SecProbe.io

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 April 8, 2025

Thomas Szlosek
Executive Vice President and Chief Financial Officer
AutoNation, Inc.
200 SW 1st Ave
Fort Lauderdale, FL 33301

 Re: AutoNation, Inc.
 Form 10-K for Fiscal Year Ended December 31, 2024
 File No 001-13107
Dear Thomas Szlosek:

 We have completed our review of your filing. We remind you that the
company and
its management are responsible for the accuracy and adequacy of their
disclosures,
notwithstanding any review, comments, action or absence of action by the staff.

 Sincerely,

 Division of Corporation
Finance
 Office of Trade &
Services
</TEXT>
</DOCUMENT>

CORRESP
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 Document AUTONATION, INC. 200 SW 1 st Avenue Fort Lauderdale, FL 33301 April 4, 2025 VIA EDGAR SUBMISSION Securities and Exchange Commission Division of Corporation Finance Office of Trade & Services 100 F Street, NE Washington, D.C. 20549-3720 Attention:    Mr. Robert Shapiro Mr. Doug Jones RE:    AutoNation, Inc. Form 10-K for Fiscal Year Ended December 31, 2024 File No 001-13107 Dear Mr. Shapiro and Mr. Jones: This letter responds to the comments that AutoNation, Inc. (the “Company”) received from the Staff (the “Staff”) of the Securities and Exchange Commission by letter dated March 24, 2025. For your convenience, we have set forth each of the Staff’s comments below followed by our response to each comment. References to the “Company,” “we,” “us,” and “our” refer to AutoNation, Inc., a Delaware corporation. Form 10-K for the Fiscal Year Ended December 31, 2024 Management’s Discussion and Analysis of Financial Condition and Results of Operations Used Vehicle 2024 compared to 2023, page 37 1.    We note from 2022 to 2024 (1) revenue mix percentages for new vehicle revenues increased from 43.6% to 48.8% and for used vehicle revenues decreased from 35.8% to 28.8%, (2) retail new vehicle unit sales increased from 229,971 to 254,715 and retail used vehicle unit sales decreased from 299,809 to 265,908, (3) revenue per used vehicle retailed decreased from $30,089 to $26,614, (4) gross profit per new vehicle retailed decreased from $5,942 to $3,045 and (5) new vehicle gross profit percentage decreased from 11.6% to 5.9%. Please discuss the reason for these apparent trends and your expectations of these trends continuing to impact financial results in future periods. Refer to Item 303(b)(2)(ii) of Regulation S-K. Response: We acknowledge the Staff’s comment regarding the observed trends from 2022 to 2024, which are largely attributable to the normalization of industry vehicle supply and pricing following disruptions in automotive manufacturers’ supply chains caused by the COVID-19 pandemic that began in early 2020. For the five-year period prior to 2020, (1) revenue mix percentages averaged approximately 56% for new vehicles and approximately 24% for used vehicles, (2) retail vehicle unit sales averaged approximately 320,000 for new vehicles and approximately 234,000 for used vehicles, (3) revenue per used vehicle retailed averaged approximately $20,000, (4) new vehicle gross profit per vehicle retailed (“PVR”) averaged approximately $1,800, and (5) new vehicle gross profit percentage averaged 4.9%. 1 As a result of the supply chain disruptions, there was a prolonged shortage for several years of available new vehicles for sale as compared to historical inventory levels starting in the second quarter of 2020, which resulted in demand for vehicles generally exceeding supply during this period. This demand and supply imbalance for new vehicles resulted in higher levels of profitability for new vehicles, increased demand and higher levels of revenue for used vehicles, and a shift in revenue mix percentages for new and used vehicle revenues as compared to historical periods beginning in the second quarter of 2020. As noted above, for the five-year period prior to 2020, our new vehicle gross profit PVR averaged approximately $1,800, and new vehicle gross profit percentage averaged 4.9%. For the year ended December 31, 2022, our new vehicle gross profit PVR increased to $5,942 and our new vehicle gross profit percentage increased to 11.6% for the aforementioned reasons. We previously disclosed on page 28 of our 2022 Form 10-K that there was still significant uncertainty as to the extent to which new vehicle availability would improve, as well as the duration and/or degree of the higher levels of profitability being realized during that time. Additionally, as previously disclosed on page 38 of our 2022 Form 10-K, the reduced availability of new vehicle inventory favorably impacted used vehicle revenue PVR during this period, which increased to $30,089. Please see relevant excerpts below. Page 28 – 2022 Form 10-K Full-year U.S. industry new vehicle unit sales were 13.9 million in 2022, as compared to 15.1 million in 2021, and 14.6 million in 2020. There continues to be a shortage of available new vehicles for sale as compared to historical inventory levels driven largely by disruptions in the manufacturers’ supply chains. Although new vehicle inventory levels for certain manufacturers improved slightly during the second half of 2022, the demand for vehicles generally continued to exceed supply throughout the year. This demand and supply imbalance continues to result in higher levels of profitability for available new vehicles. The reduced levels of total new vehicle availability is currently expected to continue into 2023; however, there is still significant uncertainty as to the extent to which new vehicle availability will improve, as well as duration and/or degree of the higher levels of profitability being realized during this time. In addition, the decline in new vehicle unit volume could adversely impact the availability of nearly new vehicle inventory, which could have an adverse impact on our used vehicle sales volume. Additionally, worsening economic conditions could adversely impact consumer demand for vehicles. Page 38 – 2022 Form 10-K Same store revenue PVR increased during 2022, as compared to 2021, primarily due to reduced availability of new vehicle inventory. Beginning in the second half of 2022, supply and availability of new vehicle inventory began to increase, which resulted in moderation of new vehicle pricing and margins. As a result, our new vehicle gross profit PVR decreased to $4,342 for 2023 and $3,045 for 2024 and our new vehicle gross profit percentage decreased to 8.3% for 2023 and 5.9% for 2024. We previously disclosed on page 28 of our 2023 Form 10-K that we expected this trend to continue in 2024, and we also previously disclosed on pages 27-28 of our 2024 Form 10-K that we expect this trend to continue in 2025. Additionally, we previously disclosed on page 28 of our 2024 Form 10-K that the increased availability and affordability of new vehicles and an increase in manufacturer incentives, including low-interest financing and customer rebates, has resulted in a shift in mix from used vehicles to new vehicles, resulting in a decrease in used vehicle unit volume, which explains both the shift in revenue mix percentages for new and used vehicle revenues and the changes in retail new and used vehicle unit sales from 2022 to 2024. Please see relevant excerpts below. 2 Page 28 – 2023 Form 10-K Full-year U.S. industry new vehicle unit sales were 15.6 million in 2023, as compared to 13.9 million in 2022, and 15.1 million in 2021. Although still below historical levels, new vehicle inventory levels continued to increase during 2023 due to higher levels of manufacturer vehicle production. The increasing supply and availability of new vehicle inventory, which varies by make and model, has resulted in moderation of new vehicle margins, which we expect will continue in 2024. Additionally, the increased availability of new vehicles and an increase in manufacturer new vehicle incentives, including low-interest financing and customer rebates, has adversely impacted market demand for used vehicles, particularly for higher-priced, nearly new vehicle inventory. Pages 27-28 – 2024 Form 10-K Full-year U.S. industry new vehicle unit sales were 16.0 million in 2024, as compared to 15.6 million in 2023, and 13.9 million in 2022. Although still below historical levels, new vehicle inventory levels continued to increase during 2024 due to higher levels of manufacturer vehicle production. The increasing supply and availability of new vehicle inventory, which varies by make and model, has resulted in moderation of new vehicle pricing and margins, which we expect will continue in 2025. Additionally, the increased availability and affordability of new vehicles and an increase in manufacturer new vehicle incentives, including low-interest financing and customer rebates, has resulted in a shift in mix from used vehicles to new vehicles. Lower new vehicle sales in recent years has also resulted in lower availability of used vehicle inventory, particularly for late model vehicles. In an effort to avoid duplicative disclosure, most of our discussion on current trends and expectations are included in the Market Conditions section of Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) of our 2024 Form 10-K. Discussion of trends and expectations between 2023 and 2022 can be found in the same section of the 2023 Form 10-K. In accordance with the SEC’s Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information rule—Release No. 33-10890 (the “MD&A modernization rule”), registrants have the flexibility to present the information in a manner that they believe will enhance a reader’s understanding, using judgment to tailor their disclosures and avoid unnecessary duplication. We believe this presentation aligns with the principles-based approach of the MD&A modernization rule, as the Market Conditions section of our MD&A provides a more holistic and cohesive discussion of macroeconomic trends, vehicle availability, pricing dynamics, and management’s expectations—all of which may materially impact our results of operations. By concentrating this analysis in one section, and, where relevant, also supplementing this discussion in the Results of Operations section of our MD&A, we believe we provide investors with clear, contextual explanations of year-over-year changes without unnecessary repetition across the MD&A. While the Staff’s comment references several specific trends, including changes in revenue mix percentages, shifts in retail new and used vehicle unit sales, declines in revenue per used vehicle retailed, and reductions in both gross profit per new vehicle retailed and new vehicle gross profit percentages, we believe these trends stem from the broader industry dynamics discussed extensively in the Market Conditions section of our MD&A in each of our Form 10-Ks from 2022 through 2024. Specifically, we have consistently explained how the imbalance between vehicle supply and demand, initially caused by pandemic-related supply chain disruptions, led to elevated pricing and profitability that began to normalize as inventory levels increased. Each year, we have provided forward-looking commentary on these conditions, acknowledging uncertainty and describing how continued normalization was expected to impact both new and used vehicle performance in the following year. We believe this principles-based, non-duplicative presentation, which is consistent with the SEC’s MD&A modernization rule, satisfies the requirements of Item 303(b)(2)(ii) of Regulation S-K by clearly conveying management’s understanding of material trends and expectations in a manner that enhances the reader’s ability to assess our historical 3 results and evaluate our future prospects. In future filings, we will continue to include discussions in our Form 10-K of the trends and expectations for any significant items that have impacted or may impact our financial results. Segment Results, page 41 2.    You cite multiple factors for the changes in new and used vehicle revenues for variances in segment revenues and segment income for each of the Domestic, Import, and Premium Luxury segments but don’t quantify them in either percentage or absolute dollars. To the extent material, please quantify factors to which changes are attributed for changes in new and used vehicle revenues. With regard to revenue discussions for each segment, quantify the extent to which changes are attributable to changes in prices or to changes in the volume of new and used vehicles being sold, changes in sales mix, the impact of divestitures in the third quarter of 2024 on the Domestic segment, and other economic factors that impacted your segment results. Other factors on a segment basis for which quantification appears to be needed include gross profit per vehicle retailed (PVR), manufacturer incentives, new and used vehicle gross profit, moderation of margins, and floorplan interest. Refer to Item 303(b) and (b)(2) of Regulation S-K and sections III.B.2 through B.4 of SEC Release 33-8350. Response: We acknowledge the Staff’s comment and endeavor to cite the significant factors that impact our segment results in order of magnitude and not repeat the quantification of factors that are evident in the financial tables preceding the discussion, in an effort to not be duplicative. Also, certain factors that impact our business are deeply interrelated or industry-driven and may be difficult to quantify. For example, while we may observe that overall increasing manufacturer incentives to customers, such as low-interest financing, drive industry new vehicle demand and, therefore, favorably impact our new vehicle unit volume, we are not able to quantify the actual impact to our new vehicle revenue. In future filings, to the extent material and possible, we will quantify factors to which changes are attributed for segment revenues and segment income. The following is an example of how the existing narrative disclosures that follow our tabular financial disclosures in our 2024 Form 10-K would be modified to include quantification of factors impacting our segment results, where material: Domestic Domestic revenue decreased during 2024, as compared to 2023, primarily due to a decrease in used vehicle revenue , approximately 60% of which was due to lower used vehicle unit volume and 40% of which was driven by a decrease in average used vehicle selling prices, with used vehicle revenue PVR down $1,645. Approximately $89 million of the decrease in used vehicle revenue was related to and the divestitures we completed in the third quarter of 2024. Used vehicle revenue was adversely impacted by a The decrease in used vehicle unit volume was due in part to a 4% shift in mix from used vehicles to new vehicles, and a decrease in revenue PVR due to a shift in mix towards lower-priced entry-level vehicles, which have relatively lower average selling prices. Domestic revenue was also adversely impacted by as well as the CDK outage, which disrupted our vehicle sales, inventory, and customer relationship management functions in the latter half of June 2024, and its residual effects in the third quarter of 2024. The decrease in used vehicle revenue PVR was primarily due to a shift in mix towards lower-priced entry-level vehicles. The decrease s in Domestic revenue were was partially offset by an increase in new vehicle unit volume as a result of the increasing supply and availability of new vehicle inventory, an increase in manufacturer incentives to customers , including low-interest financing and rebates, and sustained consumer demand. Domestic segment income decreased during 2024, as compared to 2023, primarily due to decreases in new vehicle gross profit of $85.5 million , used vehicle gross profit of $31.3 million , and finance and 4 insurance gross profit of $29.5 million . New vehicle gross profit was adversely impacted by continued moderation of margins , which decreased 240 basis points compared to 2023, resulting from the increasing supply and availability of new vehicle inventory. Used vehicle gross profit was adversely impacted by a shift in mix towards lower-priced entry-level vehicles, which have a relatively lower average gross profit PVR, and a decrease in used vehicle unit volume due in part to the 4% shift in mix from used vehicles to new vehicles. Finance and insurance gross profit was adversely impacted by the decrease in used vehicle unit volume and an a more than 5x increase in retail vehicle sales financed in our Domestic stores through our captive auto finance company.

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 March 24, 2025

Thomas Szlosek
Executive Vice President and Chief Financial Officer
AutoNation, Inc.
200 SW 1st Ave
Fort Lauderdale, FL 33301

 Re: AutoNation, Inc.
 Form 10-K for Fiscal Year Ended December 31, 2024
 File No 001-13107
Dear Thomas Szlosek:

 We have limited our review of your filing to the financial statements
and related
disclosures and have the following comment(s).

 Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.

 After reviewing your response to this letter, we may have additional
comments.

Form 10-K for the Fiscal Year Ended December 31, 2024
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Used Vehicle
2024 compared to 2023, page 37

1. We note from 2022 to 2024 (1) revenue mix percentages for new vehicle
 revenues increased from 43.6% to 48.8% and for used vehicle revenues
decreased
 from 35.8% to 28.8%, (2) retail new vehicle unit sales increased from
229,971 to
 254,715 and retail used vehicle unit sales decreased from 299,809 to
265,908, (3)
 revenue per used vehicle retailed decreased from $30,089 to $26,614, (4)
gross profit
 per new vehicle retailed decreased from $5,942 to $3,045 and (5) new
vehicle gross
 profit percentage decreased from 11.6% to 5.9%. Please discuss the
reason for these
 apparent trends and your expectations of these trends continuing to
impact financial
 results in future periods. Refer to Item 303(b)(2)(ii) of Regulation
S-K.
 March 24, 2025
Page 2
Segment Results , page 41

2. You cite multiple factors for the changes in new and used vehicle
revenues for
 variances in segment revenues and segment income for each of the
Domestic, Import,
 and Premium Luxury segments but don't quantify them in either percentage
or
 absolute dollars. To the extent material, please quantify factors to
which changes are
 attributed for changes in new and used vehicle revenues. With regard to
revenue
 discussions for each segment, quantify the extent to which changes are
attributable
 to changes in prices or to changes in the volume of new and used
vehicles being sold,
 changes in sales mix, the impact of divestitures in the third quarter of
2024 on the
 Domestic segment, and other economic factors that impacted your segment
results.
 Other factors on a segment basis for which quantification appears to be
needed
 include gross profit per vehicle retailed (PVR), manufacturer
incentives, new and used
 vehicle gross profit, moderation of margins, and floorplan interest.
Refer to Item
 303(b) and (b)(2) of Regulation S-K and sections III.B.2 through B.4 of
SEC Release
 33-8350.
Liquidity and Capital Resources
Cash Flows
Cash Flows from Operating Actitivities, page 52

3. Please provide a more informative analysis and discussion of changes in
cash flows,
 including changes in working capital components, for each period
presented. In doing
 so, explain the underlying reasons and implications of material changes
between
 periods to provide investors with an understanding of trends and
variability in cash
 flows. Ensure your discussion and analysis is not merely a recitation of
changes
 evident from the financial statements. It also appears an increase in
2024 in interest
 payments of $82 million and a decrease in 2024 in income tax payments of
$152
 million also materially impacted operating cash flows, but there is no
mention of
 them. Refer to Item 303(a) of Regulation S-K and section IV.B and B.1 of
SEC
 Release No. 33- 8350.
Notes to Consolidated Financial Statements
Note 22. Segment Information, page 105

4. Please disclose how the chief operating decision maker uses each of your
reported
 measures of segment profit or loss in assessing segment performance and
deciding
 how to allocate resources pursuant to ASC 280-10-50-29.f. Refer to ASC
280-10-55-
 47.bb for guidance.
 March 24, 2025
Page 3

 In closing, we remind you that the company and its management are
responsible for
the accuracy and adequacy of their disclosures, notwithstanding any review,
comments,
action or absence of action by the staff.

