<PAGE>


                   UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                      FORM 10-Q


(Mark One)

[ X ]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1997

                                          OR

[   ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

For the transition period from __________________ to ___________________

Commission File Number 333-06585

                         CROSS-CONTINENT AUTO RETAILERS, INC.
                (Exact name of registrant as specified in its charter)

     DELAWARE                                            75-2653095
(State or other jurisdiction of                         (IRS Employer
 incorporation or organization)                        Identification No.)

     1201 S. TAYLOR
     AMARILLO, TEXAS                                        79101
(Address of principal executive offices)                   (Zip Code)

                                    (806) 374-8653
                 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  X  .  No     .

Number of shares outstanding of each of the issuer's classes of common stock, as
of November 12, 1997.

           Class                                Shares Outstanding
--------------------------                   -------------------------
     $.01 Par Value                                 13,445,703

                                     1
<PAGE>

                         CROSS-CONTINENT AUTO RETAILERS, INC.

                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        (IN THOUSANDS - EXCEPT PER SHARE DATA)
                                     (UNAUDITED)

                                      Three Months Ended    Nine Months Ended
                                         September 30,        September 30,
                                        1997      1996       1997       1996
                                      --------   -------   --------   --------
Revenues
  Vehicle sales                       $118,078   $66,987   $315,043   $192,888
  Other operating revenue               16,706     9,595     44,150     24,936
                                      --------   -------   --------   --------
    Total Revenues                     134,784    76,582    359,193    217,824

Cost of sales                          111,061    64,528    296,756    184,449
                                      --------   -------   --------   --------
  Gross Profit                          23,723    12,054     62,437     33,375
                                      --------   -------   --------   --------
Operating Expenses   
  Selling, general and administrative   16,786     8,315     45,429     24,010
  Depreciation and amortization            815       272      1,814        821
  Employee stock compensation               -         -          -       1,099
  Loss from sale of dealerships             -         -         347         -
                                      --------   -------   --------   --------
                                        17,601     8,587     47,590     25,930
                                      --------   -------   --------   --------
  Operating income                       6,122     3,467     14,847      7,445
   
Other income (expense)   
  Interest income                          159       197        992        724
  Interest expense                      (2,112)   (1,068)    (5,058)    (3,318)
                                      --------   -------   --------   --------
  Income before income taxes             4,169     2,596     10,781      4,851
  Income tax provision                   1,557       961      4,157      2,186
                                      --------   -------   --------   --------
    Net Income                        $  2,612   $ 1,635   $  6,624   $  2,665
                                      --------   -------   --------   --------
                                      --------   -------   --------   --------
Net income per average common share   $    .19             $    .48
                                      --------             --------
                                      --------             --------
Weighted average common shares
 outstanding                            13,446               13,764
                                      --------             --------
                                      --------             --------

The accompanying notes are an integral part of these financial statements.

                                     2


<PAGE>
                                       
                      CROSS-CONTINENT AUTO RETAILERS, INC.

                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                     ASSETS

<TABLE>
                                               SEPTEMBER 30, 1997  DECEMBER 31,1996
                                               ------------------  ----------------
                                                  (UNAUDITED)
<S>                                            <C>                 <C>
Current assets
     Cash and cash equivalents                     $  2,152           $ 36,946
     Accounts receivable                             19,626             18,629
     Inventories                                     56,718             48,168
                                                   --------           --------
          Total current assets                       78,496            103,743
Property and equipment, at cost, less                                
     accumulated depreciation                        27,390             13,391
Goodwill, net                                        68,676             22,094
Other assets and deferred charges                     5,626              3,218
                                                   --------           --------
          Total assets                             $180,188           $142,446
                                                   --------           --------
                                                   --------           --------


                      LIABILITIES AND STOCKHOLDERS' EQUITY           
                                                                     
Current liabilities                                                  
     Floor plan notes payable                      $ 53,135           $ 46,282
     Current maturities of long-term debt               724              1,345
     Accounts payable                                 7,087              8,623
     Due to affiliates                                   -               5,478
     Accrued expenses and other liabilities          13,189              7,408
     Deferred income taxes                            2,397              1,914
                                                   --------           --------
          Total current liabilities                  76,532             71,050
                                                                     
Long-term debt                                       38,945             10,568
Deferred warranty revenue and other liabilities       1,595              2,310
                                                   --------           --------
          Total long-term liabilities                40,540             12,878
                                                                     
Stockholders' equity                                                 
     Preferred stock, $.01 par value, 10,000,000                     
          shares authorized, none issued                 -                 -
     Common stock, $.01 par value, 100,000,000 shares                
          authorized, 13,445,703 and 13,800,000                      
          respectively, outstanding                     142                138
     Paid-in capital                                 54,471             47,761
     Treasury stock                                  (8,740)               - 
     Retained earnings                               17,243             10,619
                                                   --------           --------
          Total stockholders' equity                 63,116             58,518
                                                   --------           --------
                                                                     
