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S&P may lower AutoNation to junk
Standard & Poor's said it placed its ratings on AutoNation Inc., including the BBB- corporate credit rating, on CreditWatch with negative implications due to deteriorating macroeconomic conditions that could pressure already weak credit measures well into 2009.
The agency said that even though AutoNation is only partially dependent on new-vehicle sales, the U.S. economic recession and tight credit markets have the potential to reduce the company's other sources of profit: used vehicles, parts and service, and finance and insurance revenues. Furthermore, there is increased uncertainty about the downturn's length and depth.
S&P said it will resolve the CreditWatch listing after it meets with management and analyzes the company's plans to manage its financial and cost structures in light of current market conditions.
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