 Please contact Robert Shapiro at 202-551-3273 or Doug Jones at
202-551-3309 with
any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Trade &
Services
</TEXT>
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Mail Stop 3561
October 7, 2016

Ms. Cheryl Miller
Executive Vice President and Chief Financial Officer
AutoNation, Inc.
201 SW 1st Avenue
Fort Lauderdale, FL 33301

Re: AutoNation, Inc.
 Form 10-K for the Fiscal Year Ended December 31, 2015
Filed February 11, 2016
File No. 1 -13107

Dear Ms. Miller :

We have completed our review of your filing.  We remind you that the company and its
management are responsible for the accuracy and adequacy of the ir disclosure s, notwithstanding
any review, comments, action or absence of action by the staff .

Sincerely,

 /s/ James Allegretto

James Allegretto
Senior Assistant Chief Accountant
Officer of Consumer Products

CORRESP
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		Document

AUTONATION, INC.

200 SW 1st Ave, Suite 1600

Fort Lauderdale, FL 33301

October 5, 2016

VIA EDGAR SUBMISSION

James Allegretto

Senior Assistant Chief Accountant

Division of Corporate Finance

Mail Stop 3561

United States Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Re:

 AutoNation, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 11, 2016

File No. 1-13107

Dear Mr. Allegretto:

This letter responds to the comment that AutoNation, Inc. (the “Company”) received from the Staff (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) by letter dated September 30, 2016. For your convenience, we have set forth the Staff’s comment below followed by our response to the comment.

Selected Financial Data, page 21

1.

 Your presentation of operating income less floorplan interest expense may be inconsistent with Question 102.10 of the updated Compliance and Disclosure Interpretations on Non-GAAP Financial Measures issued on May 17, 2016. Please review this guidance when preparing your next filing. Also, to the extent that you continue to present this measure, please label it as a non-GAAP.

Response:

We acknowledge the Staff’s comment and have reviewed Question 102.10 of the updated Compliance and Disclosure Interpretations on Non-GAAP Financial Measures. We respectfully advise the Staff that, beginning with our next annual report on Form 10-K, we will no longer present operating income less floorplan interest expense as a line item in the Selected Financial Data table.

*   *   *   *   *

In providing this response letter to the Staff, the Company acknowledges that (i) the Company is responsible for the adequacy and accuracy of the disclosure in the above-referenced filing, (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the above-referenced filing, and (iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you or any member of the Staff has any questions regarding the response set forth herein, please contact the undersigned at (954) 769-2803.

Respectfully submitted,

/s/ Cheryl Miller

Cheryl Miller

Executive Vice President and Chief Financial Officer

Mail Stop 3561
September 30 , 2016

Ms. Cheryl Miller
Executive Vice President and Chief Financial Officer
AutoNation, Inc.
201 SW 1st Avenue
Fort Lauderdale, FL 33301

Re: AutoNation,  Inc.
 Form 10-K for the Fiscal Year Ended December 31, 2015
Filed February 11, 2016
File No. 1 -13107

Dear Ms. Miller :

We have limited our review of your filing to the financial statements and related
disclosures and have the following comment .  In our comment , we may ask you to provide us
with information so we may better understand your disclosure.

Please respond to this comment  within ten busine ss days by providing the requested
information or advis e us as soon as possible when you will respond.  If  you do not believe our
comment applies  to your facts and circumstances, please tell us why in your response.

After reviewing your response to this comment , we may have  additional comments.

Selected Financial Data, page 21

1. Your presentatio n of operating income less floorplan interest expense  may be
inconsistent with Question  102.10 of the updated Compliance and Disclosure
Interpretations on Non -GAAP Financial Measures issued on May 17, 2016.  Please
review this guidance w hen preparing your next filing.  Also, to the extent that you
continue to present this measure, please label it as a non -GAAP.

We urge all persons who are responsible for the a ccuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all fa cts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

Ms. Cheryl Miller
AutoNation, Inc.
September 30 , 2016
Page 2

  In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is respon sible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may  contact  Yong  Kim, Staff  Accountant, at (202)  551-3323  or me at (202) 551 -
3849 with any questions.

Sincerely,

 /s/ James Allegretto

James Allegretto
Senior Assistant Chief Accountant
Officer of Consumer Products

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 -3561

       DIVISION OF
CORPORATION FINANCE

        June 17, 2010

By U.S.  Mail and facsimile t o (954) 769 -6402

Jonathan P. Ferrando
Executive Vice President, General Counsel and Secretary
AutoNation, Inc.
200 SW 1st Avenue, Suite 1600
Fort Lauderdale, FL 33301

Re: AutoNation , Inc.
 Form 10-K for Fiscal Year Ended December 31 , 2009
Filed February 17, 2010
   Definitive Pro xy Statement on Schedule 14A
Filed March 25, 2010
 File No. 001-13107

Dear  Mr. Ferrando:

We have completed our review of your filings and do not have any further comments at
this time.
Sincerely,

H. Christopher Owings
Assistant Director

CORRESP
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Correspondence

 AUTONATION, INC.

200 SW 1st Ave, Suite 1600

Fort Lauderdale, FL 33301

June 15, 2010

VIA EDGAR SUBMISSION

 H.
Christopher Owings

 Assistant Director

Division of Corporate Finance

 Mail Stop 3561

 U.S. Securities and Exchange Commission

100 F Street, NE

 Washington, D.C. 20549

RE:

AutoNation, Inc.

 Form 10-K for Fiscal Year Ended December 31, 2009

Filed February 17, 2010

 Definitive Proxy
Statement on Schedule 14A

 Filed March 25, 2010

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 U.S. Securities and Exchange Commission (the “Commission”) by letter dated June 7, 2010. 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, 2009

Item 15. Exhibits and Financial Statement Schedules, page 90

1.
We note that your Form 8-K dated April 28, 2006 attaches your Five-year Credit Agreement dated July 14, 2005. It appears that the schedules and exhibits
related to your credit agreement as amended have not been filed on EDGAR. In your next periodic report, please refile this agreement, including all related schedules, exhibits and annexes.

 Response:

We will refile our Credit Agreement, as amended, including the related schedules, exhibits and annexes (except that, with respect to
certain information on a limited number of schedules and exhibits, we intend to request confidential treatment in accordance with the rules of the Commission), in our Quarterly Report on Form 10-Q for the second quarter of 2010.

Definitive Proxy Statement on Schedule 14A

Executive Compensation, page 21

2.
We note that you have not included any disclosure in response to Item 402(s) of Regulation S-K. Please advise us of the basis for your conclusion that
disclosure is not necessary and describe the process you undertook to reach that conclusion.

Response:

In the course of preparing our proxy statement for our 2010 Annual Meeting of Stockholders, we considered whether any disclosure was
required under Item 402(s) of Regulation S-K. In order to make such determination, our management team, with the support of members of our Human Resources, Legal, and Finance teams, conducted a review of our compensation policies and practices
in the context of risk management. Following this review, we concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Accordingly, we concluded that no
disclosure would be required in our proxy statement in response to Item 402(s) of Regulation S-K. These conclusions were reviewed and discussed with the Compensation Committee of our Board of Directors at a meeting held on March 19, 2010,
and the Compensation Committee concurred with our conclusion.

 In reaching the conclusion that the manner in which we
compensate and incentivize our employees does not create risks that are reasonably likely to have a material adverse effect on the Company, we primarily considered the following factors:

•

 Our compensation program is designed to incentivize management to optimize business performance, deploy capital productively, and increase long-term
stockholder value.

•

 Our executive officers and other key employees receive a blend of salary, cash-incentive awards, and equity-based awards as compensation. The
equity-based awards are designed to align the long-term interests of management and our stockholders. We believe our compensation elements for this group balance short-term and long-term perspectives appropriately and do not encourage excessive
risk-taking.

•

 To further align the long-term interests of management and our stockholders and to ensure an owner-oriented culture, the Board has adopted executive
stock ownership guidelines which require our senior executive officers to hold a significant amount of our common stock.

•

 We operate an automotive retail business with similar compensation policies and practices among our retail stores that comprise our business, and with
compensation plans generally similar to others in our industry. Although the majority of compensation provided to our field level employees is performance-based, our compensation plans are not designed to encourage excessive risk-taking by field
level employees and do not provide for disproportionate rewards to them based on engaging in high-risk behavior.

•

 No single store carries a significant portion of our risk profile (as of June 15, 2010, we have 204 stores). In addition, we do not have business
units with the authority to engage in high-risk activities or the deployment of substantial capital that could result in material losses to the Company as a whole. Further, we do not have employees who are compensated based on taking significant
risks with our capital.

*        *        *
  *

 In providing this response letter to the Staff, the Company acknowledges that (i) the Company is
responsible for the adequacy and accuracy of the disclosure in the above-referenced filings, (ii) Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the
above-referenced filings, and (iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you or any member of the Staff has any questions regarding the responses set forth herein, please contact the undersigned at
(954) 769-7224.

Respectfully submitted,

 /s/ Jonathan P. Ferrando

 Jonathan P. Ferrando

 Executive Vice President, General

Counsel and Secretary

cc:

Audit Committee of the Board of Directors of AutoNation, Inc.

 Mike Jackson, Chairman and Chief Executive Officer

Michael E. Maroone, Director, President and Chief Operating Officer

Michael J. Short, Executive Vice President, Chief Financial Officer

Michael J. Stephan, Vice President – Corporate Controller

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 -3561

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3561

        June 7, 2010

By U.S.  Mail and facsimile t o (954) 769 -6402

Michael J.  Jackson
Chairman and Chief Executive Officer
AutoNation, Inc.
200 SW 1st Avenue, Suite 1600
Fort Lauderdale, FL 33301

Re: AutoNation , Inc.
 Form 10-K for F iscal Year Ended December 31 , 2009
Filed February 17, 2010
   Definitive Proxy Statement on Schedule 14A
Filed March 25, 2010
 File No. 001-13107

Dear  Mr. Jackson:

We have reviewed your filings and have the following comments.  In some comments
we have a sked you to provide us with additional information so we may better understand
your disclosure.  Please do so within the time frame set forth below.  You should comply
with the remaining comments in all future filings, as applicable.  Please confirm in wri ting
that you will do so and also explain to us in sufficient detail  how you intend to comply by
providing us with your proposed revisions.   If you disagree with any of these comments, we
will consider your explanation as to why our comment is inapplicable  or a revision is
unnecessary.  Please be as detailed as necessary in your explanation.  Please understand that
after our review of all of your responses, we may raise additional comments.

Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure
in your filings.  We look forward to working with you in these respects.  We welcome any
questions you may have about our comments  or any other aspect of our review.  Feel free to
call us at the telephone numbers listed at the end of this letter.

Michael J.  Jackson
AutoNation, Inc.
June 7, 2010
Page 2

Form 10-K for Fiscal Year Ended December 31, 2009

Item 15.  Exhibits and Financ ial Statement Schedules, page 90

1. We note that your Form 8 -K dated April 28, 2006  attaches your Five -year Credit
Agreement dated July 14, 2005.  It appears that the schedules and exhibits related to
your credit agreement as amended have not been filed on EDGAR.  In your next
periodic report, p lease refile th is agreement, incl uding all related schedules, exhibits
and annexes.

Definitive Proxy Statement on Schedule 14A

Executive Compensation, page 21

2. We note that you have not included any disclosure in response to  Item 402(s) of
Regulation S -K.  Please advise us of the basis for your conclusion that disclosure is
not necessary and describe the process you undertook to reach that conclusion.

******

Please respond to these comments within 10 business days or tell us when you will
provide us with a response.  Please furnish a l etter that keys your responses to our comments
and provides any requested information.  Detailed letters greatly facilitate our review.  Please
understand that we may have additional comments after reviewing your responses to our
comments.

We urge all p ersons who are responsible for the accuracy and adequacy of the
disclosure in the filings reviewed by the staff to be certain that they have provided all
information investors require for an informed decision.  Since the company and its
management are in p ossession of all facts relating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

In connection with responding to our comments , please provide, in writing, a
statement from the company ackn owledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the
filings;

 staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and

Michael J.  Jackson
AutoNation, Inc.
June 7, 2010
Page 3

 the company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.

In addition, please be advised that the Division of Enforcement has  access to all
information you provide to the staff of the Division of Corporation Finance in our review of
your filings or in response to our comments on your filings.

Please contact Ronald E. Alper, Staff Attorney, at (202) 551 -3329, Brigitte
Lippman n, Special Counsel, at (202) 551 -3713, or me at (202) 551 -3720 with any questions.

Sincerely,

H. Christopher Owings
Assistant Director

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404

       DIVISION OF
CORPORATION FINANCE

 Mail Stop 3561

         October 9, 2008
  Michael J. Jackson  Chairman and Chief Executive Officer AutoNation, Inc.  110 S.E. 6
th Street
Fort Lauderdale, FL  33301
Re: AutoNation, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2007
  Filed February 28, 2008
File No. 1-13107
 Dear Mr. Jackson:   We have reviewed your response letter filed on September 10, 2008 to our comment letter dated August 5, 2008 and have the following comments.  Please provide a written response to our comments.  Please be as detailed as necessary in your explanation.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2007

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets, net, page 52

1. We have reviewed your response to comment 2 from our letter dated August 5, 2008, and we have additional comments.  We appreciate the information you have been providing us and we request your continued patience as we find out more about your
segment reporting.  Please understand that our concerns about your segment reporting stem from our uncertainty as to how you determined your operating segments, particularly as this determination may impact your impairment testing of goodwill under SFAS 142.

Mr. Michael Jackson
AutoNation, Inc.
October 9, 2008 Page 2

We read in your response that your chief operating decision maker ("CODM") is your CEO.  Your response indicates that your CODM manages your business using a matrix form of organization that considers both your field management structure, in which individual stores are organized into markets and regions, and your functional management structure, which manages your business based on lines of products and services.  Your response also indicates that while your CODM receives information at the consolidated level, by geographic region, by individual markets and stores in connection with your MOR and QOR reports, and by lines of products and services, your CODM relies primarily on consolidated information to assess performance and to allocate resources.

Given your statement that your CODM manages your business based on both your field management structure and your functi onal management structure, and noting the
vast amount of detail below the consolidated level that is included in the representative CODM reports that you provided to us, it remains unclear to us that you have only one operating segment.  In this regard, we note that you have communicated to the public and to the analysts that follow your company that certain regions or markets such as Florida and California are having more difficulties in the current economic environment than other regions, and we assume that your CODM would need to consider that all of your markets are not acting identically in order to make appropriate strategic decisions fo r your company.  Additionally, we note your
history of acquiring and disposing of a cer tain number of stores each year, and we
assume that stores that were recently acquired may not be as profitable as stores that you have owned for several years, as we assume there would be certain start-up advertising and other costs associated with newly acquired stores.  We assume that your CODM would need insight into the number, location, and performance of these recently acquired stores to make appropriate strategic decisions for your company.  We further note that certain of your CODM reports contain revenue and cost of sales data by product and service line, and the fact that this information is presented both at the consolidated and regional level appears to indicate that management may view the company based primarily on geographic location.  Finally, we note that the reports provided to your Board of Directors include discrete financial information at both the consolidated and regional level, further indicating that management may view the company based primarily on geographic location.

In light of the above, please explain to us in more detail how your CODM can manage your company in an appropriate control environment based solely on consolidated data, including further explaining what you mean when you state that your CODM relies “primarily” on consolidated information.  As the vast majority of reports provided to us appear to view your company based on geographic location, including your reporting of product and service lines by geographic location, it remains unclear to us that your CODM w ould not make strategic decisions based on
some level of results by geographic location.  If your CEO only views results at the consolidated level, it would remain unclear to us that the function of allocating

Mr. Michael Jackson
AutoNation, Inc. October 9, 2008 Page 3

 resources and assessing performance was performed solely by your CEO, as it would appear that the CEO would need to work with others, such as the regional managers, as a group to obtain the level of information and understanding of your results needed to make appropriate strategic decisions.  Please advise.