Commitments and contingencies                                        
                                                                     
          Total liabilities and stockholders'                        
            equity                                 $180,188           $142,446
                                                   --------           --------
                                                   --------           --------
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

                      CROSS-CONTINENT AUTO RETAILERS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)


                                                           NINE MONTHS ENDED
                                                              SEPTEMBER 30,   
                                                        -----------------------
                                                          1997            1996
                                                        --------        -------
Cash flows from operating activities
   Net income                                           $  6,624        $ 2,665
   Adjustments to reconcile net income to net cash
             provided by operating activities
        Depreciation and amortization                      1,814            821
        Employee stock compensation                         -             1,099
        Deferred taxes and other                            (748)          -
(Increase)decrease in
   Accounts receivable                                     4,178         (1,375)
   Inventory                                               3,812          3,906
   Other assets                                           (2,135)          (394)
Increase (decrease) in
   Accounts payable - trade                               (4,067)          (864)
   Accrued expenses and other liabilities                   (524)           343
                                                        --------        -------
        Net cash provided by operating activities          8,954          6,201
                                                        --------        -------

Cash flows from investing activities
   Acquisition of property and equipment                  (1,504)          (254)
   Construction in progress                               (4,935)          (570)
   Acquisition of dealerships                            (41,620)          - 
                                                        --------        -------
        Net cash used in investing activities            (48,059)          (824)
                                                        --------        -------

Cash flows from financing activities
   Change in floor plan notes payable                       (903)        (3,558)
   Due to affiliates                                      (7,121)        (1,208)
   Proceeds from borrowing on long-term debt              30,037           -
   Long-term debt repayments                            (17,702)         (1,309)
   Proceeds from common stock issuance                     -             45,818 
                                                        --------        -------
        Net cash provided by financing activities         4,311          39,743
                                                        --------        -------

Increase (decrease) in cash and cash equivalents        (34,794)         45,120
Cash and cash equivalents at beginning of period         36,946           8,362
                                                        --------        -------

Cash and cash equivalents at end of period             $  2,152         $53,482
                                                        --------        -------
                                                        --------        -------

The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>
                                       
                      CROSS-CONTINENT AUTO RETAILERS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                               SEPTEMBER 30, 1997

NOTE 1.   UNAUDITED INTERIM FINANCIAL INFORMATION

     The accompanying unaudited condensed consolidated financial statements 
have been prepared in accordance with the instructions to Form 10-Q and do 
not include all of the information and footnotes required by generally 
accepted accounting principles for complete financial statements.  In the 
opinion of management, all adjustments (consisting of normal recurring 
accruals) considered necessary for a fair presentation have been included.  
Operating results for the three and nine months ended September 30, 1997 are 
not necessarily indicative of the results that may be expected for the year 
ending December 31, 1997.  This interim report should be read in conjunction 
with the consolidated financial statements and notes related thereto, and 
management's discussion and analysis of results of operations and financial 
condition included in Cross-Continent Auto Retailers, Inc.'s ("C-CAR" or the 
"Company") Annual Report on Form 10-K for the year ended December 31, 1996.  
The accompanying, unaudited, condensed consolidated financial statements have 
been subject to review by the Company's independent accountants, whose report 
is included herein.

NOTE 2.   INITIAL PUBLIC OFFERING

     In September 1996, the Company sold 3,675,000 shares of its common stock 
(the "Common Stock") in an initial public offering for $14.00 per share (the 
"Offering").  Net proceeds from the Offering, after considering underwriting 
commissions, printing costs, professional fees, and other direct expenses, 
were $45.5 million.

NOTE 3.   NET INCOME PER COMMON SHARE

     Earnings per share data are not presented for the three or nine month 
periods ended September 30, 1996 because the historical capital structure 
prior to the Company's Offering is not comparable to the capital structure 
existing after the Offering.

     In February 1997, the Financial Accounting Standards Board ("FASB") 
issued Financial Accounting Standard No. 128, Earnings Per Share ("FAS 128"), 
which is effective for financial statements issued for periods ending after 
December 15, 1997, including interim periods.  Effective December 31, 1997, 
the Company will adopt FAS 128, which establishes standards for computing and 
presenting earnings per share ("EPS").  The statement requires dual 
presentation of basic and diluted EPS on the face of the income statement for 
entities with complex capital structures and requires a reconciliation of the 
numerator and denominator of the basic EPS computation, to the numerator and 
denominator of the diluted EPS computation.  Basic EPS excludes the effect of 
potentially dilutive securities while diluted EPS reflects the potential 
dilution that could occur if securities or other contracts to issue common 
stock were exercised, converted, or resulted in the issuance of common stock 
that would then share in the earnings of the entity.

