United Auto Group, Inc. (Form: 8-K)

Roger Penske

Jim Davidson

Tony Pordon

Chairman
248-648-2400

Executive VP – Finance
201-325-3303

Vice President –
Investor Relations
248-648-2540

jdavidson@unitedauto.com

tpordon@unitedauto.com

Earnings Per Share Rises 15% to $0.70 Per Share
____________________________________________________________

BLOOMFIELD HILLS, MI, October 28, 2004 – United Auto Group, Inc. (NYSE: UAG), a FORTUNE 500 automotive specialty retailer, today announced a 28.2% rise in third quarter net income on the strength of a 16.2% increase in revenue and continued strong same-store retail revenue growth of 3.7%. The same-store growth was highlighted by a 10.7% increase in service and parts revenue, driven by increases in units in operation and capacity increases at many locations, and a 3.0% increase in new vehicle retail revenue due primarily to increases at the Company’s premium and luxury franchises.

Revenue for the quarter increased to $2.7 billion and net income increased to $32.4 million, or $0.70 per share, from $25.3 million, or $0.61 per share, in the prior year. Third quarter 2004 results include a $3.1 million after tax gain ($0.07 per share) resulting from the sale of an investment, a $1.4 million benefit ($0.03 per share) from a reduction of the Company’s estimated annual effective tax rate, and a $5.3 million after tax gain ($0.11 per share) resulting from a refund of UK consumption taxes. These gains were offset in part by $4.9 million of after tax non-cash charges ($0.11 per share) due primarily to the planned relocation of certain UK franchises as part of the Company’s ongoing facility enhancement program. Earnings per share reflects an 11.8% increase in weighted average shares outstanding.

For the nine months ended September 30, 2004, revenues increased 17.4% to $7.5 billion. Net income for the nine months increased 36.1% to $85.6 million, or $1.89 per share, from $62.9 million, or $1.52 per share, in the prior year. Nine-month 2004 results include a $7.2 million after tax gain ($0.16 per share) resulting from the sale of an investment. Prior year results include the effect of $5.0 million of after tax non-recurring charges ($0.12 per share).

Commenting on third quarter results, Chairman Roger Penske said, “Our performance during a challenging third quarter showcases the strength of our business model and further validates our capital investment and international diversification strategies. Considering the impact on our operations from severe weather in Florida, Georgia and the Carolinas, a difficult selling environment for new and pre-owned vehicles, which I expect will continue in the fourth quarter, and the 75 basis point increase in interest rates since last year, our business performed exceptionally well.”

After considering the challenging selling environment and increased interest rates, the Company currently estimates earnings in the range of $2.32 — $2.38 per share for 2004, which includes the $0.16 per share gain from the sale of an investment during the nine months ended September. Earnings per share in the fourth quarter are expected to be in the range of $0.43 - $0.49 per share. These estimates are based on an estimated average of 45.6 and 46.6 million shares outstanding for the year and the quarter, respectively, which represent increases of approximately 4.5 and 3.5 million shares, respectively, over the prior year periods.

UnitedAuto will host a conference call discussing financial results relating to third quarter 2004 on Thursday, October 28, 2004 at 2 p.m. ET. To listen to the conference call, participants must dial (800) 762-4887 [International, please dial (480) 629-9026]. The call will also be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.

UnitedAuto, which has pursued a strategy based on internal growth from its existing dealerships, as well as from strategic acquisitions, operates 145 franchises in the United States and 102 franchises internationally, primarily in the United Kingdom. UnitedAuto dealerships sell new and used vehicles, and market a complete line of aftermarket automotive products and services. Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto’s future sales and earnings growth potential. Actual results may vary materially because of risks and uncertainties, including external factors such as interest rate fluctuations, changes in consumer spending and other factors over which management has no control. These forward-looking statements should be evaluated together with additional information about UnitedAuto’s business, markets, conditions and other uncertainties which could affect UnitedAuto’s future performance, which are contained in UnitedAuto’s Form 10-K for the year ended December 31, 2003 and its other filings with the Securities and Exchange Commission, and which are incorporated into this press release by reference. This press release speaks only as of its date and UnitedAuto disclaims any duty to update the information herein.

UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)


	Third Quarter
	2004			2003
New Vehicles	$	1,567,701		$	1,388,131
Used Vehicles		566,394			488,035
Finance and Insurance		59,596			57,329
Service and Parts (a)		265,883			217,489
Fleet		39,102			25,102
Wholesale		189,313			137,910

Total Revenues		2,687,989			2,313,996
Cost of Sales		2,308,273			1,981,820

Gross Profit		379,716			332,176
SG&A Expenses		296,595			258,878
Depreciation and Amortization		14,686			8,106

Operating Income		68,435			65,192
Floor Plan Interest Expense		(12,261	)		(11,053	)
Other Interest Expense		(10,470	)		(11,114	)
Other Income		4,858			—

Income from Continuing Operations Before Minority Interests and Income Tax Provision		50,562			43,025
Minority Interests		(676	)		(655	)
Income Tax Provision		(17,393	)		(16,995	)

Income from Continuing Operations		32,493			25,375
Loss from Discontinued Operations, Net of Tax		(128	)		(120	)

Net Income	$	32,365		$	25,255

Income from Continuing Operations Per Diluted Share	$	0.70		$	0.61

Diluted EPS	$	0.70		$	0.61

Diluted Weighted Average Shares Outstanding		46,567			41,637

(a): The Company’s parts and service departments provide preparation and reconditioning services for our dealerships’ new and used vehicle departments, for which the new and used vehicle departments are charged as if they were third parties. The Company has determined that revenue and cost of sales has not been reduced by the intracompany charge for such work performed at certain of the Company’s dealerships. Commencing with the third quarter of 2004, the Company is reducing revenue and cost of sales for intracompany charges at the identified dealerships and has revised amounts previously reported to eliminate these intracompany charges. Service and parts revenue and cost of sales have been reduced by $18 million and $22 million for the three months ended September 30, 2004 and 2003, respectively. The eliminations do not have a material impact on service and parts revenue, gross profit, operating income, income from continuing operations, net income, earnings per share, cash flows, or financial position for any period.

UNITED AUTO GROUP, INC.
Consolidated Statements of Income
(Amounts In Thousands, Except Per Share Data)
(Unaudited)


	Nine Months
	2004			2003
New Vehicles	$	4,284,668		$	3,745,448
Used Vehicles		1,623,136			1,386,581
Finance and Insurance		165,961			156,557
Service and Parts (a)		750,737			606,509
Fleet		106,007			87,523
Wholesale		534,266			376,661

Total Revenues		7,464,775			6,359,279
Cost of Sales		6,388,234			5,439,118

Gross Profit		1,076,541			920,161
SG&A Expenses		848,432			722,140
Depreciation and Amortization		32,609			22,644

Operating Income		195,500			175,377
Floor Plan Interest Expense		(36,766	)		(31,201	)
Other Interest Expense		(31,287	)		(32,206	)
Other Income		11,469			—

Income from Continuing Operations Before Minority Interests and Income Tax Provision		138,916			111,970
Minority Interests		(1,504	)		(1,706	)
Income Tax Provision		(51,674	)		(44,231	)

Income from Continuing Operations		85,738			66,033
Loss from Discontinued Operations, Net of Tax		(166	)		(123	)

Income Before Cumulative Effect of Accounting Change		85,572			65,910
Cumulative Effect of Accounting Change		—			(3,058	)

Net Income	$	85,572		$	62,852

Income from Continuing Operations Per Diluted Share	$	1.90		$	1.60

Diluted EPS before Cumulative Effect of Accounting Change	$	1.89		$	1.60

Cumulative Effect of Accounting Change on Diluted EPS		—			($0.07	)

Diluted EPS	$	1.89		$	1.52

Diluted Weighted Average Shares Outstanding		45,198			41,258

(a): The Company’s parts and service departments provide preparation and reconditioning services for our dealerships’ new and used vehicle departments, for which the new and used vehicle departments are charged as if they were third parties. The Company has determined that revenue and cost of sales has not been reduced by the intracompany charge for such work performed at certain of the Company’s dealerships. Commencing with the third quarter of 2004, the Company is reducing revenue and cost of sales for intracompany charges at the identified dealerships and has revised amounts previously reported to eliminate these intracompany charges. Service and parts revenue and cost of sales have been reduced by $57 million and $63 million for the nine months ended September 30, 2004 and 2003, respectively. The eliminations do not have a material impact on service and parts revenue, gross profit, operating income, income from continuing operations, net income, earnings per share, cash flows, or financial position for any period.

UNITED AUTO GROUP, INC.
Consolidated Condensed Balance Sheets
(Amounts In Thousands)
(Unaudited)


	9/30/04		12/31/03
Assets
Cash and Cash Equivalents	$	17,681	$	13,439
Accounts Receivable, Net		388,689		342,446
Inventories		1,196,659		1,166,756
Other Current Assets		52,486		43,090

Total Current Assets		1,655,515		1,565,731
Property and Equipment, Net		453,865		368,504
Intangibles		1,233,984		1,085,034
Other Assets		78,250		117,912

Total Assets	$	3,421,614	$	3,137,181

Liabilities and Stockholders’ Equity
Floor Plan Notes Payable	$	1,090,476	$	1,122,065
Accounts Payable and Accrued Expenses		439,729		347,098
Current Portion Long-Term Debt		952		8,574

