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Letter to the Editor

AutoNation Streamlines Regional Management Structure

AutoNation will consolidate its ten districts into five regions, each led by a regional president. Within each region, a market president will manage each individual market. This combination of regional and market presidents will allow the company to further capitalize on AutoNation's innovative retailing systems, processes and technology.

"This new alignment is the continuation of our efforts to improve our company's operating efficiency and capitalize on our infrastructure investments," said Mike Jackson, AutoNation's chairman and chief executive officer. "It's the next step in a plan that we've been laying out for the past four years and will continue to improve on."

Since initiating its emphasis on productivity and cost reduction as a focus for business improvement in 2000, the company has realized a 500-basis- point cumulative reduction in SG&A as a percentage of total gross profit, which has translated into savings of $150 million per year. The company expects that the new regional management structure will generate approximately $30 million (pre-tax) in incremental annual cost reductions, which would constitute a portion of AutoNation's previously announced 200 basis point targeted reductions in SG&A as a percentage of total gross profit over the next few years. The company expects that the new regional management structure will result in a one-time pre-tax charge to continuing operations of approximately $5 million, primarily relating to severance.

"Our regional management structure is the natural evolution enabling us to manage our stores and our markets with even greater focus and productivity," said Mike Maroone, AutoNation's president and chief operating officer. "We view our regional presidents as the elite leaders at AutoNation who have excelled in their previous leadership roles."

The company announced the following promotions:

• Jim Bender - president of the Florida region
• Todd Maul - president of the West Central region
• Jerry Heuer - president of the California region
• Dan Agnew - president of the Texas region
• Hank Phillips - president of the East Central region.

In addition, Senior Vice President and General Counsel Jon Ferrando will assume oversight responsibilities for the company's human resources function in addition to his current responsibilities.

Regarding the company's earnings guidance, Jackson said, "The company's August and September business has been adversely affected by two major hurricanes that have caused store closings and substantial disruption to our business throughout Florida, which accounts for almost 30 percent of the company's operating profits. We also are continuing to experience a challenging retail sales environment. Considering these factors, we expect to report third-quarter EPS from continuing operations in the range of $0.33 to $0.35, including a one-time pre-tax charge of $5 million or $0.01 per share (after-tax) associated with the new regional management structure. We now anticipate full-year 2004 EPS from continuing operations in the range of $1.32 to $1.35."

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. Ranked #97 on the Fortune 500, AutoNation employs approximately 28,000 people at 365 new vehicle franchises in 19 states.

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