     Pro-forma basic and diluted EPS as computed pursuant to FAS 128 would 
not have differed from the reported $0.19 and $0.48 per common share as 

                                       5
<PAGE>

presented on the face of the consolidated statement of operations, for the 
three and nine month periods ended September 30, 1997, respectively.

NOTE 4.   RELATED PARTY TRANSACTIONS

     In connection with its business travel, the Company from time to time 
makes use of an airplane that is owned and operated by Plains Air, Inc.   
Plains Air, Inc. is owned by Bill A. Gilliland and Robert W. Hall, Chairman 
and Senior Vice Chairman, respectively.  Currently, the Company pays Plains 
Air, Inc. $13,050 per month plus a fee of approximately $488 per hour for use 
of the airplane. During the three and nine month periods ended September 30, 
1997 the Company paid Plains Air, Inc. an aggregate of $130,000 and $399,000, 
respectively, for the use of the airplane, compared to $48,000 and $112,000 
for the three and nine month periods ended September 30, 1996.

     In general, the Company is required to pay for all vehicles purchased 
from the automakers upon delivery of the vehicles to the Company.  General 
Motors Acceptance Corporation ("GMAC"), Chrysler Financial Credit ("CFC") and 
Toyota Motor Credit Corporation ("TMCC") provide financing for all new 
vehicles and certain qualified used vehicles.  This type of financing is 
known as "floor plan financing" or "flooring."  Under this arrangement with 
GMAC, CFC and TMCC, the Company may deposit funds with the financial 
institutions in an amount up to 75% of the amount of the floor plan 
financing.  Such funds earn interest at the same rate charged by GMAC, CFC 
and TMCC to the Company for its flooring.  From time to time, the control 
group and other affiliates have advanced funds to the Company primarily for 
the purpose of investing with GMAC, CFC and TMCC.  The Company acts only as 
an intermediary in this process.  As of July 1, 1997, the Company had 
withdrawn and repaid all control group and affiliate funds and interest 
earned.  The amount of interest accrued pursuant to these arrangements during 
the nine month period ended September 30, 1997 approximated $193,000, 
compared to $85,000 and $276,000 for the three and nine month periods ended 
September 30, 1996.

     Gilliland Group Family Partnership ("GGFP") was the contracting agent 
for the construction of certain facilities for the Company during the nine 
month period ending September 30, 1997.  Bill Gilliland and Robert W. Hall, 
Chairman and Senior Vice Chairman, respectively, are General Partners of 
GGFP.  The total cost of the facilities through September 30, 1997  
approximated $585,000 including approximately $75,000 as payment to GGFP for 
architectural and construction management fees.  No construction costs or 
related management fees were incurred during the three month period ending 
September 30, 1997.

     GGFP was also the lessor of certain properties to the Company during the 
nine month period ending September 30, 1997.  The total lease payments 
approximated $21,000 and $53,000 for the three and nine month periods ending 
September 30, 1997, compared to $16,000 and $40,000 for the comparable 
periods ending September 30, 1996.

     Subsequent to the acquisition of Toyota West Sales & Service, Inc. and 
Douglas Toyota, Inc. (see Note 5), the seller, R. Douglas Spedding became 
Vice President-Regional Manager of the Company.  In connection with the 
acquisition of Toyota West Sales & Service, Inc. and Douglas Toyota, Inc., 
the Company purchased two plots of land from R. Douglas Spedding in exchange  
for a total of $7.5 million in seller-financed notes.  The plots of land 

                                       6
<PAGE>

will be used to relocate the Las Vegas, Nevada and Denver, Colorado 
dealerships to newly constructed facilities.  In connection with interim 
financing on construction projects at the two new locations (see Note 8), the 
Company entered into an Interim Construction and Master Loan Agreement ("Loan 
Agreement") with R. Douglas Spedding.  The Loan Agreement provides interim 
financing up to $7.4 million for use on construction of new automobile 
dealership facilities in Las Vegas, Nevada and Denver, Colorado.

NOTE 5.   ACQUISITIONS

     Effective July 1, 1997, the Company acquired Sahara  Nissan, Inc. 
("Nissan West").  Nissan West is engaged in the retail sales of new and used 
vehicles and in the retail and wholesale sales of replacement parts and 
vehicle servicing. The total purchase price of approximately $13.7 million 
was funded with $11.1 million in cash, $9 million of which was financed with 
borrowings on the Company's Credit Facility (hereinafter defined), 125,983 
shares of the Company's common stock valued at $15.875 per share, and 
$600,000 in seller financed notes, bearing a 6.45% rate of interest and 
payable on July 1, 2002. The Nissan West acquisition has been accounted for 
as a purchase and the operating results of Nissan West have been included in 
the accompanying consolidated statements of operations since July 1, 1997.  
The cost of the Nissan West acquisition, including acquisition costs, has 
been allocated on the basis of the estimated fair market value of the assets 
acquired and the liabilities assumed.

