Mike Short: It is more cyclical. We are at the point now where you have such difficult economic conditions between the uncertainty around housing and what is the value of your housing. We always said the sensitivity begins at $3, now we are at $3.50 with the prospect of $4 on the horizon. It is a value-conscious price buyer that we see out there right now. They are willing to give up size and other capabilities to get to a price point. To keep volume moving at all, that puts tremendous pressures on margins.

John Murphy (Merrill Lynch): The used margins saw good strength. Is there anything you are seeing in that market?

Mike Maroone: We did have some margin pressure in used as well. We are off about $233 a vehicle. It is the tightening of credit, especially subprime. We are seeing shorter advances. We are seeing more restrictions, tighter verification. It is just the credit market is tightening up. We were relatively pleased with our used vehicle performance, but the credit environment is making it difficult on margins.

John Murphy (Merrill Lynch): Are you through all the cost cutting you can do at this point on the structural side and at this point it is getting the grosses back up as volumes ultimately recover over time?

Mike Short: I do not think we are ever done with a diligent look at our cost structure. It is an ongoing process for us here at AutoNation. Each of the stores is now putting in place tactical plans that make sense for the business both in the short and long term to make ourselves as efficient as we can. It is an ongoing continuous improvement idea here.

John Murphy (Merrill Lynch): Where are you at on parts and service, customer pay versus warranty work?

Mike Maroone: Our customer pay was up 2.4% offset by about a 2% reduction in warranty. Warranty is starting to moderate. On a customer pay point of view our traffic was down about 1% but our dollars per repair order were up. We are still optimistic about our service business. We are moving to a service selling culture and have got a lot of programs in place. We are working hard on the ‘e’ side, and I am optimistic about our ability to grow that business.

John Murphy (Merrill Lynch): What the average ticket was?

Mike Maroone: Our customer pay ticket averages about $300.

Matt Nemer (Thomas Weisel Partners): Is the decline in used vehicle margins a mix shift away from subprime where the subprime deals generate a lot more margins than plain vanilla deals?

Mike Jackson: I do not think it is that simple. There is pressure all through both prime and subprime. There are less subprime lenders. There is some conservatism there. There are some big fees from the subprime lender, but it is a cautious advances both on new and used from all lenders.

Matt Nemer (Thomas Weisel Partners): Have you seen any issues either in your own business or in the industry where lenders are becoming more cautious with floorplan lines and any risk that there is a chance of some of the terms on those lines change?

Mike Jackson: No, we have not seen much change on the floorplan side of the business at all.

Matt Nemer (Thomas Weisel Partners): Your new and used ASP, average revenue per unit ticked is down sequentially. What is driving?

Mike Jackson: Because of this combination of the situation in housing, the credit crisis, gasoline prices - the customers that are in the market at the moment are value conscious and they are willing to move to lower price points. They are asking to move to a lower price point to get in a vehicle. I think that will change with the cycle. I do not think that is a permanent change in consumer preference, it is just a sign of economic stress.

Matt Nemer (Thomas Weisel Partners): Is that within brands or people crossing over to value-oriented brands?

Mike Maroone: It is across all brands. There are a couple of exceptions– for example in Toyota the revenue is up, but most brands were down. The growth in segments in the quarter was in small cars and crossovers which have a larger price point which ties back to Mike Jackson''s comments about the value-conscious price buyer.

Matt Nemer (Thomas Weisel Partners): On your cash flow statement you spent $29 million on acquisitions in the quarter. Can you give some detail on that?

Mike Jackson: Yes, we acquired one dealership in the quarter, a BMW dealership.

Colin Langan (UBS): Have you seen any changes in the multiples for dealers on the M&A front?