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Press Release

UnitedAuto Reports Fourth Quarter Results

BLOOMFIELD HILLS, Mich.--(BUSINESS WIRE)--Feb. 14, 2006--United Auto Group, Inc. (NYSE: UAG):

  • Income From Continuing Operations Increases 13% to $31.6 Million
  • Income From Continuing Operations Rises 12% to $0.67 per share
  • Total Revenues Increase 7%
  • Same-Store Retail Revenues Increase 4%

United Auto Group, Inc. (NYSE: UAG), an international automotive retailer, today reported fourth quarter income from continuing operations of $31.6 million and related earnings per share of $0.67, representing increases of 12.9% and 11.7%, respectively, over the comparable period in 2004. Fourth quarter 2005 results include $5.2 million of after-tax earnings ($0.11 per share) attributable to the sale of all the remaining variable profits relating to the pool of extended service contracts sold at the Company's dealerships over the past five years. Fourth quarter net income amounted to $30.1 million and related earnings per share was $0.64, representing increases of 15.3% and 14.3%, respectively.

Revenues in the fourth quarter increased 7.5% to $2.5 billion, including a 3.9% increase in same-store retail revenues, and gross margin improved to 15.7%, including increases in margins of new vehicle, used vehicle and service and parts revenues. The increase in same-store revenue was highlighted by 9.0% growth in service and parts revenues at the Company's dealerships in the U.S. and a 7.5% increase in same-store retail revenues at the Company's dealerships located outside the U.S.

For the year ended December 31, 2005, revenues increased 13.9% to $10.2 billion. Full year income from continuing operations amounted to $120.7 million and related earnings per share was $2.57, representing increases of 8.2% and 4.9%, respectively, over 2004. Results for 2005 include the earnings from the sale of the extended service contract variable profits, as well as the after-tax severance charges of $1.2 million ($0.03 per share) recorded in the second quarter. Full year 2004 results include $7.2 million ($0.16 per share) of after-tax earnings resulting from the sale of an investment. Adjusted for these items, income from continuing operations and related earnings per share amounted to $116.7 million and $2.49 per share, representing increases of 11.8% and 8.7%, respectively, over the comparable period in 2004.

Commenting on the Company's results, Chairman Roger Penske said, "We continue to be pleased with the performance of our business, despite the challenging retail environment during most of the quarter. We believe our strategies, including the strength of our brand mix, our geographical diversity, and our commitment to increasing the service and parts component of UAG's business, remain key differentiators of our Company and an integral part of the Company's success."

Penske continued, "2005 was another outstanding year for UnitedAuto. We strengthened our brand mix, added new franchises in important growth markets, and increased our gross margin by 29 basis points to 15.2%. In addition, our recently completed $375 million convertible note offering lowers our overall cost of capital, fixes the interest rate on a significant portion of our debt in a time of rising interest rates, and leaves us with significant financial flexibility to pursue our growth objectives."

After considering volatile energy prices, the challenging selling environment and the impact of our recent convertible note offering, the Company currently estimates earnings from continuing operations to be in the range of $2.70 to $2.80 per share for the year ended December 31, 2006, and in the range of $0.53 to $0.57 per share for the first quarter 2006. These estimates are based on an estimated average of 47.0 million shares outstanding.

UnitedAuto will host a conference call discussing financial results relating to fourth quarter 2005 on Tuesday, February 14, 2006 at 2:00 p.m. ET. To listen to the conference call, participants must dial (800) 230-1092 (International, please dial (612) 288-0318). The call will be simultaneously broadcast live over the Internet through the UnitedAuto website at www.unitedauto.com.

About UnitedAuto

United Auto Group, Inc., headquartered in Bloomfield Hills, Michigan, operates 297 retail automotive franchises, representing 40 different brands, and 27 collision repair centers. UnitedAuto, which sells new and previously owned vehicles, finance and insurance products and replacement parts, and offers maintenance and repair services on all brands it represents, has 171 franchises in 19 states and Puerto Rico and 126 franchises located internationally, primarily in the United Kingdom. UnitedAuto is a member of the Fortune 500 and Russell 2000 and has approximately 14,000 employees.

Statements in this press release involve forward-looking statements, including forward-looking statements regarding UnitedAuto's future sales 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, market conditions, and other uncertainties which could affect UnitedAuto's future performance, which is contained in UnitedAuto's Form 10-K for the year ended December 31, 2004, and its other filings with the Securities and Exchange Commission, and which is 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.