     A summary of the preliminary purchase price allocation for Nissan West 
is presented below (in thousands):

               Net working capital                $   364
               Property and equipment                 476
               Goodwill and other intangibles      12,900
                                                  -------
                    Total                         $13,740
                                                  -------
                                                  -------

     Effective April 1, 1997, the Company acquired Toyota West Sales and 
Service, Inc. and Douglas Toyota, Inc. (collectively "Spedding Toyota"). 
Spedding Toyota is engaged in the retail sales of new and used vehicles and 
in the retail and wholesale sales of replacement parts and vehicle servicing. 
The total purchase price of approximately $40.5 million was funded with 
$28.5 million in cash, $6 million of which was financed with bank debt 
maturing in 2000, 279,720 shares of the Company's common stock valued at 
$17.875 per share, and a prime rate based, seller financed note in the amount 
of $7 million which matures in 2002.  These debt balances have subsequently 
been refinanced (See Note 7).  In conjunction with the acquisition of 
Spedding Toyota, the Company purchased two plots of land from R. Douglas 
Spedding (see Note 4) in exchange for a total of $7.5 million in 
seller-financed notes.  The principal amount, together with interest at the 
prime rate, matures October, 1998.  The plots of land will be used to 
relocate both the Spedding dealerships to newly constructed facilities.  The 
Spedding Toyota acquisition has been accounted for as a purchase and the 
operating results of Spedding Toyota have been included in the accompanying 
consolidated statements of operations since April 1, 1997.  The cost of the 
Spedding Toyota acquisition, including acquisition costs, has been allocated 
on the basis of the estimated fair market value of the assets acquired and 
the liabilities assumed.

     A summary of the purchase price allocation for Spedding Toyota is 
presented below (in thousands):

                                       7
<PAGE>

               Net working capital                $ 2,183
               Property and equipment               1,264
               Goodwill and other intangibles      37,100
                                                  -------
                    Total                         $40,547
                                                  -------
                                                  -------
















                                       8
<PAGE>

     Effective October 1, 1996, the Company acquired Lynn Hickey Dodge 
("Hickey").  Hickey is engaged in the retail sales of new and used 
automobiles and in the retail and wholesale sales of replacement parts and 
vehicle servicing.  The total purchase price of approximately $20 million was 
financed with proceeds from the Company's initial public offering.  The 
acquisition has been accounted for as a purchase, and the operating results 
of Hickey have been included in the accompanying consolidated statements of 
operations since the date of the acquisition.  The cost of the acquisition 
was allocated on the basis of the estimated fair market value of the assets 
acquired and the liabilities assumed.

     A summary of the purchase price allocation for Hickey is presented below 
(in thousands):

          Net working capital                          $ 4,760
          Property and equipment                           430
          Goodwill and other intangible assets          14,862
                                                       -------
                    Total                              $20,052
                                                       -------
                                                       -------

     The unaudited consolidated statement of operations data is presented 
below on a pro forma basis as though the Company's 1996 reorganization and 
Offering, and the  Hickey, Spedding Toyota and Nissan West acquisitions had 
all occurred as of the beginning of each period presented (in thousands, 
except per share data).
                                        NINE MONTHS ENDED SEPTEMBER 30,
                                               1997      1996
                                               ----      ----

     Pro forma revenue                       $436,272  $520,345
     Pro forma net income                       7,140     8,384
     Pro forma net income per share          $   0.51  $   0.59
     Pro forma weighted average shares         13,910    14,206

     The adjustments to arrive at pro forma revenue include the historic 
revenue of Hickey, Spedding Toyota, and Nissan West prior to the acquisition 
of each. Adjustments to net income to arrive at pro forma net income include 
estimated additional administrative expenses as a publicly owned company, 
additional amortization expense related to purchased goodwill and other 
intangibles, increased interest expense associated with the debt incurred in 
the purchase of Spedding Toyota and Nissan West, and the tax effects of these 
adjustments.

     The pro forma results of operations information is not necessarily 
indicative of the operating results that would have occurred had the 
reorganization, acquisitions and the Offering been consummated as of the 
beginning of each period, nor is it necessarily indicative of future 
operating results.