2. We read in your response to comment 3 from our letter dated August 5, 2008, that based on your operating and reporting structure, you determined that your regions constituted components under SFAS 142, but your regions were viewed as a single reporting unit as you believe the regions have similar economic characteristics and can be aggregated.  Regardless of your response to our comment number one above, given your statement that your regions are components under SFAS 142, we assume that your segment management must regularly review operating results at the regional level consistent with the guidance in paragraph 30 of SFAS 142.  With reference to footnote 19 to SFAS 142 and paragraph 14 of SFAS 131, the term segment management refers to the segment managers of a company’s operating segments.  Since you state that you have only one operating segment, we assume that you would have only one segment manager and that segment manager would be your CODM, which you indicate is your CEO.  However, if your CODM regularly reviews your results at the regional level such that your regions constitute components under SFAS 142, it would appear that your regions also meet the definition of operating segments in paragraph 10 of SFAS 131.  Please explain this apparent contradiction in the level of discrete financial information reviewed by your CODM in your response to our prior comments 2 and 3 from our letter dated August 5, 2008.
 Please respond to these comments within 10 business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your responses to our comments and provides any requested information.  Detailed letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your responses to our comments.
 You may contact Andrew Blume, Staff Accountant, at (202) 551-3254 or Jennifer
Thompson, Accounting Branch Chief, at (202) 551-3737 if you have any questions regarding the financial statements and related matters.  Please contact Mara L. Ransom,
Legal Branch Chief, at (202) 551-3264, or me at (202) 551-3725 with any other questions.
 Sincerely,

H. Christopher Owings Assistant Director

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404

       DIVISION OF
CORPORATION FINANCE

 Mail Stop 3561

         February 13, 2009
  Michael J. Jackson  Chairman and Chief Executive Officer AutoNation, Inc.  110 S.E. 6
th Street
Fort Lauderdale, FL  33301
Re: AutoNation, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2007
  Filed February 28, 2008
File No. 1-13107
 Dear Mr. Jackson:

 We have completed our review of your Form 10-K and related filings and have no further comments at this time.           S i n c e r e l y ,              H. Christopher Owings          A s s i s t a n t  D i r e c t o r

CORRESP
1
filename1.htm

Letter to the SEC

AUTONATION, INC.

AutoNation Tower

110 SE Sixth Street

Fort Lauderdale, FL 33301

February 10, 2009

VIA EDGAR SUBMISSION

H. Christopher Owings

Assistant Director

Division of Corporation Finance

Mail Stop 3561

U.S. 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
January 15, 2009. 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 the Fiscal Year Ended December 31, 2007

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets, net, page 52

    1.

    We have reviewed your responses to comments 1 and 2 from our letter dated October 9, 2008.
Please enhance your disclosures in future filings to explain in further detail why you changed
your management structure during 2008 from one enterprise-wide operating segment to three
brand-oriented operating segments. Your disclosure in the Form 10-Q for the quarterly period
ended September 30, 2008 that the change was made “in response to changes in the automotive
retail market, including the disproportionate decline in revenue and earnings from our
domestic franchises compared to our import and premium luxury franchises” appears to be fairly
broad and does not enable a reader to assess how management regularly evaluates the business
and responds to internal or external factors

impacting
the company. For example, it is not clear if you will return to your previous reporting structure if the
revenues and earnings from your domestic franchises return to their historical levels prior
to the economic downturn. Please tell us how the reorganization was structured, including
how segment managers were determined, how your CODM reporting packages have changed, and
whether or not you created new positions to fit the revised reporting structure, and explain
the extent to which management reviews and places reliance on financial information by
geographic region. Considering the CODM primarily reviewed consolidated financial
information in the past, please clarify how the CODM’s management of the business has
changed and why you now consider it necessary for the CODM to review disaggregated
information and allocate resources and assess performance on a disaggregated level. Since
you conducted your annual goodwill impairment test during the second quarter of 2008 with no
goodwill impairment charge deemed necessary, please also tell us the specific factors that
changed from the second to third quarters that resulted in no impairment during the second
quarter but a material impairment charge in the third quarter.

Response:

Changes in Operating Segment Structure

We will enhance our disclosure in future filings to explain in further detail why we changed
our management structure during 2008 from one enterprise-wide operating segment to three
brand-oriented operating segments. The following example demonstrates how we would consider
revising our disclosure regarding the change in our management structure:

In the third quarter of 2008, our domestic franchises were disproportionately
impacted by the unfavorable economic conditions in the United States, which included
high fuel prices, turmoil in the credit markets, general economic uncertainty, and a
decline in consumer confidence. Our domestic franchises derive a greater proportion
of their revenue and earnings from sales of trucks and sport-utility vehicles, and,
as a result of the increase in fuel prices during that period, demand shifted away
from those types of vehicles to smaller, more fuel-efficient cars. Additionally, a
reduction in the availability of favorable customer financing from the finance
captives of domestic manufacturers, including the discontinuation or limitation of
certain lease programs for domestic vehicles, contributed to the disproportionate
decline in sales volume from our domestic franchises.

In response to the difficult conditions in the automotive retail market and the
outlook for the automotive industry and, in particular, the domestic manufacturers,
our chief operating decision maker (our “CODM”), who is our Chief Executive Officer,
made changes to his management approach and began allocating resources and assessing
performance based on financial information for our domestic, import, and premium
luxury brands. Our CODM directed a review of the profitability, strategic fit,
and potential marketability of each of the stores in our store portfolio. Our
Corporate Development team reviewed our store portfolio and recommended to our CODM
the divestiture of certain underperforming stores, which were primarily domestic.
Our CODM approved the recommendations of our Corporate Development team, reaffirmed
our overall brand portfolio strategy to increase our mix of import and premium
luxury stores, and realigned our planning and reporting efforts to focus on
domestic, import, and premium luxury brands as separate segments of our business.

2

As a result of these actions, in the third quarter of 2008, we determined that under
Statement of Financial Accounting Standards No. 131, Disclosures about Segments of
an Enterprise and Related Information, we had three operating segments: (1)
Domestic, (2) Import, and (3) Premium Luxury. We have determined that our three
operating segments also represent our reportable segments. Our CODM may in the
future, based on our results of operations or developments in the automotive retail
market, make further changes to his management approach that could impact our
operating segment structure.

In connection with the change in our operating segment structure, to facilitate management
review of our segment results, we added new, segment-specific presentations to the internal
reports (the “Internal Reports”) that we provided to the Staff on a confidential and
supplemental basis with our letter to the Staff dated September 10, 2008. Additionally,
Mike Maroone, our Chief Operating Officer, became the segment manager for each of our new
segments. Mr. Maroone is directly accountable to and maintains regular contact with our
CODM to discuss operating activities, financial results, forecasts, and plans for each of
our new operating segments. Our CODM concluded that, given Mr. Maroone’s deep understanding
of our Company and extensive experience in the automotive retail industry, no additional
segment managers were necessary. No other material changes were made to the structure of
our organization.

In addition to the new segment-specific presentations, the Internal Reports continue to
include consolidated financial information and disaggregated financial information based on
product lines, specific brands, and regions. In the third quarter of 2008, we determined
that our CODM allocates resources and assesses performance based
primarily on financial information for our domestic, import, and
premium luxury brands. Our CODM confirmed again that he does not regularly
review region-level information for purposes of allocating resources or assessing
performance. The region-level information continues to be used by various members of
management and staff for analytical purposes.

We also note that paragraph 15 of SFAS No. 131 indicates a preference for segmentation based
on products and services. We believe that the presentation of our domestic, import, and
premium luxury segments allows users of our financial statements to better understand our
business and assess prospects for future cash flows and, as such, is consistent with the
objectives of segment reporting as stated in paragraph 3 of SFAS No. 131.

Goodwill Impairment Test

We had concluded that there was no impairment of goodwill as of the date of our annual
impairment testing (April 30, 2008), and that no triggering event requiring an interim test
of goodwill impairment had occurred as of June 30, 2008. In the third quarter of 2008,
given the significantly deteriorating conditions in the automotive retail industry, we
determined that discounted projected cash flows were significantly lower than as determined
in our assessment of goodwill for potential impairment as of our annual assessment date of
April 30, 2008. In addition, the market price of our stock was significantly lower during
the third quarter of 2008 than during the second quarter of 2008. The change in our
discounted projected cash flows and stock price resulted in us concluding in the third
quarter of 2008 that the carrying value of our single reporting unit exceeded its fair
value, which required us to perform the “second” step of
our goodwill impairment test. We concluded that goodwill associated
with our single reporting unit was impaired. We
then performed an impairment analysis for our reporting units resulting from our new segment
structure and concluded that goodwill associated with our domestic reporting unit was
impaired. See Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements
in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 for additional
information about our goodwill and franchise rights
impairment charges.

* * * * *

3

     In providing this response letter to the Staff, the Company acknowledges that (i) the Company
is responsible for the adequacy and accuracy of the disclosure in the above-referenced filing, (ii)
Staff comments or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the above-referenced filing, and (iii) the
Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

     If you or any member of the Staff has any questions regarding the responses set forth herein,
please contact the undersigned at (954) 769-3145.

    Respectfully submitted,

    /s/ Michael J. Stephan

    Michael J. Stephan

    Vice President — Corporate Controller

    cc:

    Michael J. Jackson, Chairman and Chief Executive Officer, AutoNation, Inc.

Michael E. Maroone, Director, President and Chief Operating Officer, AutoNation, Inc.

Robert R. Grusky, Audit Committee Chair, AutoNation, Inc.

Michael J. Short, Executive Vice President and Chief Financial Officer, AutoNation, Inc.

Jonathan P. Ferrando, Executive Vice President, General Counsel and Secretary, AutoNation, Inc.

Hector Mojena, KPMG LLP

Jonathan Awner, Esq., Akerman Senterfitt

4

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3561

         January 15, 2009
  Michael J. Jackson  Chairman and Chief Executive Officer AutoNation, Inc.  110 S.E. 6
th Street
Fort Lauderdale, FL  33301
Re: AutoNation, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2007
  Filed February 28, 2008
File No. 1-13107
 Dear Mr. Jackson:   We have reviewed your response letter filed on November 6, 2008 to our comment letter dated October 9, 2008 and have the following comment.  Please provide a written response to our comment.  Please be as detailed as necessary in your explanation.  In our comment, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2007

Notes to Consolidated Financial Statements
 Note 1. Summary of Significant Accounting Policies

 Goodwill and Other Intangible Assets, net, page 52

1. We have reviewed your responses to comments 1 and 2 from our letter dated October 9, 2008.  Please enhance your disclosures in future filings to explain in further detail why you changed your management structure during 2008 from one enterprise-wide operating segment to three brand-oriented operating segments.  Your disclosure in the Form 10-Q for the quarterly period ended September 30, 2008 that the change was made “in response to changes in the automotive retail market, including the disproportionate decline in revenue and earnings from our domestic franchises compared to our import and premium luxury franchises” appears to be fairly broad and does not enable a reader to assess how management

Mr. Michael Jackson
AutoNation, Inc. January 15, 2009 Page 2

regularly evaluates the business and responds to internal or external factors impacting the company.  For example, it is not clear if you will return to your previous reporting structure if the revenues and earnings from your domestic franchises return to their historical levels prior to the economic downturn.  Please tell us how the reorganization was structured, including how segment managers were determined, how your CODM reporting packages have changed, and whether or not you created new positions to fit the revised reporting structure, and explain the extent to which management reviews and places reliance on financial information by geographic region.  Considering the CODM primarily reviewed consolidated financial information in the past, please clarify how the CODM’s management of the business has changed and why you now consider it necessary for the CODM to review disaggregated information and allocate resources and assess performance on a disaggregated level.  Since you conducted your annual goodwill impairment test during the second quarter of 2008 with no goodwill impairment charge deemed necessary, please also tell us the specific factors that changed from the second to third quarters that resulted in no impairment during the second quarter but a material impairment charge in the third quarter.  Please respond to this comment within 10 business days or tell us when you will
provide us with a response.  Please furnish a letter that keys your response to our comment and provides any requested information.  Detailed letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your responses to our comment.
 You may contact Andrew Blume, Staff Accountant, at (202) 551-3254 or Jennifer
Thompson, Accounting Branch Chief, at (202) 551-3737 if you have any questions regarding the financial statements and related matters.  Please contact Mara L. Ransom,
Legal Branch Chief, at (202) 551-3264, or me at (202) 551-3725 with any other questions.
 Sincerely,

H. Christopher Owings Assistant Director

CORRESP
1
filename1.htm

Letter to S.E.C.

AUTONATION, INC.

AutoNation Tower

110 SE Sixth Street

Fort Lauderdale, FL 33301

November 6, 2008

VIA EDGAR SUBMISSION

H. Christopher Owings

Assistant Director

Division of Corporation Finance

Mail Stop 3561

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    RE:

    AutoNation, Inc.

Form 10-K for the 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
October 9, 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 the Fiscal Year Ended December 31, 2007

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets, net, page 52

    1.

    We have reviewed your response to comment 2 from our letter dated August 5, 2008, and we have
additional comments. We appreciate the information you have been providing us and we request
your continued patience as we find out more about your segment reporting. Please understand
that our concerns about your segment reporting stem from our uncertainty as to how you
determined your operating segments, particularly as this determination may impact your
impairment testing of goodwill under SFAS 142.

    We read in your response that your chief operating decision maker (“CODM”) is your CEO. Your
response indicates that your CODM manages your business using a matrix form of organization
that considers both your field management structure, in which individual stores are organized into markets and regions, and your functional management structure, which
manages your business based on lines of products and services. Your response also indicates
that while your CODM receives information at the consolidated level, by geographic region,
by individual markets and stores in connection with your MOR and QOR reports, and by lines
of products and services, your CODM relies primarily on consolidated information to assess
performance and to allocate resources.

    Given your statement that your CODM manages your business based on both your field
management structure and your functional management structure, and noting the vast amount of
detail below the consolidated level that is included in the representative CODM reports that
you provided to us, it remains unclear to us that you have only one operating segment. In
this regard, we note that you have communicated to the public and to the analysts that
follow your company that certain regions or markets such as Florida and California are
having more difficulties in the current economic environment than other regions, and we
assume that your CODM would need to consider that all of your markets are not acting
identically in order to make appropriate strategic decisions for your company. Additionally,
we note your history of acquiring and disposing of a certain number of stores each year, and
we assume that stores that were recently acquired may not be as profitable as stores that
you have owned for several years, as we assume there would be certain start-up advertising
and other costs associated with newly acquired stores. We assume that your CODM would need
insight into the number, location, and performance of these recently acquired stores to make
appropriate strategic decisions for your company. We further note that certain of your CODM
reports contain revenue and cost of sales data by product and service line, and the fact
that this information is presented both at the consolidated and regional level appears to
indicate that management may view the company based primarily on geographic location.
Finally, we note that the reports provided to your Board of Directors include discrete
financial information at both the consolidated and regional level, further indicating that
management may view the company based primarily on geographic location.

    In light of the above, please explain to us in more detail how your CODM can manage your
company in an appropriate control environment based solely on consolidated data, including
further explaining what you mean when you state that your CODM relies “primarily” on
consolidated information. As the vast majority of reports provided to us appear to view your
company based on geographic location, including your reporting of product and service lines
by geographic location, it remains unclear to us that your CODM would not make strategic
decisions based on some level of results by geographic location. If your CEO only views
results at the consolidated level, it would remain unclear to us that the function of
allocating resources and assessing performance was performed solely by your CEO, as it would
appear that the CEO would need to work with others, such as the regional managers, as a
group to obtain the level of information and understanding of your results needed to make
appropriate strategic decisions. Please advise.

    Response:

    In the year ended December 31, 2007, and in the first and second quarter of 2008, we
determined that our chief operating decision maker (“CODM”), as defined by SFAS 131, was
Mike Jackson, our Chief Executive Officer. Our CODM set the Company’s business strategy and
exercised final decision-making authority with respect to the allocation of resources and
the assessment of performance. For example, based on consolidated financial information, he
established consolidated financial performance targets and the parameters of our capital
allocation strategy, including budgets for capital expenditures, share repurchases, and acquisitions
and divestitures, and also identified the broad goals of the Company, including
cost-reduction plans and other key initiatives, subject to applicable Board approvals.

2

    Our CODM has confirmed that he relied primarily on consolidated financial information to
allocate resources and assess performance. We use the term “primarily” since our CODM
received financial information in a number of different ways. However, our CODM did not
regularly review any specific presentation of disaggregated financial information for
purposes of allocating resources and assessing performance. Our CODM made Company-wide
strategic decisions based on consolidated financial information and did not allocate
resources on a region-by-region basis. Although from time to time we disclosed specific
factors affecting various aspects of our business, such as the impact of gas prices on sales
of cars versus trucks and the impact of the housing market weakness on the economies of
certain states, our CODM did not regularly review region-level information for purposes of
allocating resources or assessing performance. Accordingly, we concluded that we had one
operating segment under SFAS 131 and that dividing our business into multiple segments would
have been inconsistent with SFAS 131.

    Mike Maroone, our Chief Operating Officer (“COO”), served as our segment manager, as defined
by SFAS 131. Our COO was directly accountable to and maintained regular contact with our
CODM to discuss operating activities, financial results, forecasts, and plans for our
operating segment. However, our COO did not have the necessary power or authority to
perform the CODM function. Our COO reported directly to our CODM, and our CODM evaluated
the performance of our COO.

