Continuing Car Woes: Big Loss At AutoNation

Car dealership group AutoNation swung to a big quarterly loss, hurt by a deep slump in the U.S. auto market and non-cash charges for goodwill and franchise impairments.

AutoNation on Thursday posted a third-quarter net loss of $1.41 billion, or $7.99 per share, compared with a profit of $72.1 million, or 37 cents a share, a year ago.

The No. 1 publicly traded dealership group said it took a $1.46 billion after-tax charge for goodwill and franchise impairments.

Excluding the charge, the company earned $44 million, or 25 cents per share.

AutoNation Chief Executive Mike Jackson said consumer confidence plunged in the third quarter due to the the credit crisis, and the continued depression in the housing market accelerated the decline of the U.S. economy and retail auto market. (Jackson discusses the results with CNBC in the video)

"As a result of the adverse market conditions and a decline in our stock price, we were required under accounting rules to record non-cash goodwill and franchise impairment charges in the third quarter," he said.

AutoNation said third-quarter 2008 revenue fell to $3.5 billion, from $4.5 billion in 2007, primarily because of lower new-vehicle sales.

The company also said it remains in compliance with all financial covenants and has reduced debt by $589 million so far this year and is planning a further reduction of $500 million.

AutoNation's new-vehicle unit sales declined 24 percent during the third quarter and the dealership group had a 62-day supply of vehicles on hand at the end of September.

Economic weakness and tight credit drove U.S. light-vehicle sales in October to lows not seen since 1983.

Copyright 2008 Reuters. Click for restrictions.