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HOUSTON -- Group 1 Automotive, Inc. (NYSE:GPI), a Fortune 500 specialty retailer, today revised its outlook for 2004 and announced that it recently completed the acquisition of three dealerships in Houston and Beverly Hills, Calif., with total annual revenues of approximately $315 million.

The company expects full-year earnings per diluted share in the range of $2.95 to $3.15, or about 8 percent below the previous range of $3.20 to $3.40 provided by the company in April. This revised outlook excludes the $0.17 per diluted share charge from the March 2004 notes redemption but includes the accretive impact of all completed acquisitions, including those noted above. It also includes the results of what the company expects to be a relatively weak second quarter, as described below, as well as slightly improved performance for the balance of the year versus the first half.

The company expects to report earnings per diluted share of $0.65 to $0.69 for the second quarter ended June 30, 2004. These results include a charge of approximately $0.08 per diluted share related to a recent hailstorm that damaged or destroyed more than 1,000 vehicles, or about 95 percent of the inventory, at the company's Gene Messer dealerships in Amarillo, Texas. The charge reflects not only the company's required deductibles, but also the amount of financial risk retained by the company on its property and casualty insurance. The second-quarter results also reflect what the company considers to be a challenging market for new vehicle sales. This has resulted in less-than-expected performance at certain of its dealerships, particularly its Ford and Toyota dealerships, that together comprise about 40 percent of the company's new vehicle sales.While we are disappointed by these results, our luxury and certain other dealership franchises are performing well, and we remain committed to our strategy of acquiring well-managed, accretive operations," said B.B. Hollingsworth Jr., Group 1's chairman, president and chief executive officer. "Although we have funded a portion of our recent acquisitions with debt, we continue to maintain one of the strongest balance sheets in our industry, which keeps us poised for solid, profitable growth."

Group 1 Completes Acquisitions in Texas and California

The dealerships acquired by Group 1 in Texas and California are comprised of BMW, Mercedes-Benz and Maybach franchises with total annual revenues of approximately $315 million. Total consideration paid for both transactions was approximately $77.5 million in cash, net of cash received.

Group 1 has expanded its brand offerings in the Houston market by acquiring Advantage BMW Downtown and its satellite store, Advantage BMW Clear Lake. These dealerships will operate under the company's existing Houston-area platform, the Sterling McCall Automotive Group, that also includes Toyota, Lexus, Nissan, Honda and Acura franchises.

In a separate transaction, Group 1 also acquired Mercedes-Benz of Beverly Hills, an award-winning dealership that offers both Mercedes-Benz and its ultra-luxury Maybach brand. The dealership augments the company's existing Los Angeles-area platform, the Miller Automotive Group. Including the Beverly Hills dealership, Miller Automotive now operates eight dealerships consisting of nine import franchises in the Los Angeles area.

"These tuck-in acquisitions will be immediately accretive to earnings and will further expand Group 1's offerings of luxury brands in markets with strong demand for these vehicles," said Hollingsworth. "With the addition of the Mercedes-Benz and Maybach franchises in Beverly Hills, the company is gaining a significant presence in one of the largest luxury automobile markets in the United States."

Year to date, Group 1 has added 19 franchises with expected annual revenues of approximately $1.0 billion. The aggregate consideration paid in completing these acquisitions was approximately $172.0 million in cash, net of cash received, and 360,693 shares of Group 1 common stock. The brand mix of these franchises, based on expected revenues, consists of 24 percent domestics and 76 percent imports, including 39 percent luxury brands. The cash portion of these transactions was funded with a combination of cash on hand and borrowings under the company's revolving credit facility.

"We have now reached our full-year acquisition target of $1 billion of expected aggregate annual revenues," stated Hollingsworth. "We continue to find qualified candidates that meet our stringent criteria and will continue our disciplined approach to acquisitions during the second half of the year, although at a slower pace than in the first half of the year."

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