    Regarding his role in the Company, our COO was principally responsible for executing our
CODM’s business strategy. For example, while our CODM set broad goals with respect to
cost-reduction plans, our COO identified specific actions to take within our operating
segment to achieve those goals, including cost reductions in our stores and in our corporate
organization. Based on the capital allocation strategy established by our CODM, our COO,
together with our Corporate Development and Industry Relations teams, identified potential
acquisitions and divestitures. In addition, our COO regularly reviewed the operating
results of our regions, which were components of our operating segment. He evaluated the
performance of our region presidents and met regularly with them to discuss the operating
results of our regions — the MOR and QOR reports were prepared primarily for these
meetings. Our CODM did not regularly participate in these meetings. Our regions were
designed to provide our senior management team, including our COO, with reasonable span of
control and were not based on unique economic characteristics of certain geographic areas.
From time to time, our regions and markets were reconfigured in order to optimize the span
of control of our management team.

    During the third quarter of 2008, in response to changes in the automotive retail
market, including the disproportionate decline in revenue and earnings from our domestic
franchises compared to our import and premium luxury franchises, we made changes to our
management approach that divided our business into three operating segments: (1) Domestic,
(2) Import, and (3) Premium Luxury. Our Form 10-Q for the
quarter ended September 30, 2008 will include information about each of these
segments.

3

    2.

    We read in your response to comment 3 from our letter dated August 5, 2008, that based on
your operating and reporting structure, you determined that your regions constituted
components under SFAS 142, but your regions were viewed as a single reporting unit as you
believe the regions have similar economic characteristics and can be aggregated. Regardless of
your response to our comment number one above, given your statement that your regions are
components under SFAS 142, we assume that your segment management must regularly review
operating results at the regional level consistent with the guidance in paragraph 30 of SFAS
142. With reference to footnote 19 to SFAS 142 and paragraph 14 of SFAS 131, the term
segment management refers to the segment managers of a company’s operating segments. Since
you state that you have only one operating segment, we assume that you would have only one
segment manager and that segment manager would be your CODM, which you indicate is your CEO.
However, if your CODM regularly reviews your results at the regional level such that your
regions constitute components under SFAS 142, it would appear that your regions also meet
the definition of operating segments in paragraph 10 of SFAS 131. Please explain this
apparent contradiction in the level of discrete financial information reviewed by your CODM
in your response to our prior comments 2 and 3 from our letter dated August 5, 2008.

    Response:

    As noted in our response to the Staff’s first comment above, Mike Maroone, our Chief
Operating Officer, served as our segment manager, as defined by SFAS 131. As segment
manager, our COO regularly reviewed the operating results of our regions, which were
components of our operating segment. Our CODM did not regularly review region-level
information for purposes of allocating resources or assessing performance.

*     *     *     *     *

     In providing this response letter to the Staff, the Company acknowledges that (i) the Company
is responsible for the adequacy and accuracy of the disclosure in the above-referenced filing, (ii)
Staff comments or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the above-referenced filing, and (iii) the
Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

     If you or any member of the Staff has any questions regarding the responses set forth herein,
please contact the undersigned at
 (954) 769-3145.

    Respectfully submitted,

    /s/ Michael J. Stephan

    Michael J. Stephan

    Vice President – Corporate Controller

    cc:

    Michael J. Jackson, Chairman and Chief Executive Officer, AutoNation, Inc.

Michael E. Maroone, Director, President and Chief Operating Officer, AutoNation, Inc.

Robert R. Grusky, Audit Committee Chair, AutoNation, Inc.

Michael J. Short, Executive Vice President and Chief Financial Officer, AutoNation, Inc.

Jonathan P. Ferrando, Executive Vice President, General Counsel and Secretary, AutoNation, Inc.

Hector Mojena, KPMG LLP

Jonathan Awner, Esq., Akerman Senterfitt

4

CORRESP
1
filename1.htm

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

CORRESP
1
filename1.htm

AutoNation Inc.

AUTONATION, INC.

AutoNation Tower

110 SE Sixth Street

Fort Lauderdale, FL 33301

August 28, 2008

VIA EDGAR SUBMISSION

Andrew Blume

Staff Accountant

Division of Corporation Finance

Mail Stop 3561

U.S. 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. Blume:

     AutoNation, Inc. has received the letter (the “Comment Letter”) from the Staff (the “Staff”)
of the Securities and Exchange Commission dated August 5, 2008, concerning the above-referenced
filing. The purpose of this letter is to confirm our understanding, based on our telephone
conversation with you, that the Staff does not object to our request for an extension to September 10,
2008, to respond to the Staff’s comments listed in the Comment Letter.

     Please contact me at (954) 769-3145 if you have any questions.

    Respectfully submitted,

    /s/ Michael J. Stephan

    Michael J. Stephan

    Vice President - Corporate Controller

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3561

         August 5, 2008
  Michael J. Jackson  Chairman and Chief Executive Officer AutoNation, Inc.  110 S.E. 6
th Street
Fort Lauderdale, FL  33301
Re: AutoNation, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2007
  Filed February 28, 2008
File No. 1-13107
 Dear Mr. Jackson:   We have reviewed your response letter filed on May 30, 2008 to our comment letter dated April 17, 2008 and have the following comments.  Please provide a written response to our comments.  Please be as detailed as necessary in your explanation.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2007

Management’s Discussion and Analysis of Fi nancial 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

Mr. Michael Jackson
AutoNation, Inc.
August 5, 2008 Page 2

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.
 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

Mr. Michael Jackson
AutoNation, Inc.
August 5, 2008 Page 3

determined 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.
 3. If you have a single operating segment, it appears that each store may represent a “component” under paragraph 30 of SFAS 142.  In this regard, we assume that each of your stores constitutes a business for which discrete financial information is available, that segment management regularly reviews the operating results of each store, and that not all stores have similar economic characteristics.  Please tell us how you determined each store does not represent a component under SFAS 142.  If each store were considered a component, it appears that stores with similar economic characteristics would be aggregated into a single reporting unit and dissimilar stores would be disaggregated into separate reporting units.
 Please respond to these comments within 10 business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your responses to our comments and provides any requested information.  Detailed letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your responses to our comments.
 You may contact Andrew Blume, Staff Accountant, at (202) 551-3254 or Jennifer
Thompson, Accounting Branch Chief, at (202) 551-3737 if you have any questions regarding the financial statements and related matters.  Please contact Mara L. Ransom,
Legal Branch Chief, at (202) 551-3264, or me at (202) 551-3725 with any other questions.
 Sincerely,

H. Christopher Owings

Mr. Michael Jackson
AutoNation, Inc. August 5, 2008 Page 4

Assistant Director

Mail Stop 3561                  April 17, 2008  Michael J. Jackson  Chairman and Chief Executive Officer AutoNation, Inc.  110 S.E. 6
th Street
Fort Lauderdale, FL  33301
 Re:  AutoNation, Inc.
  Form 10-K for Fiscal Year Ended December 31, 2007
  Filed February 28, 2008   Definitive Proxy Statement on Schedule 14A   Filed March 27, 2008   File No. 001-13107

Dear Mr. Jackson:
  We have reviewed your filing and have the following comments.  You should comply with the comments in all future filings, as applicable.  Please confirm in writing
that you will do so, and also explain to us how you intend to comply.  If you disagree, we
will consider your explanation as to why our comments are inapplicable or a revision is
unnecessary.  Please be as detaile d as necessary in your explan ation.  After reviewing this
information, we may raise additional comments.
  Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filings.  We look forward to working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.
 Form 10-K for Fiscal Year Ended December 31, 2007

 Management’s Discussion and Analysis of Financial Condition and Results of
Operations, page 22
1. We note your discussion in MD&A of th e challenges in the automotive retail
industry resulting from the slowing economy and tightening credit markets.  To
help us and your investors better under stand how recent changes in the economy
affect your company, please respond to the following comments:

Mr. Michael Jackson
AutoNation, Inc.
April 17, 2008 Page 2 of 6
• Given that goodwill comprises approximately one-third of your total assets,
please expand your critical accounti ng policy for goodwill to focus on the
assumptions and uncertainties that u nderlie your goodwill impairment testing,
including better explaining how you arrive at your estimates of fair value, how
accurate such estimates have been in the past, how much the estimates have
changed in the past, and whether such  estimates are reasonably likely to
change in the future.  You should al so quantify the se nsitivity of your
estimates to change, based on other ou tcomes that are reasonably likely to
occur and would have a material effect on your financial statements.  Refer to
Section V of our Release No. 33-8350.

• Please consider providing similar expa nded disclosures for your franchise
rights assets.

• Given that inventory comp rises approximately 27% of your total assets, please
tell us how you considered providing a critical accounting policy on inventory
impairment.  In this regard, we assume from your disclosures that you have not incurred any inventory impairment s in the periods presented in your
financial statements.  Please confirm our  assumption or explain this matter to
us in more detail.  Please consider whether your investors would benefit from
additional insight as to the likelihood of inventory impairments resulting from
reasonably likely changes in the future.  Additionally, given your disclosure of the days supply of inventory that you ma intain, if your estimate of the amount
of inventory needed to cover a ce rtain number of days has changed
significantly, or is reasonably  likely to change significantly in the future, we
believe you should consider addressing th is in a critical accounting policy.

• We note your discussion of the reserve for chargebacks.  Please provide us
with a rollforward of your reserve for each  of the three years presented in your
financial statements, and tell us how you considered disclosing this
information under Articles 5-04 and 12-09 of Regulation S-X.  Please expand your critical accounting policy for reve nue recognition and chargebacks to
better explain how accurate such estimates  have been in the past, how much
the estimates have changed in the past, including whether you are seeing a trend of increasing chargebacks resulting from the slowing economy, and whether such estimates are reasonably lik ely to change in the future.  You
should also quantify the sensitivity of  your estimates to change, based on
other outcomes that are reasonably likely  to occur and would have a material
effect on your financial statements.  In this regard, we note that while your
finance and insurance, net revenues comp rise a small percentage of your total
revenues, they appear significant to  your gross profit and net income.

• Please describe to us the extent of yo ur use of price reductions or any other

Mr. Michael Jackson
AutoNation, Inc.
April 17, 2008 Page 3 of 6
customer incentives that you offer beyond those provided by the manufacturers.  To the extent that you offer such incentives, please tell us how
you account for such incentives, and how you considered disclosing your accounting policy.  Additionally, to the exte nt that the use of such incentives
is more prevalent in certain markets th an others, please addr ess this in your
analysis of results of operations as part of providing your investors with a
view of the company through the eyes of management.
 Liquidity and Capital Resources, page 36

2. We note that you have repurchased a signi ficant amount of your outstanding stock
over the past two years, reducing th e number of shares outstanding by
approximately 30% over this two year period.  We also note that a significant portion of these repurchases appear to have  been funded by the issuance of debt.
Given these significant changes in your capital structure, we believe you should
provide your investors with further in sight into management’s decisions
concerning these significant stock repurc hases and debt issuances.  We remind
you that MD&A is intended to enable your investors to see the company through
the eyes of management and to provide the context within which your financial
information should be analyzed.  To ach ieve these objectives, we believe that
your discussion of material changes in  your capital structure should not only
explain what changed, but should also an alyze the underlying factors behind these
changes, including how these changes fit into management’s overall business plan.  Please refer to our Release N o. 33-8350, and tell us how you considered
revising your MD&A narrative to  address these concerns.
 Notes to Consolidated Financial Statements

 Note 1. Summary of Significant Accounting Policies

 Goodwill and Other Intangibl e Assets, net, page 52

3. We note that you perform your annual goodwil l impairment test on an enterprise-
wide level.  Please explain to us in  reasonable detail how your use of one
reporting unit in your goodwill impairment test is consistent with paragraphs 30 and 31 of SFAS 142.  If applicable, pleas e also tell us why you do not assign
goodwill to individual reporting units.
 Revenue Recognition, page 55

4. You disclose that you sell and receiv e a commission, which is recognized upon
sale, on several types of products, in cluding extended service contracts,
maintenance programs, guaranteed auto protection, tire and wheel protection, and theft protection products.  Y ou further indicate that your product offerings include

Mr. Michael Jackson
AutoNation, Inc.
April 17, 2008 Page 4 of 6
those that are sold and admi nistered by independent third parties.  Please provide
us with the following informati on regarding these products:

• Since you recognize the net commission rece ived as revenue at the point of
sale, it appears that you do not consider your self to be the le gal obligor in any
jurisdiction under these arra ngements.  If you are not the legal obligor, please
clarify how you arrived at that determin ation.  If you are considered the legal
obligor in one or more jurisdicti ons, please clarify your disclosures
accordingly and tell us how you recogni ze revenues for those contracts.
Please quantify for us the gross amounts of proceeds received and
commissions paid that have been refl ected in revenue under these contracts
for the historical periods presented.  Please see FASB Technical Bulletin 90-1
and SFAS 113.

• Please explain to us in further de tail the nature and terms of your
“retrospective commission arrangem ents” and the related accounting
treatment.  Please specify the accounting literature used to account for these
contracts.  Please also clarify how your  participation in these contracts is
determined.  If you know at inception whether or not you will participate in
future profit pursuant to th ese arrangements, please tell us if you defer the
initial commission revenue and explain th e reasons for your determination.
5. Please provide us with, and expand your accounting policy to disclose, a more
detailed description of your revenue r ecognition for providing services.  Please
tell us whether you provide guarantees for your service work, either to your
customers or, in the case of work done  under manufacturer wa rranties and service
contracts, to the manufacture rs.  If so, please explain how such guarantees impact
your revenue recognition and tell us what consideration you gave to the disclosure requirements of paragraph 14 of FIN 45.
 Note 13.  Discontinued Operations, page 69

6. We note your disclosures concerning sales of your stores.  Please tell us how you
considered quantifying the number of st ores sold each year, similar to your
disclosure in Note 15 of th e number of stores acquired each year, as we believe
this information is useful to your investors.   If there is a sign ificant change in the
number of stores sold from year to year , please provide your investors with some
insight into the reasons for these vari ances, either here or in your MD&A
analysis.
 Definitive Proxy Statement on Sche dule 14A as filed March 27, 2008

 Compensation Discussion & Analysis, page 17

Mr. Michael Jackson
AutoNation, Inc.
April 17, 2008 Page 5 of 6  Setting Compensation Levels of Executive Officers, page 17

7. Please expand your discussion here to addr ess in more detail the company’s use
of the comparative pay of the retail companies that you name here.  For example,
we note your statement that you review the data “for informational purposes” but
that does not explain what the informa tion you are reviewing tells you about your
own compensation levels.  Please also tell  us how you determined to include the
companies you name in the pool of retail companies you review.

2007 Executive Compensation Elements, page 18
8. In your discussion of the Annual Incentiv e Bonus, you mention that bonus awards
will be payable based upon a sliding scale based on your actual achievement
relative to the predetermined goals.  If this means that the participants in the bonus awards could earn less or more than you state here, please revise to disclose
the threshold and/or stretch goals re flected as a percentage of salary.
9. Please also explain how the Subcommittee determines which of your named executive officers or other key employees participates in the Executive Incentive
Bonus Plan.  For example, we note your indication that Mr. McAllister was not eligible to receive an awar d under the plan in 2007.   Pl ease revise to explain why.
10. Please clarify whether the pe rcentages reflected in the “2008 Target Award as a
Percentage of Base Salary” chart are in tended to apply to both the AutoNation
Operating Performance Plan and the Executive Incentive Bonus Plan.
11. It does not appear that you have disc losed the 2008 annual performance goals
necessary for the executives to receive the awards you discuss here.  Please disclose or, to the extent  you believe disclosure of the company’s performance
goals are not required because it could result in competitive harm, provide us on a supplemental basis a detailed explanation fo r this conclusion.  S ee instruction 4 to
Item 402(b).  If disclosure of the performance goals would cause competitive harm, please discuss further how diffic ult it will be for the named executive
officer or how likely it will be for you to achieve the target levels or other factors.

*****

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your responses to our comments and provides any requested information.  Detailed letters greatly facilitate our
review.  Please understand that we may have  additional comments after reviewing your
responses to our comments.

Mr. Michael Jackson
AutoNation, Inc. April 17, 2008 Page 6 of 6
 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filings to be certain that the filings include all information required under the Securities Exchange Act of 1934 and that they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the adequacy  and accuracy of the disc losures they have made.
 In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:

• the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

• staff comments or changes to disclosu re in response to staff comments do
not foreclose the Commission from ta king any action with respect to the
filing; and

• the company may not assert staff comments as a defense in any
proceeding initiated by the Commissi on or any person under the federal
securities laws of the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filings or in response to our comments on your filings.
 You may contact Andrew Blume, Staff A ccountant, at (202) 551-3254 or Jennifer
Thompson, Accounting Branch Chief at ( 202) 551-3823 if you have any questions
regarding the financial stat ements and related matters.  Please contact Mara L. Ransom,
Legal Branch Chief, at (202) 551-3264, or  me at (202) 551-3725 with any other
questions.
Sincerely,

H. Christopher Owings Assistant Director

CORRESP
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Letter to the SEC

AUTONATION, INC.