NOTE 6.   DISPOSITION

     Effective July 1, 1997, the Company sold 100% of the stock in 
Performance Dodge, Inc. and Performance Nissan, Inc. ("Performance"), both in 
the Oklahoma City area, to Benji Investments, Ltd., a Texas limited 
partnership controlled by Emmett M. Rice, Jr., the Company's former Chief 
Operating Officer (also a shareholder and former Director of the Company), in 
exchange for 760,000 shares of the Company's stock valued at a total of $8.7 
million based on the average closing share price on the four (4) days 
following June 16, 1997 (the date of execution of the definitive agreement).  

                                       9
<PAGE>

During the quarter ended June 30, 1997, the Company recorded an estimated 
loss on the disposition of $347,000, which included estimated selling 
expenses.  In conjunction with the sale, the Company repaid $4.3 million in 
long-term debt associated with the acquisition of these dealerships.  The 
Company also retained ownership of the Performance Dodge facilities and the 
related mortgage, and is leasing such facilities to Benji Investments, Ltd.  
The combined revenue and operating income (loss) from these dealerships for 
the three and nine month periods ended September 30, 1997 and 1996 are 
presented (in thousands) below:

                         THREE MONTHS ENDED       NINE MONTHS ENDED 
                            SEPTEMBER 30             SEPTEMBER 30
                           1997      1996           1997     1996 
                         ------------------       -----------------
Revenue                  $   -     $17,727        $37,312   $54,924

Operating income (loss)      -         (11)          (215)      959

NOTE 7.   REVOLVING CREDIT FACILITY

     Effective June 26, 1997, the Company entered into a three year $40 
million revolving credit facility ("Credit Facility") with a certain bank, 
bearing variable interest rates based generally on the prime rate or the 
LIBOR rate plus certain premiums on each depending on the Company's average 
leverage ratio.  The premium on the prime based rates ranges from 0.5% to 
 .75% and the premium on the LIBOR based rates ranges from 1.25% to 2%. On 
August 7, 1997, the Company elected the LIBOR based rate which on September 
30, 1997 was equal to 7.71875%. A commitment fee ranging from .25% to .50% 
(0.5% at September 30, 1997), depending on the Company's average leverage 
ratio is charged on the unused portion of the facility.  As of September 30, 
1997, the Company had drawn down $24 million, of which $13 million was used 
to refinance borrowings used in the acquisition of Toyota West, Inc. and 
Douglas Toyota, Inc., $9 million was used in the acquisition of Nissan West, 
and $2 million was used to reduce other debt. The principal balances may be 
repaid any time, but are due in full on June 26, 2000.  The Credit Facility 
requires the Company to maintain certain financial ratios and limits the 
Company's capital expenditures for maintenance (excludes acquisitions and 
certain store relocations) to $3 million annually.  The Company was in 
compliance with these requirements at September 30, 1997.

NOTE 8.   REAL ESTATE CONSTRUCTION AND RELATED FINANCING

     In connection with the new facilities for the Spedding Toyota stores as 
discussed in Note 4, the Company has entered into construction contracts with 
commitments for approximately $12.9 million.  Construction costs to date have 
totaled approximately $4.9 million and the projects are expected to be 
completed in the second quarter of 1998.  In order to finance a portion of 
the construction costs, the Company entered into a Loan Agreement with R. 
Douglas Spedding on September 30, 1997 (See Note 4).  The Loan Agreement 
provides interim financing up to $7.4 million for use in the construction of 
the new automobile dealership facilities in Las Vegas, Nevada and Denver, 
Colorado. Interest accrues at the prime rate plus 1% payable monthly, and any 
outstanding balance is payable on October 31, 1998.  As of September 30, 
1997, no advances had been made under the Loan Agreement.

                                      10
<PAGE>

     During the three and nine months ended September 30, 1997, the Company 
capitalized approximately $178,000 and $398,000, respectively, in interest 
costs relating to the construction of such facilities, including interest 
associated with the related land costs.

















                                      11
<PAGE>

NOTE 9.   CHAISSON ACQUISITION

     On October 20, 1997, the Company announced it had reached a definitive 
agreement to acquire 100% of the common stock of JRJ Investments, Inc. which 
owns Chaisson Motor Cars and Chaisson BMW, a multiple-franchise dealership 
group operating in Las Vegas and Henderson, Nevada, for cash, promissory 
notes and stock approximating $18.0 million. The transaction will be 
accounted for as a purchase, is subject to customary closing conditions, 
including appropriate approvals, and is expected to be completed by the end 
of the fourth quarter.

