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UPDATE 1-Group 1 posts better-than-expected profit, shares hit new high

(Adds comments by company executives, updates stock activity)

DETROIT, Oct 24 (Reuters) - Group 1 Automotive Inc posted a far better-than-expected quarterly profit on Thursday as strong U.S. demand offset weakness in other markets, sending shares of the No. 3 U.S. auto dealership soaring as much as 16% to an all-time high.

J.P. Morgan analysts said in a research note the results were well above expectations, calling out "solid execution" in the U.S. market despite struggles in its British and Brazilian markets. They said the British market was weak for the company but better than expected.

Group 1 still expects the U.S. auto industry to finish this year at 17 million in new-vehicle sales and finish somewhere in the 16.5 million to 17 million range next year, Chief Financial Officer John Rickel said in a telephone interview.

"If you look where the consumer is in the U.S., they're still pretty upbeat," he said.

Chief Executive Earl Hesterberg in a statement cited the strong U.S. demand in a flat overall market and called U.S. same-store used vehicle and parts and services profit growth of 8.2% and 8.7%, respectively, "remarkable."

"A lot of things came together," Group 1 senior vice president Pete DeLongchamps said in the interview. "The most exciting thing is we posted these results with very little contribution from the UK and Brazil."

Group 1's net income in the second quarter rose more than 9% to $38 million, or $2.04 a share, from $34.8 million, or $1.74 a share, in the year earlier quarter.

Excluding one-time items, Group 1 earned $3.02 a share. Analysts were expecting $2.72 a share, according to IBES data from Refinitiv.

Revenue rose 7.9% to $3.12 billion, above the $2.95 billion analysts had expected.

The Houston-based company, with dealerships in the United States, Britain and Brazil, reported a 7% increase in gross profit as revenue from new-vehicle sales rose 7.3%, and retail used-vehicle revenue increased almost 10%.

U.S. operations accounted for almost 78% of total revenue and about 83% of gross profit, while British operations accounted for almost 19% and 14%, respectively. Same-store revenue rose 9.7% in the United States, while it fell 2.3% in Britain.

Group 1 said continued weakness in British consumer confidence and the overall auto market due to turmoil over Britain's plan to leave the European Union is hurting new-vehicle sales and profits.

Shares of Group 1 rose to an all-time high of $108.99, and were still up 10.2% at $103.48 in afternoon trading. (Reporting by Ben Klayman in Detroit Editing by Sonya Hepinstall and Nick Zieminski)