AutoNation Tower

110 SE Sixth Street

Fort Lauderdale, FL 33301

May 30, 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

Definitive Proxy Statement on Schedule 14A Filed March 27, 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
April 17, 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, page 22

    1.

    We note your discussion in MD&A of the challenges in the automotive retail industry resulting
from the slowing economy and tightening credit markets. To help us and your investors better
understand how recent changes in the economy affect your company, please respond to the
following comments:

    •

    Given that goodwill comprises approximately one-third of your total assets, please
expand your critical accounting policy for goodwill to focus on the assumptions and
uncertainties that underlie your goodwill impairment testing, including better
explaining how you arrive at your estimates of fair value, how accurate such estimates
have been in the past, how much the estimates have changed in the past, and whether
such estimates are reasonably likely to change in the future. You should also quantify
the sensitivity of your estimates to change, based on other outcomes that are
reasonably likely to occur and would have a material effect on your financial
statements. Refer to Section V of our Release No. 33-8350.

    •

    Please consider providing similar expanded disclosures for your franchise rights
assets.

    •

    Given that inventory comprises approximately 27% of your total assets, please tell
us how you considered providing a critical accounting policy on inventory impairment.
In this regard, we assume from your disclosures that you have not incurred any
inventory impairments in the periods presented in your financial statements. Please
confirm our assumption or explain this matter to us in more detail. Please consider
whether your investors would benefit from additional insight as to the likelihood of
inventory impairments resulting from reasonably likely changes in the future.
Additionally, given your disclosure of the days supply of inventory that you maintain,
if your estimate of the amount of inventory needed to cover a certain number of days
has changed significantly, or is reasonably likely to change significantly in the
future, we believe you should consider addressing this in a critical accounting policy.

    •

    We note your discussion of the reserve for chargebacks. Please provide us with a
rollforward of your reserve for each of the three years presented in your financial
statements, and tell us how you considered disclosing this information under Articles
5-04 and 12-09 of Regulation S-X. Please expand your critical accounting policy for
revenue recognition and chargebacks to better explain how accurate such estimates have
been in the past, how much the estimates have changed in the past, including whether
you are seeing a trend of increasing chargebacks resulting from the slowing economy,
and whether such estimates are reasonably likely to change in the future. You should
also quantify the sensitivity of your estimates to change, based on other outcomes that
are reasonably likely to occur and would have a material effect on your financial
statements. In this regard, we note that while your finance and insurance, net revenues
comprise a small percentage of your total revenues, they appear significant to your
gross profit and net income.

    •

    Please describe to us the extent of your use of price reductions or any other
customer incentives that you offer beyond those provided by the manufacturers. To the
extent that you offer such incentives, please tell us how you account for such
incentives, and how you considered disclosing your accounting policy. Additionally, to
the extent that the use of such incentives is more prevalent in certain markets than
others, please address this in your analysis of results of operations as part of
providing your investors with a view of the company through the eyes of management.

    Response:

    Goodwill and Franchise Rights

    Please see Attachments 1 and 2 for examples of revisions we will include, to the extent
applicable, in future filings to our critical accounting policies related to goodwill and
franchise rights to describe the valuation methods and related estimates and assumptions
used in our impairment testing, as well as the sensitivity of significant estimates and
assumptions to changes.

2

    Inventory

    With respect to inventory, we have three categories of inventory: (1) new vehicles, (2) used
vehicles, and (3) parts, accessories, and other. New vehicle inventory comprised 80% of our
total inventory as of December 31, 2007, and 81% of our total inventory as of December 31,
2006. We have generally not experienced losses on the sale of new vehicle inventory, in
part due to incentives provided by manufacturers to promote sales of new vehicles and our
inventory management practices noted below.

    Used vehicle inventory comprised 13% of our inventory at both
December 31, 2007 and 2006. In general, used vehicles that we do
not expect to sell on a retail basis are sold in wholesale auctions. The value of our used vehicle inventory was reduced by
$2.0 million at December 31, 2007 (to $313.1 million) and $1.8 million at December 31, 2006
(to $299.9 million) to reflect estimated losses on used vehicle inventory that we estimated
would be sold in wholesale auctions at a loss.

    Parts, accessories, and other inventory, which totaled $150.8 million at December 31, 2007,
and $148.8 million at December 31, 2006, comprised 6% of our inventory and less than 2% of
our total assets at December 31, 2007 and 2006. Parts, accessories, and other
inventory are carried at the lower of acquisition cost (first-in, first-out method) or
market. The value of our parts, accessories, and other inventory was reduced by $5.8
million at December 31, 2007, and $3.0 million at December 31, 2006, to reflect inventory
write downs.

    With respect to inventory levels, we do not currently anticipate a significant change in the
level of inventory we are required to maintain. Additionally, given our inventory
management practices (such as managing our inventory purchases based on our sales
forecasts), we do not believe the current business climate, including challenges in the
automotive retailing industry resulting from the slowing economy and tightening credit
markets, will increase the likelihood of material impairment charges.

    As a result of our inventory management practices and the level of inventory write-downs
noted above, we do not believe that inventory valuation is a critical accounting policy.

    Chargeback Liabilities

    With respect to chargeback liabilities, the requested rollforward of our estimated liability
for each of the three years presented in our financial statements is as follows (in
millions):

    2007

    2006

    2005

    Balance — January 1

    $
    70.1

    $
    67.7

    $
    65.9

    Add: Provisions

    46.8

    57.2

    57.9

    Deduct: Chargebacks

    (54.4
    )

    (54.8
    )

    (56.1
    )

    Balance — December 31

    $
    62.5

    $
    70.1

    $
    67.7

3

    We believe our estimated liability for chargebacks represents a contingent obligation and,
therefore, is not subject to the requirements of Rule 12-09 of Regulation S-X.

    Please see Attachment 3 for example revisions we will include, to the extent applicable, in
future filings to our critical accounting policy for chargebacks. We will also identify the
effects of the slowing economy on our estimated liability for chargebacks, if significant.

    Price Reductions and Incentives

    With respect to customer incentives and price reductions beyond what is offered by the
various manufacturers, our stores periodically offer various sales promotions and incentives
to drive traffic and sales. We do not have formal company-wide price reduction programs for
our customers. Individual vehicle sales transactions are negotiated with customers on a
transaction-by-transaction basis. The effect of changes in transaction prices is reflected
in changes in our gross margins, which we disclose and discuss in our MD&A.

Liquidity and Capital Resources, page 36

    2.

    We note that you have repurchased a significant amount of your outstanding stock over the
past two years, reducing the number of shares outstanding by approximately 30% over this two
year period. We also note that a significant portion of these repurchases appear to have been
funded by the issuance of debt. Given these significant changes in your capital structure, we
believe you should provide your investors with further insight into management’s decisions
concerning these significant stock repurchases and debt issuances. We remind you that MD&A is
intended to enable your investors to see the company through the eyes of management and to
provide the context within which your financial information should be analyzed. To achieve
these objectives, we believe that your discussion of material changes in your capital
structure should not only explain what changed, but should also analyze the underlying factors
behind these changes, including how these changes fit into management’s overall business plan.
Please refer to our Release No. 33-8350, and tell us how you considered revising your MD&A
narrative to address these concerns.

    Response: In future filings, we will expand our discussion in the Liquidity and
Capital Resources section of MD&A based on the guidance in Release No. 33-8350. The
following example demonstrates how we would consider revising our December 31, 2007
discussion, which will be updated as appropriate in future filings:

    In April 2006, we purchased 50 million shares of our common stock at $23 per
share for a purchase price of $1.15 billion pursuant to our equity tender
offer. After the completion of our equity tender offer, we repurchased an
additional 11.2 million shares of our common stock for a purchase price of
$228.9 million during the remainder of 2006, for a total of
61.2 million shares repurchased for an aggregate purchase price of $1.38 billion in 2006.
During 2007, we repurchased 33.2 million shares of our common stock for an
aggregate purchase price of $645.7 million (average purchase price per share
of $19.43). On a cumulative basis since January 1, 2006 through December
31, 2007, we repurchased approximately 31% of our common shares outstanding
(net of issuances in connection with stock option exercises) for
approximately $2.0 billion and have issued approximately $1.3 billion of new
debt (net of
repayments), in part, to fund these repurchases.

4

    We believe that stock repurchases are consistent with the objective of
returning value to stockholders and increasing long-term stockholder value.
We have completed stock repurchases using available cash and new borrowings
to maintain an appropriate balance between meeting the needs of our business
and delivering value to our stockholders.

    At December 31, 2007, $196.7 million remained available for share
repurchases under the existing repurchase program approved by our Board of
Directors. Future share repurchases are subject to limitations in the
indenture relating to our senior unsecured notes. At January 1, 2008,
approximately $30 million remained available for share repurchases and other
restricted payments under the indenture relating to our senior unsecured
notes. This amount will increase in future periods by 50% of our cumulative
consolidated net income (as defined in the indenture), the net proceeds of
stock option exercises, and certain other items, and decrease by the amount
of future share repurchases and other restricted payments subject to these
limitations.

    While we expect to continue repurchasing shares in the future, the decision
to make additional share repurchases will be based on such factors as the
market price of our common stock versus our view of its intrinsic value, the
potential impact on our capital structure, and the expected return on
competing uses of capital, such as dealership acquisitions, capital
investments in our current business, or pay down / repurchases of our debt.

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets, net, page 52

    3.

    We note that you perform your annual goodwill impairment test on an enterprise-wide level.
Please explain to us in reasonable detail how your use of one reporting unit in your goodwill
impairment test is consistent with paragraphs 30 and 31 of SFAS 142. If applicable, please
also tell us why you do not assign goodwill to individual reporting units.

    Response: We operate in a single operating and reporting segment, automotive
retailing. As of December 31, 2007, we operated 322 new vehicle franchises from 244 stores.
Our stores have from time to time been organized into different geographic regions.
Changes to our geographical organizational structure are facilitated by the economic and
operating similarities of our stores. As of December 31, 2007, our stores were organized
into four regions.

    We believe that each of our four regions represent “components,” as defined in paragraph 30
of SFAS 142, since each region meets the definition of a “business” and has separate and
distinct financial information. Additionally, however, these components have similar
economic characteristics and, therefore, should be considered as a single reporting unit as
further described in paragraph 30 of SFAS 142 and in Emerging Issues Task Force (“EITF”)
Abstracts, Topic D-101, “Clarification of Reporting Unit Guidance in Paragraph 30 of FASB
Statement No. 142.”

    We believe all of our regions have similar economic characteristics as a result of several
factors, including:

5

    •

    Our regions have historically exhibited comparable gross profit percentages.

    •

    Each region is comprised of a mix of brands of new vehicle franchises, which
offer similar products and services.

    •

    The stores within our regions use standardized policies and procedures,
including similar finance and insurance products and sales processes.

    •

    Each franchise sells predominantly to end consumers and operates under the same
types of manufacturer and state regulatory environments.

    •

    Our stores share common information technology systems and operate under
standardized accounting policies. In addition, most of our stores utilize a shared
service center for certain accounting and other administrative functions.

    As a result of the foregoing, we have a single reporting unit for the purposes of goodwill
impairment testing, which we believe to be consistent with the requirements of paragraphs 30
and 31 of SFAS 142.

Revenue Recognition, page 55

    4.

    You disclose that you sell and receive a commission, which is recognized upon sale, on
several types of products, including extended service contracts, maintenance programs,
guaranteed auto protection, tire and wheel protection, and theft protection products. You
further indicate that your product offerings include those t

CORRESP
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Letter to the SEC

AUTONATION, INC.

AutoNation Tower

110 SE Sixth Street

Fort Lauderdale, FL 33301

May 15, 2008

VIA EDGAR SUBMISSION

Jennifer Thompson

Accounting Branch Chief

Division of Corporation Finance

Mail Stop 3561

U.S. 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

Definitive Proxy Statement on Schedule 14A Filed March 27, 2008

File No. 001-13107

Dear Ms. Thompson:

     AutoNation, Inc. has received the letter (the “Comment Letter”) from the Staff (the “Staff”)
of the Securities and Exchange Commission dated April 17, 2008 concerning the above-referenced
filings. The purpose of this letter is to confirm our understanding, based on our telephone
conversation with you, that the Staff does not object to our request for an extension to June 2,
2008 to respond to the Staff’s comments listed in the Comment Letter.

     Please contact me at (954) 769-3145 if you have any questions.

    Respectfully submitted,

    /s/ Michael J. Stephan

    Michael J. Stephan

    Vice President - Corporate Controller

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3561
        September 17, 2007
Mr. Michael J. Jackson
Chief Executive Officer
AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, FL  33301

Re: AutoNation, Inc.
  Form 10-K for the Fiscal Year Ended December 31, 2006
  Filed February 28, 2007
  File No. 0-13107

Dear Mr. Jackson:

 We have completed our review of your Form 10-K and have no further comments at this
time.

Sincerely,

William Choi
Branch Chief

CORRESP
1
filename1.htm

CORRESP

VIA EDGAR

September 12, 2007

Mr. William Choi

Branch Chief

United States Securities and Exchange Commission

Division of Corporation Finance

Mail Stop 3561

100 F Street, N.E.

Washington, DC 20549

    Re:

    AutoNation, Inc.

Form 10-K for Fiscal Year Ended December 31, 2006

Filed February 28, 2007

File No. 0-13107

Dear Mr. Choi:

We refer to the comment letter dated August 16, 2007 from the staff (the “Staff”) of the Division
of Corporation Finance of the United States Securities and Exchange Commission concerning the Form
10-K for the fiscal year ended December 31, 2006 of AutoNation, Inc. (the “Company”) filed with the
Commission on February 28, 2007 (the “Form 10-K”).

We have noted below the text of each of the Staff’s comments included in its comment letter,
followed by the Company’s response. The Company expects that it will revise its future filings as
noted in the responses indicated below.

General

Comment 1

In future filings, please include a ratio of earnings to fixed charges for your registered debt
securities. Please also include an exhibit to future filings to show the figures used to calculate
the ratios. Refer to Items 503(d) and 601(b)(12) of Regulation S-K.

Response

We note the Staff’s comment and hereby advise the Staff that we have not included a ratio of
earnings to fixed charges or the related exhibit in our Annual Report on Form 10-K, because we do
not have any debt securities registered under the Securities Exchange Act of 1934 (the “1934 Act”)
or any outstanding shelf registrations covering debt securities that incorporate future 1934 Act
filings. The exchange offer for our senior notes under the Registration Statement on Form S-4 (No.
333-136949) was completed in 2006. In the future, if we have debt securities registered which
incorporate future filings under the 1934 Act, we will include this table and the exhibit in
subsequent Form 10-K reports.

Mr. William Choi

United States Securities and Exchange Commission

September 12, 2007

Page 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 20

Reported Operating Data, page 23

Comment 2

When attributing increases or decreases in revenue or expense line items to multiple factors
contributing to material changes over the reported periods, please quantify the amount of the
increase or decrease attributed to each factor. For example, please revise future filings to
quantify the impact of:

    •

    Increased retrospective commissions received on extended service contracts,
higher new and used vehicle prices and increased premium luxury revenue per vehicle
retailed on 2006 finance and insurance sales;

    •

    The increase in compensation expense, decrease in advertising program
participation reimbursed by manufacturers, increase in non-reimbursed advertising,
and property damage costs on 2006 selling, general and administrative expenses; and

    •

    Additional debt incurred, the repurchase of your 9% unsecured notes, and
repayments of mortgage facilities on 2006 other interest expense.

For further guidance please refer to Item 303 (a)(3) of Regulation S-K and the Commission’s
Interpretative Releases on MD&A, Release 33-8350 and Section III.D of Release 33-6835, both of
which are available on our website at www.sec.gov. Please be advised that this comment should not
be limited to the examples provided, but should be applied to each category you discuss, as
practicable. Please include a draft of your proposed revisions with your response.

Response

Appendix A provides examples of how we will quantify in future filings the extent of contribution
from multiple factors where doing so is practicable and when doing so provides information that may
not otherwise be derived from information disclosed in the financial data tables. Discussions
about qualitative factors that contribute to our financial results will exclude quantification
where their effects on our financial statements cannot be readily determined. Examples of such
qualitative factors include the impact of the housing market on our sales and improvements in
finance and insurance revenues derived from a greater focus on certain training and certification
programs.