NOTE 10.  STOCK OPTIONS

     The Company modified the pay plans of certain officers and key employees 
for the three months ended September 30, 1997 resulting in a reduction in 
compensation expense of approximately $1.3 million.  As part of the modified 
pay plans for the quarter, the Company granted to these officers and 
employees options to purchase 492,000 shares of the Company's common stock at 
an exercise price of $8.06 per share representing the market price of the 
shares on the date of grant.  The options are fully vested and were granted 
under the Company's 1996 Stock Option Plan.  The Company advanced to these 
officers and employees an aggregate of approximately $1.1 million which is to 
be repaid to the Company by no later than February 1999.

     Also during the three months ended September 30, 1997, the Company 
granted to certain directors, employees, and officers 339,000 options to 
purchase the Company's common shares at an exercise price of $8.06 per share. 
Approximately 200,000 of these options vest immediately and the remaining 
balance vests over 4 years.










                                      12
<PAGE>
                                       
                    INDEPENDENT ACCOUNTANTS' REVIEW REPORT



The Board of Directors
Cross-Continent Auto Retailers, Inc.



We have reviewed the accompanying condensed consolidated balance sheet of 
Cross-Continent Auto Retailers, Inc. and its subsidiaries (the "Company") as 
of September 30, 1997, and the condensed consolidated statements of income 
for the three and nine month periods ended September 30, 1997 and 1996, and 
cash flows for the nine month periods ended September 30, 1997 and 1996.  
These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the 
American Institute of Certified Public Accountants.  A review of interim 
financial information consists principally of applying analytical procedures 
to financial data, and making inquiries of persons responsible for financial 
and accounting matters.  It is substantially less in scope than an audit 
conducted in accordance with generally accepted auditing standards, the 
objective of which is the expression of an opinion regarding the financial 
statements taken as a whole.  Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that 
should be made to the accompanying consolidated financial statements referred 
to above for them to be in conformity with generally accepted accounting 
principles.

We previously audited, in accordance with generally accepted auditing 
standards, the consolidated balance sheet information of the Company as of 
December 31, 1996, and the related consolidated statements of income, 
shareholders' equity, and cash flows for the year then ended (not presented 
herein) and in our report dated February 13, 1997, we expressed an 
unqualified opinion on those consolidated financial statements.  In our 
opinion, the accompanying consolidated balance sheet information as of 
December 31, 1996 is fairly stated, in all material respects, in relation to 
the consolidated balance sheet from which it has been derived.




PRICE WATERHOUSE, LLP


Fort Worth, Texas
October 20, 1997


                                      13
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

GENERAL

     Cross-Continent Auto Retailers, Inc. ("C-CAR" or the "Company") 
currently owns and operates a group of franchised automobile dealerships in 
the Amarillo, Texas, Oklahoma City, Oklahoma, Denver, Colorado and Las Vegas, 
Nevada markets. The financial condition and results of operations reported 
herein are based solely upon the results of the eight dealerships owned by 
C-CAR at September 30, 1997; however, year-to-date and the comparable periods 
last year also include Performance Dodge, Inc. and Performance Nissan, Inc. 
which were sold effective July 1, 1997.  The Company generates its revenues 
from sales of new and used vehicles, fees for repair and maintenance 
services, sales of replacement parts, and fees and commissions from arranging 
financing, extended warranties, and credit insurance in connection with 
vehicle sales.

     In October 1996, the Company acquired Lynn Hickey Dodge in Oklahoma 
City, Oklahoma (See Note 5).  In April 1997, the Company completed the 
acquisition of Toyota West Sales & Service, Inc., located in Las Vegas, 
Nevada, and Douglas Toyota, Inc. located just outside Denver, Colorado, from 
owner R. Douglas Spedding (See Note 5). In July 1997, the Company acquired 
Nissan West in Las Vegas, Nevada (See Note 5).  Hickey, Spedding Toyota and 
Nissan West are herein collectively referred to as the "Acquisitions".  All 
of the aforementioned Acquisitions were accounted for as purchases and, 
accordingly, the operating results of the acquired dealerships have been 
included in the operating results of the Company since their respective dates 
of acquisition.  Because of the significant growth of the Company since its 
formation, as a result of the aforementioned Acquisitions, the Company's 
historical results of operations, its period-to-period comparisons of such 
results and certain financial data may not be comparable, meaningful or 
indicative of future results.

     The Company completed the divestiture of Performance Nissan, Inc. and 
Performance Dodge, Inc. in Oklahoma City to Benji Investments, Ltd., a Texas 
limited partnership controlled by Emmett M. Rice, Jr., a former officer and 
director of the Company (See Note 6).  The divestiture was effective July 1, 
1997.

     In October, 1997, the Company announced the proposed acquisition of 100% 
of the stock of JRJ Investments, Inc., which owns Chaisson Motor Cars and 
Chaisson BMW located in Las Vegas and Henderson, Nevada, for $18.0 million, 
payable in cash, promissory notes and stock.  The transaction will be 
accounted for as a purchase, is subject to customary closing conditions, 
including appropriate manufacturer approvals, and is expected to be completed 
by the end of the fourth quarter (See Note 9).