This release contains certain non-GAAP financial measures as defined under SEC rules, such as adjusted income from continuing operations and related earnings per share, which exclude certain items disclosed in the release. The Company has reconciled these measures to the most directly comparable GAAP measures in the release. The Company believes that these non-GAAP financial measures improve the transparency of the Company's disclosure and the period-to-period comparability of the Company's results from operations.

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

                                                   Fourth Quarter
                                               -----------------------
                                                  2005        2004
                                               ----------- -----------
Revenues:
  New Vehicle                                  $1,418,442  $1,336,355
  Used Vehicle                                    500,733     470,054
  Finance and Insurance, Net                       61,501      61,972
  Service and Parts                               279,043     249,611
  Fleet and Wholesale Vehicle                     197,518     168,483
                                               ----------- -----------
       Total Revenues                           2,457,237   2,286,475
Cost of Sales:
  New Vehicle                                   1,291,419   1,218,484
  Used Vehicle                                    457,312     430,911
  Service and Parts                               125,210     113,612
  Fleet and Wholesale Vehicle                     198,700     168,612
                                               ----------- -----------
       Total Cost of Sales                      2,072,641   1,931,619
                                               ----------- -----------
       Gross Profit                               384,596     354,856
SG&A Expenses                                     298,012     277,228
Depreciation and Amortization                      10,148       8,786
                                               ----------- -----------
       Operating Income                            76,436      68,842
Floor Plan Interest Expense                       (13,447)    (11,671)
Other Interest Expense                            (13,402)    (11,686)
                                               ----------- -----------
       Income from Continuing Operations Before
        Minority Interests and Income Taxes        49,587      45,485
Minority Interests                                   (564)       (556)
Income Taxes                                      (17,410)    (16,924)
                                               ----------- -----------
       Income from Continuing Operations           31,613      28,005
Loss from Discontinued Operations, Net of Tax      (1,492)     (1,890)
                                               ----------- -----------
       Net Income                                 $30,121     $26,115
                                               =========== ===========
Income from Continuing Operations Per Diluted
 Share                                              $0.67       $0.60
                                               =========== ===========
Diluted EPS                                         $0.64       $0.56
                                               =========== ===========
Diluted Weighted Average Shares Outstanding        47,187      46,689
                                               =========== ===========



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

                                                    Twelve Months
                                               -----------------------
                                                  2005        2004
                                               ----------- -----------
Revenues:
  New Vehicle                                  $5,900,326  $5,195,728
  Used Vehicle                                  2,148,582   1,929,230
  Finance and Insurance, Net                      237,843     209,467
  Service and Parts                             1,100,241     938,090
  Fleet and Wholesale Vehicle                     803,292     675,983
                                               ----------- -----------
       Total Revenues                          10,190,284   8,948,498
Cost of Sales:
  New Vehicle                                   5,384,406   4,746,894
  Used Vehicle                                  1,956,066   1,764,080
  Service and Parts                               500,316     431,805
  Fleet and Wholesale Vehicle                     804,152     674,856
                                               ----------- -----------
Cost of Sales                                   8,644,940   7,617,635
                                               ----------- -----------
       Gross Profit                             1,545,344   1,330,863
SG&A Expenses                                   1,213,259   1,036,521
Depreciation and Amortization                      39,388      37,910
                                               ----------- -----------
       Operating Income                           292,697     256,432
Floor Plan Interest Expense                       (50,922)    (44,033)
Other Interest Expense                            (49,540)    (42,969)
Other Income                                           --      11,469
                                               ----------- -----------
       Income from Continuing Operations Before
        Minority Interests and Income Taxes       192,235     180,899
Minority Interests                                 (1,814)     (2,047)
Income Taxes                                      (69,760)    (67,290)
                                               ----------- -----------
       Income from Continuing Operations          120,661     111,562
Income (Loss) from Discontinued Operations, Net
 of Tax                                            (1,688)        125
                                               ----------- -----------
       Net Income                                $118,973    $111,687
                                               =========== ===========
Income from Continuing Operations Per Diluted
 Share                                              $2.57       $2.45
                                               =========== ===========
Diluted EPS                                         $2.53       $2.45
                                               =========== ===========
Diluted Weighted Average Shares Outstanding        46,966      45,613
                                               =========== ===========



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

                                                 12/31/05    12/31/04
                                               ----------- -----------
Assets
Cash and Cash Equivalents                          $9,424     $23,547
Accounts Receivable, Net                          412,861     342,174
Inventories                                     1,224,443   1,180,769
Other Current Assets                               51,142      43,095
Assets of Discontinued Operations                 181,775     284,614
                                               ----------- -----------
     Total Current Assets                       1,879,645   1,874,199
Property and Equipment, Net                       424,429     374,678
Intangibles                                     1,206,471   1,197,044
Other Assets                                       83,628      86,880
                                               ----------- -----------
     Total Assets                              $3,594,173  $3,532,801
                                               =========== ===========