Mr. William Choi

United States Securities and Exchange Commission

September 12, 2007

Page 3

Financial Condition, page 32

Cash Flows from Operating Activities, page 34

Comment 3

Please revise future filings to focus on the primary drivers and other material factors necessary
to an understanding of your operating cash flows and the indicative value of historical cash flows
and the underlying reasons for changes in cash flows as well as their reasonably likely impact on
future cash flows. For example, we note that the decreases in inventory, vehicle floorplan
payable-trade, net, and other liabilities appear to have been primarily responsible for the 2006
decrease in operating cash, but you have not provided an analysis of these items to permit a reader
to understand the extent to which changes are the result of changes in the level of operations or
other factors. We also note that you did not include a discussion of cash flows from discontinued
operations. Please refer to Interpretive Release No. 33-6835, which is available on our website at
www.sec.gov.

Response

We will enhance our cash flow disclosures in future filings to further identify and discuss the
primary drivers and other material factors affecting cash flows. Future filings will also include
discussions of cash flows from discontinued operations for periods with material cash flows from
discontinued operations.

Contractual Payment Obligations, page 36

Comment 4

You disclose in note 8 to your consolidated financial statements that your operating leases require
payment of real estate taxes, insurance and common area maintenance in addition to rent. To the
extent that payments made for maintenance, insurance and taxes on your leased properties are
material, please include disclosures below the contractual obligations table to indicate that the
lease obligation amounts presented do not include these additional obligations. Since the table is
aimed at providing additional information that is material to understanding a company’s cash
requirements, you may want to disclose amounts paid in prior years for maintenance, insurance and
taxes in order to provide a context for the reader to understand the impact of these charges on
your total lease obligations. See Item 303(a)(5) of Regulation S-K and footnote 46 to SEC Release
No. 33-8350.

Response

We will supplement our contractual obligations table with additional disclosures regarding amounts
paid annually for maintenance, insurance and real estate taxes on our leased properties in future
filings.

Mr. William Choi

United States Securities and Exchange Commission

September 12, 2007

Page 4

Notes to Consolidated Financial Statements, page 47

Other
Current Liabilities, page 49

Comment 5

Please provide us with a list of the major categories included in this line item and their amounts
reconciled to the other current liability balances as of December 31, 2006 and 2005. In future
filings, please state separately, in the balance sheet or in your notes any item in excess of five
percent of total current liabilities. Refer to Rule 5-02-20 of Regulation S-X. If no categories
exceed five percent, please consider further disclosure of the contents of this balance due to its
significance relative to your current liabilities.

Response

Major categories included in this line item were (in millions):

    December 31,

    Description

    2006

    2005

    Accrued payroll and benefits

    $
    117.6

    $
    110.5

    Finance and insurance chargeback liabilities (1)

    63.2

    63.6

    Unrecognized tax benefits (2)

    58.7

    54.5

    Accrued sales taxes

    55.1

    59.2

    Liabilities related to discontinued operations (3)

    25.7

    120.4

    Current income taxes (2)

    —

    88.5

    Other (4)

    219.2

    220.1

    TOTAL

    $
    539.5

    $
    716.8

    (1)

    The Company sells certain types of finance, insurance and protection products and receives a
commission or other income on such products, all of which are administered by third parties.
Pursuant to the Company’s arrangements with these third parties, certain commissions and other
income earned for the sales of finance, insurance and other protection products are subject to
chargeback should the contracts be terminated prior to their expirations. This amount
represents the current portion of reserves established for chargebacks against revenues
recognized from sales of these finance and insurance products. Please see “Revenue
Recognition” in Note 1 to our Consolidated Financial Statements (page 51 of our December 31,
2006 Form 10-K).

    (2)

    Please see Note 11 to our Consolidated Financial
Statements (pages 61-63 of our December
31, 2006 Form 10-K) for disclosures regarding current income taxes and unrecognized tax
benefits.

    (3)

    Represents the liabilities of our discontinued operations, comprised of vehicle floorplan
payables and other miscellaneous current liabilities. Please see Note 13 to our Consolidated
Financial Statements (pages 63-64 of our December 31, 2006 Form 10-K).

    (4)

    Other includes all other categories, none of which individually exceed $40 million.

Mr. William Choi

United States Securities and Exchange Commission

September 12, 2007

Page 5

We note that none of the categories above exceed 5% of total current liabilities as of December 31,
2006 or 2005. We additionally note that the nature of our other current liabilities is discussed in
Note 1 to our Consolidated Financial Statements (page 49 of our December 31, 2006 Form 10-K).

* * * * * * * * * * * * * *

In connection with responding to your comments, the Company acknowledges the following:

    1.

    The Company is responsible for the adequacy and accuracy of the disclosure in the
filing.

    2.

    Staff comments or changes to disclosures in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing.

    3.

    The Company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

Please
address any questions to me at (954) 769-3145 or via facsimile at
(954) 769-6425.

Sincerely,

/s/ Michael J. Stephan

Michael J. Stephan, Vice President and Corporate Controller (Principal Accounting Officer)

    cc:

    Michael J. Jackson, Chairman and Chief Executive Officer, AutoNation, Inc.

    Michael J. Short, Executive Vice President and Chief Financial Officer, AutoNation, Inc.

    Jonathan P. Ferrando, Executive Vice President, General Counsel and Secretary, AutoNation, Inc.

    Hector Mojena, KPMG LLP

    Jonathan Awner, Esq., Akerman Senterfitt

    Appendix A — Examples of proposed changes to future narrative discussions are marked as noted below.

     Parts and Service

    Years Ended December 31,

    ($ in millions)

    2006 vs. 2005

    2005 vs. 2004

    Variance

    Variance

    Favorable/

    Favorable/

    2006

    2005

    (Unfavorable)

    % Variance

    2004

    (Unfavorable)

    % Variance

    Reported:

    Revenue

    $
    2,600.4

    $
    2,508.5

    $
    91.9

    3.7

    $
    2,366.9

    $
    141.6

    6.0

    Gross profit

    $
    1,141.4

    $
    1,100.0

    $
    41.4

    3.8

    $
    1,036.7

    $
    63.3

    6.1

    Gross profit as a
percentage
of revenue

    43.9
    %

    43.9
    %

    43.8
    %

    Same
Store:

    Revenue

    $
    2,572.7

    $
    2,508.5

    $
    64.2

    2.6

    Gross profit

    $
    1,126.8

    $
    1,099.9

    $
    26.9

    2.4

    Gross profit as a
percentage
of revenue

    43.8
    %

    43.8
    %

Parts and Service

     Parts and service revenue
 is primarily derived from vehicle repairs paid directly by the
customers or via reimbursement from manufacturers and others under warranty programs. Reported
parts and service revenue and gross profit benefited from the impact of acquisitions when compared
to same store performance.

     Same store parts and service revenue and gross profit increased during 2006 compared to 2005
due to a $38.7 million increases in
customer-paid work revenue for parts and service, a $17.7 million
increase in and wholesale parts revenue, a $10.4 million increase in revenues associated with the
preparation of vehicles for sale, and smaller increases in other
parts and service revenues , p. Partially offsetting
these by a
increases was a $23.5 million decrease in warranty
business revenue. Warranty declines were driven in part
by improved quality of vehicles manufactured in recent years, as well as changes to certain
manufacturers’ warranty and prepaid service programs. The improvements to customer-paid are
attributable to our service drive process, maintenance menu and service marketing program, as well
as our pricing models and training programs. Additionally, during
2006 we experienced an 5.1%
increase in parts and service revenues and a 6.1% increase in gross profit related to volume
imports and premium luxury vehicles, compared to flat revenues and a 1.2% decrease in gross margin
related to parts and service for domestic vehicles.

Finance and Insurance

    Years Ended December 31,

    2006 vs. 2005

    2005 vs. 2004

    (in millions, except per

    Variance

    Variance

    vehicle data)

    Favorable/

    Favorable/

    2006

    2005

    (Unfavorable)

    % Variance

    2004

    (Unfavorable)

    % Variance

    Reported:

    Revenue and gross
profit

    $
    634.3

    $
    601.0

    $
    33.3

    5.5

    $
    590.8

    $
    10.2

    1.7

    Gross profit per
vehicle retailed

    $
    1,066

    $
    986

    $
    80

    8.1

    $
    961

    $
    25

    2.6

    Same
Store:

    Revenue and gross
profit

    $
    632.3

    $
    600.5

    $
    31.8

    5.3

    Gross profit per
vehicle retailed

    $
    1,067

    $
    985

    $
    82

    8.3

     Reported finance and insurance revenue and gross profit benefited from the impact of
acquisitions when compared to same store performance.

     During 2006, same store finance and insurance revenue and gross profit benefited from a $12.3
million increased in retrospective commissions received on extended service contracts, as well as
higher new and used vehicle prices and increased premium luxury revenue per vehicle retailed.
Improvements were also driven by our continued emphasis on training and certification of store
associates, particularly in third and fourth quartile stores, and on maximizing our preferred
lender relationships.

Operating Expenses

     Selling, General and Administrative Expenses

     During 2006, selling, general and administrative expenses increased $64.1 million, or 3.1%.
As a percentage of total gross profit, selling, general and administrative expenses increased to
71.1% in 2006 from 70.4% in 2005. Increases in selling, general and administrative expenses in
2006 compared to 2005 are primarily due to an $48.3 million increase in compensation expense,
including $15.2 million of non-cash compensation expense related to the adoption of SFAS No. 123R
for stock options during 2006. Additionally,and
increased advertising expenses increased $15.4 million,
resulting from a $6.4 million increase in gross advertising expenditures and a $9.0 million
decrease in advertising program participation
reimbursedments from by
manufacturers and an increase in non-reimbursed advertising..
In 2005, selling, general and
administrative expenses included $10.5 million of property damage costs related to Hurricane Wilma.

Other Interest Expense

     Other interest expense was incurred primarily on

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

Mail Stop 3561
        August 16, 2007
Mr. Michael J. Jackson
Chief Executive Officer
AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, FL  33301

Re: AutoNation, Inc.
  Form 10-K for the Fiscal Year Ended December 31, 2006
  Filed February 28, 2007
  File No. 0-13107

Dear Mr. Jackson:

We have reviewed your filing and have the following comments.  We have limited our
review to your financial statements and related disclosures and do not intend to expand our
review to other portions of your document.  Please be as detailed as necessary in your explanations.  Where indicated, we think you should revise your disclosures in future filings in response to these comments.  If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.

 Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

General
1. In future filings, please include a ratio of earnings to fixed charges for your registered debt securities.  Please also include an exhibit to future filings to show the figures used to calculate the ratios.  Refer to Items 503(d) and 601(b)(12) of Regulation S-K.

Management’s Discussion and Analysis of Financ ial Condition and Results of Operations, page
20

Mr. Michael J. Jackson
AutoNation, Inc.
August 16, 2007 Page 2

Reported Operating Data, page 23

2. When attributing increases or decreases in revenue or expense line items to multiple factors contributing to material changes over the reported periods, please quantify the amount of the increase or decrease attributed to each factor.  For example, please revise future filings to quantify the impact of:

• Increased retrospective commissions receive d on extended service contracts, higher
new and used vehicle prices and increas ed premium luxury revenue per vehicle
retailed on 2006 finance and insurance sales;

• The increase in compensation expense, decrease in advertising program participation reimbursed by manufacturers, increase in non-reimbursed advertising, and property damage costs on 2006 selling, general and administrative expenses; and

• Additional debt incurred, the repurchase of your 9% unsecured notes, and repayments of mortgage facilities on 2006 other interest expense.

For further guidance please refer to Item 303(a)(3) of Regulation S-K and the Commission’s Interpretative Releases on MD&A, Release 33-8350 and Section III.D of Release 33-6835, both of which are available on our website at
www.sec.gov .  Please be
advised that this comment should not be limited to the examples provided, but should be applied to each category you discuss, as practicable.  Please include a draft of your proposed revisions with your response.

Financial Condition, page 32

Cash Flows from Operating Activities, page 34

3. Please revise future filings to focus on the primary drivers and other material factors necessary to an understanding of your operating cash flows and the indicative value of historical cash flows and the underlying reasons for changes in cash flows as well as their reasonably likely impact on future cash flows.  For example, we note that the decreases in inventory, vehicle floorplan payable-trade, net, and other liabilities appear to have been primarily responsible for the 2006 decrease in operating cash, but you have not provided an analysis of these items to permit a reader to understand the extent to which changes are the result of changes in the level of operations or other factors.  We also note that you did not include a discussion of cash flows fr om discontinued operations.  Please refer to
Interpretive Release No. 33-6835, which is available on our website at
www.sec.gov .

Contractual Payment Obligations, page 36

Mr. Michael J. Jackson
AutoNation, Inc.
August 16, 2007 Page 3

4. You disclose in note 8 to your consolidated financial statements that your operating leases require payment of real estate taxes, insurance and common area maintenance in addition to rent.  To the extent that payments made for maintenance, insurance and taxes on your leased properties are material, please include disclosures below the contractual obligations table to indicate that the lease obligation amounts presented do not include these additional obligations.  Since the table is aimed at providing additional information that is material to understanding a company’s cash requirements, you may want to disclose amounts paid in prior years for maintenance, insurance and taxes in order to provide a context for the reader to understand the impact of these charges on your total lease obligations.  See Item 303(a)(5) of Re gulation S-K and footnote 46 to SEC Release
No. 33-8350.

Notes to Consolidated Financial Statements, page 47

Other Current Liabilities, page 49
5. Please provide us with a list of the major categories included in this line item and their amounts reconciled to the other current liability balances as of December 31, 2006 and 2005.  In future filings, please state separately, in the balance sheet or in your notes any item in excess of five percent of total current liabilities.  Refer to Rule 5-02-20 of Regulation S-X.  If no categories exceed five percent, please consider further disclosure of the contents of this balance due to its significance relative to your current liabilities.

* * * * *

 Please respond to these comments within 10 business days or tell us when you will
provide us with a response.  Please furnish a letter that keys your responses to our comments and provides any requested information.  Detailed cover letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your responses to our comments.

  We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed investment decision.  Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:

‚ the company is responsible for the adequacy and accuracy of the disclosure in the filing;

Mr. Michael J. Jackson
AutoNation, Inc.
August 16, 2007 Page 4

‚ staff comments or changes to disclosure in  response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

‚ the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corpor ation Finance in our review of your filing or
in response to our comments on your filing.

 You may contact Scott Ruggiero at (202) 551-3331 if you have questions regarding comments on the financial statements and related matters.  Please contact me at (202) 551-3716 with any other questions.

Sincerely,

William Choi
Branch Chief

CORRESP
1
filename1.htm

Letter to Mr. William Choi

VIA FACSIMILE & EDGAR

February 22, 2006

Mr. William Choi

Accounting Branch Chief

United States Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, NW

Washington, DC 20549

Re: AutoNation, Inc.

Dear Mr. Choi:

The following is the issue summary that was emailed to Andrew Blume of the Staff yesterday.

Issue

How should the floorplan notes payable balances related to acquisitions and divestitures be treated
for purposes of purchase price determination and the related presentation in the Statement of Cash
Flows?

Background

Typical transaction for acquisition of an automotive retail franchise:

    •

    Acquire franchise rights, real estate, equipment, all inventories

    •

    All new vehicle inventory financed with floorplan notes payable

    •

    Floorplan notes payable secured by each individual new vehicle

    •

    Buyer assumes the floorplan liability as part of the transaction and
indemnifies seller

    •

    Contract purchase price and cash paid are both net of the floorplan notes
payable balance

    •

    Floorplan lender involved in the closing to ensure secured interest protected
and to release liens on the new vehicles

    •

    Buyer may replace the floorplan notes payable lending source at the closing

    ๐

    New floorplan lender will directly payoff old
floorplan lender

    •

    Even if no change in source, floorplan lender may “refloor” the new vehicles at
the closing to ensure security is perfected and to introduce buyer’s terms/rates

1

Impact on Statement of Cash Flows

Given that the buyer in the transaction assumes the floorplan liability, calculation of purchase
price net of the floorplan note payable balance is appropriate. The net acquisition purchase price
(or divestiture proceeds) is shown in the Investing section of the Cash Flow Statement.

Any replacement of the floorplan notes payable at the closing is treated as a secondary transaction
and is accounted for as such. The payoff of the assumed floorplan liability and the simultaneous
inflow from the new floorplan source are both treated as financing cash flow activities and
effectively net to zero. The new floorplan payable balance after replacement is considered a
“non-trade” floorplan note payable since the funds were not related to the direct purchase of
inventory from the vehicle manufacturer, even if the floorplan source is an affiliate of the
vehicle manufacturer.

Based on a phone conversation with Mr. Blume this morning, our understanding is that the Staff
agrees with the Company’s approach.

If you have any questions, please call me at (954) 769-3145.

