
accounting answers.

    d.

    We would like to understand if the Staff has considered the impact that
the sale of a manufacturer-affiliated lender by the manufacturer (as is currently
being contemplated by General Motors in connection with its proposed sale of
General Motors Acceptance Corp. (GMAC)) would have on a “borrower’s” statement of
cash flows. Should the GMAC transaction occur, borrowings from GMAC that in one
period are reflected as an operating cash flow item would, in the period after
sale, be reflected as a financing activity, with no other substantive change in
operations or contractual obligations between the borrower and the lender.
Although this situation would not affect the Company currently, should Ford Motor
Company decide to sell Ford Motor Credit Corporation, the Company would be
similarly affected.

    e.

    Finally, we request that the Staff please clarify the final phrase
within the Staff’s first bullet point above, “...and include direct advances from
the financial institution to the manufacturers”, and indicate why such phrase is
not included as part of the Staff’s second bullet point.

    Although we do not believe that presenting the non-cash initial acquisition of
inventory from a manufacturer with funds provided directly to that manufacturer by
an affiliate of that manufacturer or an unaffiliated lender meets the definition of
a cash transaction in accordance with paragraph 32 of the Statement, we have
historically not excluded from our Consolidated Statements of Cash Flows the
non-cash initial acquisition of inventory using either manufacturer affiliated or
non-affiliated lending sources due to the fact that such treatment did not have a
quantitatively material (in that operating cash flow remains the same regardless of
treatment — see exhibit A attached hereto) or qualitatively material impact to such
statement. The primary qualitative factors we considered were:

    i.

    The fact that the users of our
consolidated financial statements can discern the nature of our
gross cash flows by referencing our cost of goods sold within
our consolidated statements of operations;

    ii.

    The totality of our disclosure
around our floorplan financing activities throughout our
periodic reporting, and specifically the following areas of our
Form 10-K:

Securities and Exchange Commission

December 8, 2005

Page 6

    1.

    page 5 under PART 1 Item 1. Business — Dealership
Operations, New Vehicle Sales;

    2.

    page 20 under Risk Factors — Our significant indebtedness
and lease obligations could materially adversely
affect our financial health, limit our ability to
finance future acquisitions and capital
expenditures, and prevent us from fulfilling our
financial obligations;

    3.

    page 40 under Sources of Liquidity and Capital Resources —
Credit Facilities;

    4.

    page 42 under Contractual Obligations;

    5.

    page F-10 under Notes to Consolidated Financial Statements —
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Statements of Cash Flows, where we specifically
state:

“For purposes of the statements of cash flows,
the net change in floorplan financing of
inventory, which is a customary financing
technique in the industry, is reflected as an
operating activity.”

    6.

    page F-16
under Notes to Consolidated Financial Statements —
Note 7. CREDIT FACILITIES.

    iii.

    Such presentation had no effect
on the Company’s compliance with any loan covenants or other
contractual requirements;

Were we to adopt the Staff’s interpretation of the Statement however, although the
qualitative factors would still apply, the reclassification of the non-affiliated
borrowing activity as a financing activity would result in the non-cash initial
acquisition of inventory becoming material from a quantitative standpoint to both
operating and financing cash flows (see exhibit B attached hereto.)

We believe that whether acquired using manufacturer affiliated or non-affiliated
lenders, the initial acquisition of inventory should not be reflected within the
statement of cash flows. When inventory units are shipped from the manufacturer’s
facility (or arrive at the port of entry for imported units) the manufacturer drafts
our floorplan facility directly. It is our understanding that the ability of
manufacturers to draft directly from our floorplan facilities is not simply a matter
of convenience, which would require us to reflect such borrowings

Securities and Exchange Commission

December 8, 2005

Page 7

within the Company’s Consolidated Statements of Cash Flows under a constructive
receipt argument, but a requirement of our primary manufacturers prior to delivery
of ordered vehicles. Furthermore, the American Institute of Certified Public
Accountants Technical Question and Answer No. 1300.16 addresses this situation
specifically and clearly states, in accordance with paragraph 32 of the Statement,
that such activity should not be included in the statement of cash flows.

     Although we continue to believe that our interpretation of how manufacturer affiliated and
non-affiliated borrowings should be reflected within the Company’s Consolidated Statements of Cash
Flows meets the totality of the requirements set forth in the