FACTORS THAT MAY AFFECT FUTURE RESULTS

     Certain matters discussed herein are forward-looking statements about the
business, financial condition and prospects of the Company.  The actual results
could differ materially from those indicated by such forward-looking statements
because of various risks and uncertainties. Such risks and uncertainties may
include, but are not limited to, local, regional and national economic
conditions, changes in consumer demand for products offered by the Company, auto
manufacturer employee strikes and other matters that may adversely affect the
availability of products and pricing, state and federal regulatory environment,
availability of additional funding for acquisitions in the future, and other
risks indicated in the Company's previous filings with the  Commission.  The

                                      14
<PAGE>

Company cannot control these risks and uncertainties and, in many cases, 
cannot predict the risks and uncertainties that could cause its actual 
results to differ materially from those indicated by the forward-looking 
statements.




















                                      15
<PAGE>

                      CROSS-CONTINENT AUTO RETAILERS, INC.
                                       
                         CONSOLIDATED MARGIN STATISTICS
                               SEPTEMBER 30, 1997
                                       

<TABLE>
                             QTR ENDED           QTR ENDED             YTD                  YTD
                         SEPTEMBER 30, 1997  SEPTEMBER 30, 1996  SEPTEMBER 30, 1997  SEPTEMBER 30, 1996
                         ------------------  ------------------  ------------------  ------------------
                                          (IN THOUSANDS, EXCEPT UNITS AND PERCENTAGES)
<S>                      <C>                 <C>                 <C>                 <C>
New Vehicle Sales
     Units                       2,891              1,514                7,393               4,644
     Revenue                  $ 65,260            $32,610             $163,550            $ 98,752
     Average Selling Price    $   22.6            $  21.5             $   22.1            $   21.3

Used Vehicle Sales
     Units                       3,552              1,781               10,128               5,022
     Revenue                  $ 42,257            $24,433             $120,702            $ 66,497
     Average Selling Price    $   11.9            $  13.7             $   11.9            $   13.2

Wholesale Used Vehicle Sales
     Units                       2,139              1,739                6,503               5,229
     Revenue                  $ 10,561            $ 9,944             $ 30,791            $ 27,639
     Average Selling Price    $    4.9            $   5.7             $    4.7            $    5.3

Total Vehicle Sales
     Units                       8,582              5,034               24,024              14,895
     Revenue                  $118,078            $66,987             $315,043            $192,888

Other Operating Revenue
     Finance and Insurance    $  5,231            $ 3,334             $ 13,975            $  7,675
     Parts and Service          10,242              6,121               26,879              16,577
     Other Revenue               1,233                140                3,296                 684
                              --------            -------             --------            --------
     Total Other
        Operating Revenue       16,706              9,595               44,150              24,936
                              --------            -------             --------            --------

Total Revenue                 $134,784            $76,582             $359,193            $217,824
                              --------            -------             --------            --------
                              --------            -------             --------            --------

Gross Profit
     New Vehicles             $  6,523            $ 3,143             $ 17,288            $ 10,638
     Used Vehicles               6,309              2,790               16,669               8,461
     Wholesale Used Vehicles      (427)               124               (1,294)               (415)
     Finance and Insurance       4,772              2,918               12,592               5,779
     Parts and Service           5,313              2,939               13,886               8,228
     Other Revenue               1,233                140                3,296                 684
                              --------            -------             --------            --------

Total Gross Profit            $ 23,723            $12,054             $ 62,437            $ 33,375
                              --------            -------             --------            --------
                              --------            -------             --------            --------

Gross Profit Percentages
     New Vehicles                 10.0%               9.6%                10.6%               10.8%
     Used Vehicles                14.9%              11.4%                13.8%               12.7%
     Wholesale Used Vehicles      (4.0%)              1.2%                (4.2%)              (1.5%)
     Finance and Insurance        91.2%              87.5%                90.1%               75.3%
     Parts and Service            51.9%              48.0%                51.7%               49.6%
     Other Revenue               100.0%             100.0%               100.0%              100.0%
                              --------            -------             --------            --------

Total Gross Profit Margin         17.6%              15.7%                17.4%               15.3%
                              --------            -------             --------            --------
                              --------            -------             --------            --------
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      16

<PAGE>

                         CROSS-CONTINENT AUTO RETAILERS, INC.