Sincerely,

J. Alexander McAllister

Vice President and Corporate Controller (Principal Accounting Officer)

    cc:

    Andrew Blume, SEC

Michael J. Jackson, Chairman and Chief Executive Officer, AutoNation, Inc.

Craig T. Monaghan, Executive Vice President and Chief Financial Officer, AutoNation, Inc.

Jonathan P. Ferrando, Executive Vice President, General Counsel and Secretary, AutoNation, Inc.

Phillip R. Smith, KPMG LLP

Jonathan Awner, Esq., Akerman Senterfitt

2

CORRESP
1
filename1.htm

Autonation, Inc. Response Letter

VIA FACSIMILE & EDGAR

January 30, 2006

Mr. William Choi

Accounting Branch Chief

United States Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, NW

Washington, DC 20549

    Re:

    AutoNation, Inc.

Form 10-K For the Fiscal Year Ended December 31, 2004

Filed February 24, 2005

File No. 001-13107

Dear Mr. Choi:

The following is a response to the Commission Staff’s comment letter to AutoNation, Inc. (the
“Company”) dated January 19, 2006. Please note for the convenience of the Staff we have recited
the comments in boldfaced type and provided our responses immediately thereafter.

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

Financial Statement and Supplementary Data

Consolidated Statements of Cash Flows, page 46

    1.

    We have reviewed your response to comment 1 in our letter dated December 20, 2005.
Given the significance of the error in classification of cash flows please amend your
filing, as well as your Form 10-Q for the quarterly period ended September 30, 2005, to
present cash flows (used)/provided from non-manufacturer lenders in financing activities.
Since Rule 5-02(19)(a) of Regulation S-X requires separate and clear display of amounts
payable to trade creditors and amounts payable for borrowings, please also revise your
balance sheet to reflect non-manufacturer lender payables as borrowings and manufacturer
lender payables as trade creditor payables. In addition, please disclose the change in
classification of cash flows from non-manufacturer lenders as a correction of an error in
accordance with paragraph 37 of APB 20. Further please also revise your footnote
disclosure to further describe the mechanics of your floorplan payable arrangements,
including how cash disbursements are processed and if you have discretion to receive cash
directly from the lenders.

    We respect and understand the Staff’s position and agree to reflect the net cash flows for
floorplan facilities with lenders other than the automotive manufacturers’ captive finance subsidiaries
(“non-trade lenders”) as a component of financing activities. For the reasons discussed
below, the Company believes that the above change to its statement of cash flows should be
treated as a revision rather than a restatement. The Company proposes to reflect the
revision in its 2005 Form 10-K with prior periods revised to conform to the current period
presentation rather than amend the Company’s previous filings. Please see the attached
proposed revisions to our 2004 Consolidated Balance Sheet and the 2004 and 2003 Statements
of Cash Flows as well as our proposed footnote disclosures that would be included in the
Company’s 2005 Form 10-K expected to be filed in mid-February 2006.

    We believe that a revision is appropriate given:

    •

    the immateriality of the change to the Company’s financial statements taken as a
whole and

    •

    the difference between the terms, conditions and structure of the Company’s
floorplan arrangements compared to that of other automotive retail registrants.

    Immateriality:

    Paragraph 38 of APB 20 indicates that a number of factors are relevant in determining the
materiality of accounting changes or corrections of errors as follows:

    a)

    Does the change have a material effect on income before extraordinary items
or net income of the current period?

    The above change has no effect on any line item on the income statement since it only
relates to certain cash flow captions.

    b)

    Does the change have a material effect on the trend of earnings?

    The above change has no effect on the income statement and therefore no impact on any
earnings trends.

    c)

    Could the change have a material effect upon later (i.e., future) earnings
or earnings trends?

    The above change will have no effect on future earnings or earnings trends.

    As it relates to trends or materiality in the Statement of Cash Flows:

    •

    The revision does not have a significant impact on cash flow trends.

    •

    The amounts ($(144.1) million, $(121.2) million and $45.1 million for the
years ended December 31, 2004, 2003 and 2002, respectively) are not material in the
overall context of cash flows for the Company, which has gross cash
inflows and outflows totaling approximately $40 billion each year, but are reflected as net due to the Company’s use of
the indirect method for cash flow reporting.

    •

    The amounts in question are not material to the financial position or results
of operations of the Company, which had revenue of approximately $19 billion in each
of the years ending December 31, 2004, 2003 and 2002, and total assets of
approximately $9 billion as of December 31, 2004 and 2003.

    •

    The Company’s presentation in its previous filings did not overstate
operating cash flows.

Page 2 of 5

    A review of Staff Accounting Bulletin No. 99 (SAB 99), which relates to assessing
materiality, indicates that no additional “qualitative or quantitative measures” would be
impacted by the change to cash flows. In the Company’s situation, neither the revised nor
the original cash flow presentation:

    •

    Masks a change in earnings or other trends

    •

    Hides a failure to meet analysts’ consensus expectations

    •

    Affects the Company’s regulatory compliance

    •

    Affects the Company’s compliance with any financial covenants or other
contractual requirements

    •

    Has an effect on management’s compensation

    •

    Involves concealment of an unlawful transaction

    Further, this revision would not impact any of the significant financial statements
measures commonly used by investors, analysts, rating agencies, financers, or other users
of the Company’s financial statements in evaluating the financial condition or operating
trends of the Company. Management does not believe that the judgment of a person using the
financial statements would have been changed or influenced by the disclosure that a part of
the total floorplan liability was financed by non-trade lenders and should have been
recorded as financing activities as opposed to operating activities in the statement of
cash flows. As discussed below, regardless of the source of non-trade floorplan funding,
all funding arrangements utilized by the Company have the same relevant characteristics and
terms of trade floorplan funding with manufacturers.

    We believe that this required cash flow revision is analogous with the changes required
last year by the Staff related to cash flows from long-term customer receivables. In the
SEC guidance posted on the Commission’s website titled, “Sample Letter Sent to Registrants
Related to the Statement of Cash Flows”, the Staff indicated that it would not object to
disclosures related to the reclassification that did not reference a correction of an error
provided that certain criteria were met. These requirements would be met with the proposed
changes outlined in the attachments to this letter.

    Comparability with Other Automotive Retail Registrants:

    There is broad disparity between floorplan arrangements of the Company and other automotive
retail registrants. Unlike the other automotive retail registrants, the Company does not
have used vehicle floorplan financing facilities and only a very small portion of its
floorplan balances are with non-trade lenders. Non-trade lenders are not a significant
component of the Company’s floorplan financing strategy. The components of the total
vehicle floorplan payable balances as of December 31 are as follows (in millions):

Page 3 of 5

    2004

    2003

    Trade

    $
    2,436.1

    $
    2,516.6

    Non-trade

    81.2

    225.3

    Total vehicle floorplan payable

    $
    2,517.3

    $
    2,741.9

    Percentage of non-trade

    3
    %

    8
    %

    Unlike other automotive retail registrants, which have elected to use floorplan
strategies that incorporate the use of non-trade financial institutions as an integral part
of their overall inventory financing strategy, the Company’s use of non-trade floorplan
funding is an infrequent business practice. Our considerable difference from our peers in
terms of how we fund our inventory is reflected by our ratio of non-trade floorplan payable
to total floorplan payable of 3% in 2004 as compared to the corresponding ratios for other
major automotive retail registrants (i.e. revenues greater than $5 billion) which range from
approximately 25 to 70 percent. Moreover, our use of non-trade floorplan funding has
decreased significantly in recent years, further widening the gap between our practice and
the practices of other automotive retail registrants.

    Another distinction between our peers and us is that, even to the extent we use non-trade
floorplan funding, the relevant terms of such financings mirror traditional trade floorplan
financing terms. Many of the facilities utilized by other automotive retail registrants, on
the other hand, are funded by non-manufacturer financial institutions (i.e. banks and/or
consortiums of banks) through non-traditional floorplan arrangements. The terms of these
arrangements differ from traditional trade floorplan financing facilities in several
important aspects (for example, they may not include requirements pertaining to the
collateralization of specific inventory, repayment on demand and the ability for the
manufacturer to draft directly from the floorplan facilities, among others). In fact, some
of the facilities used by our peers are more similar to revolving credit facilities than
traditional floorplan facilities. As demonstrated below, only a portion of the
Company’s non-trade lender floorplan balance is with
non-manufacturer financial institutions. The remaining
non-trade lender floorplan balance is with manufacturers’
captive finance subsidiaries providing floorplan financing for
dealerships not franchised by such manufacturers (“non-aligned
manufacturers’ captives”). The Company does not utilize revolving credit facilities for floorplan. The sources of the
Company’s vehicle floorplan payable balances as of December 31 are as follows (in millions):

    2004

    %

    2003

    %

    Revolving credit floorplan facilities

    $
    —

    0
    %

    $
    —

    0
    %

    Aligned manufacturers’ captives (trade)

    2,436.1

    97
    %

    2,516.6

    92
    %

    Non-aligned manufacturers’ captives
(non-trade)

    33.0

    1
    %

    127.6

    5
    %

    Other financing institutions (non-trade)

    48.2

    2
    %

    97.7

    3
    %

    Total vehicle floorplan payable

    $
    2,517.3

    100
    %

    $
    2,741.9

    100
    %

Page 4 of 5

    Conclusion:

    Non-trade lenders are an immaterial component of the Company’s floorplan financing
facilities and non-trade cash flows are simply the result of the Company’s further
curtailment of this practice. Restatement of prior filings would put a focus on this
immaterial and declining business practice. We believe that given these factors and the
fact that we expect to file our 2005 Form 10-K in mid-February 2006, the Staff should allow the
Company to present the proposed changes as revisions in its 2005 Form
10-K. We believe that the imminent timing of our filing would provide
timely disclosure to users of our financial statements. This would be
consistent with the changes in the treatment of cash flows for long-term customer
receivables permitted by the Staff last year as discussed above.

    Additionally, we would revise our floorplan disclosure to more fully disclose our floorplan
arrangements, including that the ability to draft directly from the Company’s floorplan
facilities is a requirement of our manufacturers (see proposed footnote disclosures in the
attachment to this letter).

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows, page 46

    2.

    We have reviewed your response to comment 2 in our letter dated December 20, 2005 and
reissue our comment. Please amend your most recent annual and quarterly filings to comply
with our previous comment regarding the presentation of discontinued operations in your
statements of cash flows.

    Cash flows used in discontinued operations for the years ended December 31, 2004, 2003 and
2002 totaled $21.1 million, $4.7 million and $8.4 million, respectively, all of which were
used in cash flows from operations. The Company does not believe that these amounts are
material consistent with our discussion above. Therefore, we propose incorporation of this
change in our 2005 Form 10-K (see proposed changes incorporated in the attachment to this
letter).

We respectfully request the opportunity to discuss these issues more fully with the Staff prior to
your issuance of a formal response.

Please contact me at (954) 769-3145 or via facsimile at (954) 769-6425 to set up a time to discuss
this matter.

Sincerely,

J. Alexander McAllister

Vice President and Corporate Controller (Principal Accounting Officer)

    cc:

    Michael J. Jackson, Chairman and Chief Executive Officer, AutoNation, Inc.

Craig T. Monaghan, Executive Vice President and Chief Financial Officer, AutoNation, Inc.

Jonathan P. Ferrando, Executive Vice President, General Counsel and Secretary, AutoNation,
Inc.

Phillip R. Smith, KPMG LLP

Jonathan Awner, Esq., Akerman Senterfitt

Page 5 of 5

Attachment (page 1 of 3)

AUTONATION, INC.

CONSOLIDATED BALANCE SHEETS

As of December 31,

(In millions, except share and per share data)

    2005

    2004

    ASSETS

    CURRENT ASSETS:

    Cash and cash equivalents

    $
    107.2

    Receivables, net

    773.2

    Inventory

    2,640.5

    Other current assets

    156.8

    Total Current Assets

    3,677.7

    RESTRICTED ASSETS

    54.0

    PROPERTY AND EQUIPMENT, NET

    1,836.3

    INTANGIBLE ASSETS, NET

    2,976.2

    OTHER ASSETS

    154.7

    Total Assets

    $
    8,698.9

    LIABILITIES AND SHAREHOLDERS’ EQUITY

    CURRENT LIABILITIES:

    Vehicle floorplan payable – trade

    $
    2,436.1

    Vehicle floorplan payable – non-trade

    81.2

    Accounts payable

    180.7

    Notes payable and current maturities of long-term obligations

    14.9

    Other current liabilities

    698.3

    Total Current Liabilities

    3,411.2

    LONG-TERM DEBT, NET OF CURRENT MATURITIES

    797.7

    DEFERRED INCOME TAXES AND OTHER TAX LIABILITIES

    156.7

    OTHER LIABILITIES

    70.2

    COMMITMENTS AND CONTINGENCIES (Note 9)

    SHAREHOLDERS’ EQUITY:

    Preferred stock, par value $.01 per share;
5,000,000 shares authorized; none issued

    —

    Common stock, par value $.01 per share;
1,500,000,000 shares authorized; 273,562,137 shares issued,
including shares held in treasury

    2.7

    Additional paid-in capital

    2,240.0

    Retained earnings

    2,176.0

    Accumulated other comprehensive loss

    (1.5
    )

    Treasury stock, at cost; 9,300,007
shares held

    (154.1
    )

    Total Shareholders’ Equity

    4,263.1

    Total Liabilities and Shareholders’ Equity

    $
    8,698.9

The accompanying notes are an integral part of these statements.

Attachment (page 2 of 3)

AUTONATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

(In millions)

    2005

    2004

    2003

    (As Revised)

    (As Revised)

    CASH PROVIDED BY OPERATING ACTIVITIES:

    Net income

    $
    433.6

    $
    479.2

    Adjustments to reconcile net income to net cash provided by
operating activities:

    Cumulative effect of accounting change

    —

    14.6

    Loss (gain) on discontinued operations

    (37.2
    )

    21.4

    Depreciation

    81.9

    67.7

    Amortization

    1.2

    1.6

    Amortization of debt issue costs and discounts

    6.6

    6.0

    Income taxes

    89.3

    (129.6
    )

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<FILENAME>filename1.txt
<TEXT>

Mail Stop 3561

									January 19, 2006

Mr. Michael J. Jackson
Chairman and Chief Executive Officer
AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, FL 33301

      Re:	AutoNation, Inc.
      Form 10-K for the Fiscal Year Ended December 31, 2004
      Filed February 24, 2005
      File No. 0-13107

Dear Mr. Jackson:

	We have reviewed your response letter filed on January 6,
2006
to our comment letter dated December 20, 2005 and have the
following
comments.  Where indicated, we think you should revise your
documents
in response to these comments.  If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary.  Please provide a written response to our
comments.
Please be as detailed as necessary in your explanation.  In some
of
our comments, we may ask you to provide us with information so we
may
better understand your disclosure.  After reviewing this
information,
we may raise additional comments.

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

Financial Statement and Supplementary Data

Consolidated Statements of Cash Flows, page 46

1. We have reviewed your response to comment 1 in our letter dated
December 20, 2005.  Given the significance of the error in
classification of cash flows please amend your filing, as well as
your Form 10-Q for the quarterly period ending September 30, 2005,
to
present cash flows (used)/provided from non-manufacturer lenders
in
financing activities.  Since Rule 5-02(19)(a) of Regulation S-X
requires separate and clear display of amounts payable to trade
creditors and amounts payable for borrowings, please also revise
your
balance sheet to reflect non-manufacturer lender payables as
borrowings and manufacturer lender payables as trade creditor
payables.  In addition, please disclose the change in
classification
of cash flows from non-manufacturer lenders as a correction of an
error in accordance with paragraph 37 of APB 20.  Further, please
also revise your footnote disclosure to further describe the
mechanics of your floorplan payable arrangements, including how
cash
disbursements are processed and if you have discretion to receive
cash directly from the lenders.

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows, page 46

2. We have reviewed your response to comment 2 in our letter dated
December 20, 2005 and reissue our comment.  Please amend your most
recent annual and quarterly filings to comply with our previous
comment regarding the presentation of discontinued operations in
your
statements of cash flows.

		As appropriate, please amend your filings and respond to
these comments within 10 business days or tell us when you will
provide us with a response.  You may wish to provide us with
marked
copies of the amendments to expedite our review.  Please furnish a
cover letter with your amendments that keys your responses to our
comments and provides any requested information.  Detailed
response
letters greatly facilitate our review.  Please understand that we
may
have additional comments after reviewing your amendments and
responses to our comments.

      You may contact Andrew Blume (Staff Accountant) at (202)
551-
3254 or William Thompson (Staff Accountant) at (202) 551-3344 if
you
have questions regarding the comment on the financial statements
and
related matters.  Please contact me at (202) 551-3716 with any
other
questions.