Liabilities and Stockholders' Equity
Floor Plan Notes Payable                         $845,251    $807,204
Floor Plan Notes Payable - Non-Trade              331,953     315,634
Accounts Payable and Accrued Expenses             386,739     395,750
Current Portion Long-Term Debt                      3,551      11,367
Liabilities of Discontinued Operations             97,256     173,774
                                               ----------- -----------
     Total Current Liabilities                  1,664,750   1,703,729
Long-Term Debt                                    576,690     574,933
Other Long-Term Liabilities                       207,001     179,104
                                               ----------- -----------
     Total Liabilities                          2,448,441   2,457,766
Stockholders' Equity                            1,145,732   1,075,035
                                               ----------- -----------
     Total Liabilities and Stockholders'
      Equity                                   $3,594,173  $3,532,801
                                               =========== ===========



                        UNITED AUTO GROUP, INC.
                             Selected Data

                           Fourth Quarter           Twelve Months
                       ----------------------- -----------------------
                          2005        2004        2005        2004
                       ----------- ----------- ----------- -----------
Units
  New Retail Units         40,864      40,056     178,157     161,221
  Used Retail Units        18,407      18,161      81,437      76,308
                       ----------- ----------- ----------- -----------
    Total Retail Units     59,271      58,217     259,594     237,529
                       =========== =========== =========== ===========

Same-Store Retail
 Revenue
  New Vehicles         $1,372,707  $1,327,553  $5,157,216  $4,908,989
  Used Vehicles           486,823     463,945   1,891,521   1,817,051
  Finance and
   Insurance, Net          60,112      61,674     220,221     201,689
  Service and Parts       263,286     247,418     948,862     881,982
                       ----------- ----------- ----------- -----------
    Total Same-Store
     Retail Revenue    $2,182,928  $2,100,590  $8,217,820  $7,809,711
                       =========== =========== =========== ===========

Same-Store Retail
 Revenue Growth
  New Vehicles                3.4%        6.7%        5.1%        6.1%
  Used Vehicles               4.9%        7.8%        4.1%        5.8%
  Finance and
   Insurance, Net           (2.5%)       37.6%        9.2%       10.2%
  Service and Parts           6.4%       12.7%        7.6%       13.3%

Revenue Mix
  New Vehicles               57.7%       58.4%       57.9%       58.1%
  Used Vehicles              20.4%       20.6%       21.1%       21.6%
  Finance and
   Insurance, Net             2.5%        2.7%        2.3%        2.3%
  Service and Parts          11.4%       10.9%       10.8%       10.5%
  Fleet and Wholesale         8.0%        7.4%        7.9%        7.5%

Retail Gross Margin -
 by Product
  New Vehicles                9.0%        8.8%        8.7%        8.6%
  Used Vehicles               8.7%        8.3%        9.0%        8.6%
  Service and Parts          55.1%       54.5%       54.5%       54.0%

Gross Profit per
 Transaction
  New Vehicles             $3,108      $2,943      $2,896      $2,784
  Used Vehicles             2,359       2,155       2,364       2,164
  Finance and
   Insurance                1,038       1,064         916         882



                        UNITED AUTO GROUP, INC.
                       Selected Data (Continued)

                                   Fourth Quarter     Twelve Months
                                  ----------------- ------------------
                                    2005     2004      2005     2004
                                  -------- -------- --------- --------
Brand Mix:
  Toyota/Lexus                         21%      23%       22%      24%
  BMW                                  16%      15%       15%      16%
  Honda/Acura                          15%      14%       15%      12%
  DCX                                  12%      13%       12%      14%
  Ford                                  9%       9%        9%      10%
  Audi                                  7%       6%        7%       5%
  General Motors                        5%       6%        6%       7%
  Porsche                               4%       4%        4%       3%
  Nissan/Infiniti                       3%       4%        4%       4%
  Other                                 8%       6%        6%       5%

Total Brand Mix:
  Domestic                              9%       9%       10%      10%
  Foreign (incl. Premium / Luxury)     91%      91%       90%      90%
  Premium / Luxury                     61%      59%       58%      57%

Debt to Total Capital Ratio            34%      35%       34%      35%

Rent Expense                      $30,950  $24,701  $115,550  $91,214

CONTACT: United Auto Group, Inc.
Finance:
Jim Davidson, 201-325-3303
jdavidson@unitedauto.com
or
Investor Relations:
Tony Pordon, 248-648-2540
tpordon@unitedauto.com
SOURCE: United Auto Group, Inc.