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AutoNation's Profit Falls as Incentives Are Increased


AutoNation (AN - Get Report) , the nation's largest new-vehicle retailer and a barometer of consumer demand, said first-quarter profit fell 14% because of increased discounts needed to close transactions.

The quarter's results also were hurt by costs associated with hail damage to vehicles in Texas last month, as well as for an accounting change in the company's stock-based compensation.

"It's a particularly challenging environment" for auto sales, Mike Jackson, CEO, told CNBC. Jackson also blamed a downturn in the economies of regions that depended on oil revenue. About a quarter of the company's revenue comes from areas dependent on oil, a commodity that has been hit by depressed prices.

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AutoNation operates stores mostly in the Sunbelt. Analysts had been forecasting operating profit of 93 cents...