								Sincerely,

									William Choi
									Accounting Branch
Chief

Mr. Michael J. Jackson
AutoNation, Inc.
January 19, 2006
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Letter to the SEC

VIA FACSIMILE & EDGAR

January 6, 2006

Mr. William Choi

Accounting Branch Chief

United States Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, NW

Washington, DC 20549

    Re:

    AutoNation, Inc.

Form 10-K For the Fiscal Year Ended December 31, 2004

Filed February 24, 2005

File No. 001-13107

Dear Mr. Choi:

     The following is a response to the Commission Staff’s comment letter to AutoNation, Inc. (the
“Company”) dated December 20, 2005. Please note for the convenience of the staff we have recited
the comments in boldfaced type and provided our responses immediately thereafter.

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

Financial Statement and Supplementary Data

Consolidated Statements of Cash Flows, page 46

    1.

    We note that floorplan financing is provided primarily by manufacturers’ captive
finance subsidiaries. Please tell us the aggregate amounts of cash inflows and cash
outflows under floorplan facilities related to vehicles that are not purchased from the
manufacturer providing the floorplan financing via its captive finance subsidiary for each
year presented. Please also tell us your basis in GAAP for classifying those cash flows as
cash flows from operating activities as opposed to financing activities. Please refer to
paragraph 23(a) of SFAS 95. Please also see AICPA TIS Section 1300.16 for further
guidance. It appears that borrowings and repayments under floorplan facilities related to
vehicles not purchased from the manufacturer providing the floorplan financing should be
classified in financing activities. Please advise.

    Although the Company believes that its presentation is consistent with the requirements of
Statement of Financial Accounting Standards No. 95, “Statement of Cash Flows” (SFAS 95) for
the reasons set forth below, we are aware that the Staff has been in conversations with
other public automotive retailer registrants and has spoken to this matter at the December
2005 AICPA National Conference on Current SEC and PCAOB Developments in Washington, D.C.
The Company understands the Staff’s concerns and as a result,
will reflect the net cash flows
for floorplan facilities with financial institutions other than the automotive
manufacturers’ captive finance subsidiaries (non-manufacturer lenders) as a component of
financing activity beginning with the Company’s 2005 Form 10-K with prior periods
reclassified to conform to the current period presentation along with appropriate footnote
disclosure. The Company believes that this approach is appropriate given the immateriality
of the change to the Company’s financial statements taken as a
whole and the Company’s conformity
with widespread industry practice that until recently had not been
questioned. The change does not impact the Company’s income
statement and related current or future trends. The
related net cash flows(used)/provided from non-manufacturer lenders were
approximately ($150 million), ($120 million) and $50
million for the years ended December 31, 2004, 2003 and 2002,
respectively. The Company believes it meets the requirements for, and will use, net reporting consistent
with paragraph 13 of SFAS 95 since the floorplan facilities are due on demand and turn
quickly, typically within several days after the related vehicle is
sold. The following disclosure will be included in the Company’s
2005 Form 10-K footnotes:

              During 2005, the Company reclassified certain amounts in the
2004 and 2003 Consolidated Statements of Cash flows from

          operating activities to financing activities as a result of recent guidance
given by the Securities and Exchange Commission.

          For the years ended
December 31, 2004 and 2003, approximately $150 million and
$120 million, respectively, were

          reclassified from operating
activities to reflect the net cash flow for floorplan facilities with
financial institutions other

          than the automotive manufacturers’
captive finance subsidiaries (non-manufacturer lenders) as a
component of financing

          activities.

    The Company’s
total vehicle floorplan payable was $2.5 billion and $2.7 billion, as of December 31, 2004
and 2003, respectively, of which approximately $80 million and
$230 million, respectively, was
outstanding from non-manufacturer lenders. The floorplan payable to non-manufacturer
lenders represents 3% and 8% of total floorplan vehicle payables and
2% and 6% of total
current liabilities as of December 31, 2004 and 2003, respectively, and will be disclosed
separately on the face of the Company’s balance sheet reported in its 2005 Form 10-K, if
material.

    Background and Company’s Interpretation:

    The net cash flows from non-manufacturer lenders have been historically classified as
operating cash flows in the Company’s statements of cash flows, which was consistent with
industry practice until recently. The Company interpreted literature related to cash flows
that, regardless of the source of financing used to acquire inventory, classification of all
floorplan financial activity as an operating activity was appropriate based on the
following:

Page 2 of 11

    ○

    The Company finances its new vehicle inventories through secured floorplan
facilities, primarily with automotive manufacturers’ captive finance subsidiaries.
Generally, all vehicle manufacturers have captive finance companies, which provide the
financing normally extended by a supplier in the form of accounts payable. The Company
may choose to utilize the manufacturer’s captive finance company or choose alternative
sources. The Company at times utilizes floorplan facilities other than those offered
by a manufacturer’s captive finance company for a particular franchise in order to the
reduce interest costs and streamline transaction processing in multi-franchise
dealerships. The Company’s floorplan facilities, irrespective of their source,
generally have the same characteristics and terms.

    ○

    Paragraph 23(a) of SFAS 95 defines cash flows to acquire materials for
manufacture or goods for resale as operating cash flows, “including principal
payments on accounts and both short- and long-term notes payable to suppliers for those
materials or goods”, but does not limit such payments. We have interpreted the specific
language of paragraph 23(a) reflected above as a clarification, but not as a limitation
of what may be included in operating cash flows. This would be consistent with
paragraph 21 of SFAS 95, which states that “operating activities generally involve
producing and delivering goods and providing services.” It further affirms “operating
cash flows are generally the cash effects of transactions and other events that enter
into the determination of net income.” The acquisition of new vehicles through
floorplan payables, including from non-manufacturer lenders, enters into the
determination of the Company’s net income, as the underlying activity is the purchase
of inventory, which becomes cost of sales in relatively short time periods.

    ○

    Paragraph 87 of SFAS 95 recognizes that “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.” Furthermore, Financial Accounting
Statements Board, Concept 5, “Recognition and Measurement in Financial Statements of
Business Enterprises”, paragraph 20, emphasizes the importance of grouping information
with similar characteristics into homogeneous groups to facilitate analysis. Given that
the major terms of the floorplan financings, regardless of the source, are similar, the
Company believed that different cash flow classifications for non-manufacturer lenders
for what is essentially the same transaction is inconsistent with the intent of SFAS 95
and would make the resulting statement less useful and understandable.

Page 3 of 11

    ○

    The Company believed that the presentation of changes in floorplan facilities from
non-manufacturer lenders as a financing activity would result in recognition of the
non-cash initial acquisition of inventory, which would be inconsistent with the
underlying nature of the facilities. Additionally, the Company believed that the
purchase of inventory should not be reflected in the statement of cash flows as a direct
inflow of cash since when inventory units are shipped from the manufacturer’s facility,
the manufacturer, regardless of the source of financing used to acquire inventory,
drafts the Company’s floorplan facility automatically. The ability to draft directly
from the Company’s floorplan facilities is a requirement of our manufacturers. In the
Technical Questions and Answers of the AICPA, Section 1300 –Cash Flows, Item 16 the
response to a specific question related to the direct financing of inventory through a
finance subsidiary indicates that the acquisition of the vehicle has no cash flow
implication and is only reflected as a cash flow item upon the sale of the vehicle when
the amounts are repaid. It is silent as to whether transactions with non-manufacturer
lenders should be considered in the same manner.

    ○

    Also, it should be noted that the Company would be unaware of
situations where floorplan financing provided by a captive may be sold, securitized or others parties
allowed to participate in the financing. The Company would have no information to
indicate at what point it would need to reassess the nature of the cash flow
classification. This would also be the case if a portion or all of the captive finance
company were sold and/or spun-off to shareholders, effectively making the finance
source a non-manufacturer related entity without any change to the
Company’s floorplan financing with that entity (as is potentially occurring with General
Motors Acceptance Corp.)

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows, page 46

    2.

    We note that you disclose cash used in discontinued operations as a separate line item.
Under the provisions of SFAS 95, all cash flows must be reported as an operating,
investing or financing activity. Please revise to identify cash flows from discontinued
operations for each category. Alternatively, you may:

    •

    Combine cash flows from discontinued operations with cash flows from continuing
operations within each category;

    •

    Identify cash flows from discontinued operations within each category; or

    •

    Identify operating cash flows from discontinued operations within the operating
category and combine investing and financing cash flows from discontinued
operations with cash flows from continuing operations within each of those
categories.

Page 4 of 11

    Cash flows used in discontinued operations for the years ended December 31, 2004, 2003 and
2002 totaled $21.1 million, $4.7 million and $8.4 million, respectively, all of which were
used in cash flows from operations. Future filings will disclose cash flows from
discontinued operations for each category.

    3.

    We note your disclosure in Note 18 on page 67 that you reclassified certain amounts,
including certain items related to your former loan underwriting business, from investing
activities to operating activities. Please tell us the items and their amounts
reclassified for each year presented. Please also tell us why the adjustments were
characterized as reclassifications as opposed to error corrections in accordance with
paragraph 36 of APB 20.

    Collections of installment loans receivable and other items related to the wind-down of
this business totaling $27.0 million and $86.7 million for the years ended December 31,
2003 and 2002, respectively, and $52.4 million related to proceeds from the sale of the
Company’s finance receivable portfolio in 2003 were reclassified from investing activities
to operating activities in the Company’s 2004 Form 10-K as a result of SEC guidance posted
on the Commission’s website titled, “Sample Letter Sent to Registrants Related to the
Statement of Cash Flows,” related to long-term customer receivables. Other amounts reclassified were not material and were
reclassified for conformity. The changes had no income statement impact and were not
material to the Company’s cash flows. Neither the corrected nor the original cash flow
presentation masked a change in earnings or other trends, failed to meet analysts’
consensus expectations, affected the Company’s compliance with any loan covenants or other
contractual requirements, had an effect on management’s compensation or involved
concealment of an unlawful transaction. Additionally, the guidance indicated that the
Staff would not object to disclosures related to the reclassification that do not reference
a correction of an error provided that the following criteria were met:

    1.

    Correctly present the consolidated statements of cash flows for all
periods presented;

Effective with the December 31, 2004 financial statements, the Company
classified cash flows related to installment loan receivables for 2003 and 2002
within the operating cash flow section on page 46 of the 2004 Form 10-K.

    2.

    Indicate that management’s decision to change the classification of
the cash flow effects of long-term customer receivables, including sales-type
lease receivables, stemmed from concerns raised by the staff of the Securities
and Exchange Commission about the previous presentation;

The Company’s disclosure in Note 18 of the 2004 Form 10-K on page 67 indicated
that the reclassification is the result of recent guidance issued by the SEC.

    3.

    Include prominent disclosure that:

    a.

    Describes how the accounting for these transactions
was historically reflected in the consolidated statements of cash flows,
including an explicit statement that no cash was received by the company
on a consolidated basis when the sale was made to the customer;

Page 5 of 11

Not applicable – the amounts in the cash flows represent actual cash
flows. There were no financing originations in the years presented in
the Form 10-K once the Company ceased underwriting new loans as of
December 2001.

    b.

    States that the consolidated statements of cash flows
has been adjusted to reflect the fact that there was no cash received by
the consolidated entity upon the sale of inventory, resulting in the
elimination of the effects of the intercompany transactions, and to
properly classify cash receipts from the sale of inventory as operating
activities;

Not applicable – the amounts in the cash flows represent actual cash
flows. As noted above, there were no financing originations in the
years presented in the Form 10-K.

    c.

    Includes a reconciliation of the amount previously
presented for the affected line items to the amount currently presented
for each period;

The amount of the proceeds is clearly disclosed in financial statements
on page 46 of the 2004 Form 10-K so that total transparency exists
relative to the cash flows discussed.

    d.

    Discusses the effect of these transactions in the
liquidity and cash flow section of MD&A.

Discussion of the impact for 2003 and 2002 was included in the cash flow
section of the MD&A on page 33. There was no impact for 2004 or future
periods and therefore, no discussion was included in the liquidity
section of the MD&A.

Note 1. Summary of Significant Accounting Policies:

Basis of Presentation, page 47

    4.

    Please tell us in detail how you determined that the company has only one reportable
segment under the guidance in SFAS 131. In doing so, tell us each component of the company
that has been identified as an operating segment as defined in paragraph 10 of SFAS 131.
Please also tell us why it is appropriate to aggregate identified operating segments

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 3561

									December 20, 2005

Mr. Michael J. Jackson
Chairman and Chief Executive Officer
AutoNation, Inc.
110 S.E. 6th Street
Fort Lauderdale, FL 33301

      Re:	AutoNation, Inc.
      Form 10-K for the Fiscal Year Ended December 31, 2004
      Filed February 24, 2005
      File No. 0-13107

Dear Mr. Jackson:

      We have reviewed your filing and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments.  Please provide a written response to
our
comments.  Please be as detailed as necessary in your explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.  After
reviewing this information, we may raise additional comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

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

Financial Statement and Supplementary Data

Consolidated Statements of Cash Flows, page 46

1. We note that floorplan financing is provided primarily by
manufacturers` captive finance subsidiaries.  Please tell us the
aggregate amounts of cash inflows and cash outflows under
floorplan
facilities related to vehicles that are not purchased from the
manufacturer providing the floorplan financing via its captive
finance subsidiary for each year presented.  Please also tell us
your
basis in GAAP for classifying those cash flows as cash flows from
operating activities as opposed to financing activities.  Please
refer to paragraph 23(a) of SFAS 95.  Please also see AICPA TIS
Section 1300.16 for further guidance.  It appears that borrowings
and
repayments under floor plan facilities related to vehicles not
purchased from the manufacturer providing the floorplan financing
should be classified in financing activities.  Please advise.

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows, page 46

2. We note that you disclose cash used in discontinued operations
as
a separate line item.  Under the provisions of SFAS 95, all cash
flows must be reported as an operating, investing or financing
activity.  Please revise to identify cash flows from discontinued
operations for each category.  Alternatively, you may:

* Combine cash flows from discontinued operations with cash flows
from continuing operations within each category;

* Identify cash flows from discontinued operations within each
category; or

* Identify operating cash flows from discontinued operations
within
the operating category and combine investing and financing cash
flows
from discontinued operations with cash flows from continuing
operations within each of those categories.

3. We note your disclosure in Note 18 on page 67 that you
reclassified certain amounts, including certain items related to
your
former loan underwriting business, from investing activities to
operating activities.  Please tell us the items and their amounts
reclassified for each year presented.  Please also tell us why the
adjustments were characterized as reclassifications as opposed to
error corrections in accordance with paragraph 36 of APB 20.

Note 1. Summary of Significant Accounting Policies

Basis of Presentation, page 47

4. Please tell us in detail how you determined that the company
has
only one reportable segment under the guidance in SFAS 131.  In
doing
so, tell us each component of the company that has been identified
as
an operating segment as defined in paragraph 10 of SFAS 131.
Please
also tell us why it is appropriate to aggregate identified
operating
segments into a single reportable segment based on the criteria in
paragraph 17 of SFAS 131 and EITF 04-10.  Specifically address
your
dealership stores, your collision repair centers and your captive
insurance companies.  We assume that discrete financial
information
is available and reported to the chief operating decision maker
for
each dealership, collision repair center and insurance company
and/or
regional operation referred to on page 3 for purposes of resource
allocation and assessing performance.  If not, please advise.
Notwithstanding the preceding, please provide the disclosures
required by paragraph 26 of SFAS 131 in future filings.

Form 8-K filed October 27, 2005

5. We note that you disclose the per-share benefit from the
"resolution of certain tax matters" and earnings per share from
continuing operations excluding the per-share tax benefit from the
resolution of the tax matters.  We also note that you disclose net
income from continuing operations and related per-share amounts
excluding the effects of income tax adjustments and debt
repurchase
costs and that similar disclosure is included in Forms 8-K filed
on
July 28, 2005 and April 28, 2005.  As required by Release 33-8176,
please disclose the following information in future filings:

* the reasons why management believes that presentation of the
non-
GAAP financial measures provide useful information to investors
regarding your financial condition and results of operations; and

* to the extent material, the additional purposes, if any, for
which
management uses the non-GAAP financial measures that are not
otherwise disclosed.

      Please respond to these comments within 10 business days or
tell us when you will provide us with a response.  Please furnish
a
letter that keys your responses to our comments and provides any
requested information.  Detailed letters greatly facilitate our
review.  Please understand that we may have additional comments
after
reviewing your responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed decision.  Since the company and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.

      In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.

      You may contact Andrew Blume (Staff Accountant) at (202)
551-
3254 or William Thompson (Staff Accountant) at (202) 551-3344 if
you
have questions regarding the comments on the financial statements
and
related matters.  Please contact me at (202) 551-3716 with any
other
questions.

								Sincerely,

						William Choi
									Accounting Branch
Chief
??

??

??

??

Mr. Michael J. Jackson
AutoNation, Inc.
December 21, 2005
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