Total Current Liabilities		1,531,157		1,477,737
Long-Term Debt		682,052		643,145
Other Long-Term Liabilities		177,124		187,887

Total Liabilities		2,390,333		2,308,769
Stockholders’ Equity		1,031,281		828,412

Total Liabilities and Stockholders’ Equity	$	3,421,614	$	3,137,181


	Third Quarter						Nine Months
	2004			2003			2004			2003
Units
New Retail Units		50,099			47,486			137,360			128,791
Used Retail Units		23,788			23,055			69,077			66,563

Total Retail Units		73,887			70,541			206,437			195,354

Same-Store Retail Revenue
New Vehicles	$	1,406,929		$	1,366,191		$	3,810,260		$	3,594,199
Used Vehicles		497,820			481,403			1,349,550			1,311,928
Finance and Insurance		54,776			56,428			151,139			151,334
Service and Parts		237,323			214,300			653,697			581,035

Total Same-Store Retail Revenue	$	2,196,848		$	2,118,322		$	5,964,646		$	5,638,496

Same-Store Retail Revenue Growth
New Vehicles		3.0	%		9.9	%		6.0	%		7.4	%
Used Vehicles		3.4	%		13.1	%		2.9	%		10.8	%
Finance and Insurance		(2.9	%)		17.2	%		(0.1	%)		16.2	%
Service and Parts		10.7	%		11.7	%		12.5	%		9.3	%
Revenue Mix
New Vehicles		58.3	%		60.0	%		57.4	%		58.9	%
Used Vehicles		21.1	%		21.1	%		21.7	%		21.8	%
Finance and Insurance		2.2	%		2.5	%		2.2	%		2.5	%
Service and Parts		9.9	%		9.4	%		10.1	%		9.5	%
Fleet		1.5	%		1.1	%		1.4	%		1.4	%
Wholesale		7.0	%		6.0	%		7.2	%		5.9	%
Retail Gross Margin — by Product
New Vehicles		8.4	%		8.2	%		8.5	%		8.3	%
Used Vehicles		8.7	%		9.3	%		8.9	%		9.3	%
Finance and Insurance		100.0	%		100.0	%		100.0	%		100.0	%
Service and Parts		52.8	%		52.9	%		53.5	%		53.0	%

Gross Profit per Transaction
New Vehicles	$	2,630		$	2,383		$	2,645		$	2,422
Used Vehicles		2,061			1,962			2,091			1,932
Finance and Insurance		807			813			804			801


	Third Quarter						Nine Months
	2004			2003			2004			2003

Brand Mix:
Toyota/Lexus		21	%		23	%		22	%		22	%
BMW		14	%		14	%		15	%		14	%
Mercedes		10	%		10	%		10	%		10	%
Honda/Acura		12	%		11	%		11	%		12	%
General Motors		10	%		10	%		9	%		11	%
Ford Premier Group		7	%		8	%		8	%		8	%
Chrysler		5	%		6	%		5	%		6	%
Nissan/Infiniti		4	%		5	%		4	%		5	%
Ford		4	%		4	%		4	%		5	%
Other		13	%		9	%		12	%		7	%
Debt to Total Capital Ratio		40	%		50	%		40	%		50	%
Adjusted EBITDA (a)	$	75,716		$	62,245		$	202,810		$	166,820
Rent Expense	$	27,150		$	21,246		$	74,432		$	60,893

(a)

Adjusted EBITDA is defined as income from continuing operations before minority interests, income tax provision, other interest expense, depreciation and amortization. While Adjusted EBITDA should not be construed as a substitute for income from continuing operations or as a better measure of liquidity than cash flows from operating activities, each of which is determined in accordance with U.S. GAAP, it is included in this press release to provide additional information regarding the amount of cash our business is generating. This measure may not be comparable to similarly titled measures reported by other companies. Following is a reconciliation of income from continuing operations before minority interests and income tax provision and Adjusted EBITDA:


	Third Quarter				Nine Months
	2004		2003		2004		2003
Income from continuing operations before minority interests and income tax provision	$	50.6	$	43.0	$	138.9	$	112.0
Other interest expense		10.5		11.1		31.3		32.2
Depreciation and amortization		14.7		8.1		32.6		22.6

Adjusted EBITDA	$	75.7	$	62.2	$	202.8	$	166.8


Delaware	1-12297	22-3086739
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

2555 Telegraph Road, Bloomfield Hills, Michigan		48302
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	United Auto Group, Inc.

October 28, 2004	By:	Robert H. Kurnick, Jr.

		Name: Robert H. Kurnick, Jr.
		Title: Executive Vice President


Exhibit No.		Description

99.1		Press Release dated October 28, 2004


Date of Report (Date of Earliest Event Reported):		October 28, 2004


Registrant’s telephone number, including area code:		248-648-2500