                           (1) SAME STORE MARGIN STATISTICS
                                  SEPTEMBER 30, 1997


<TABLE>
<CAPTION>


                               Qtr Ended         Qtr Ended               YTD                 YTD
                         September 30, 1997  September 30, 1996  September 30, 1997  September 30, 1996  
                         ------------------  ------------------  ------------------  ------------------  
                                             (IN THOUSANDS, EXCEPT UNITS AND PERCENTAGES)
<S>                            <C>                 <C>                <C>                <C>
New Vehicle Sales
     Units                        1,172               1,130              3,154              3,278  
     Revenue                   $ 27,287            $ 25,196           $ 72,445           $ 73,305  
     Average Selling Price     $   23.3            $   22.3           $   23.0           $   22.4  

Used Vehicle Sales
     Units                        1,205               1,302              3,527              3,656   
     Revenue                   $ 16,256            $ 18,822           $ 47,232           $ 50,475   
     Average Selling Price     $   13.5            $   14.5           $   13.4           $   13.8   

Wholesale Used Vehicle Sales
     Units                        1,219               1,347              3,550              3,970   
     Revenue                   $  7,392            $  8,062           $ 20,343           $ 22,308    
     Average Selling Price     $    6.1            $    6.0           $    5.7           $    5.6   

Total Vehicle Sales
     Units                        3,596               3,779             10,231             10,904  
     Revenue                   $ 50,935            $ 52,080           $140,020           $146,088  

Other Operating Revenue
     Finance and Insurance     $  2,227            $  2,532           $  6,361           $  5,508  
     Parts and Service            4,479               4,126             11,654             10,924  
     Other Revenue                  242                 118                918                380  
                               --------            --------           ---------          -------- 
     Total Other
        Operating Revenue         6,948               6,776             18,933             16,812  
                               --------            --------           ---------          -------- 
Total Revenue                  $ 57,883            $ 58,856           $158,953           $162,900   
                               --------            --------           ---------          -------- 
                               --------            --------           ---------          -------- 
Gross Profit
     New Vehicles              $  2,538            $  2,611           $  7,790           $  7,834  
     Used Vehicles                1,981               2,251              5,982              6,476  
     Wholesale Used Vehicles       (188)                 80               (428)              (328)  
     Finance and Insurance        1,892               2,195              5,448              4,161  
     Parts and Service            2,202               2,084              5,951              5,721  
     Other Revenue                  242                 118                918                380  
                               --------            --------           ---------          -------- 
Total Gross Profit             $  8,667            $  9,339           $ 25,661           $ 24,244  
                               --------            --------           ---------          -------- 
                               --------            --------           ---------          -------- 

Gross Profit Percentages
     New Vehicles                  9.3%               10.4%              10.8%              10.7%  
     Used Vehicles                12.2%               12.0%              12.7%              12.8%   
     Wholesale Used Vehicles      (2.5%)               1.0%              (2.1%)             (1.5%)  
     Finance and Insurance        85.0%               86.7%              85.6%              75.5%  
     Parts and Service            49.2%               50.5%              51.1%              52.4%  
     Other Revenue               100.0%              100.0%             100.0%             100.0%  
                               --------            --------           ---------          -------- 

Total Gross Profit Margin         15.0%               15.9%              16.1%              14.9%  
                               --------            --------           ---------          -------- 
                               --------            --------           ---------          -------- 
</TABLE>

(1)  "SAME STORE" INFORMATION RELATES TO THE DEALERSHIPS FOR WHICH THEIR RESULTS
     OF OPERATIONS ARE INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
     SAME PERIODS OF 1997 AND 1996.


The accompanying notes are an integral part of these financial statements.

                                      17

<PAGE>

RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 1997

     Total revenue increased 76.0% to $134.8 million for the  quarter ended
September 30, 1997 compared to $76.6 million for the quarter ended September 30,
1996.

     New vehicle sales revenue increased approximately 100.1% to $65.3 million
for the third quarter of 1997, compared to $32.6 million in the third quarter of
1996.  Acquisitions accounted for $38.0 million of the increase, which was
partially off-set by the absence of revenue from the two Performance dealerships
which were sold in July, 1997 but included in the comparable period last year.
Same store sales increased 8.3% or $2.1 million.  New unit sales increased 1,377
units in the quarter to 2,891 units, compared to 1,514 in the third quarter of
1996.  The Acquisitions accounted for 1,719 units of the increase, which was
partially off-set by the absence of unit sales from the Performance dealerships.
Comparable store new vehicle sales increased 42 units. The average selling price
of a new vehicle was $22,574, a 4.8% increase.

     Gross margins on new vehicle sales were 10.0%, an increase of .4 percentage
point over last year.  Acquisitions added approximately $4.0 million in gross
profit and the Acquisitions have historically had higher margins on new vehicle
sales.

     Used vehicle retail sales revenue increased approximately 73.0% in the
third quarter of 1997 to $42.3 million, compared to $24.4 million in the third
quarter of 1996.  Acquisitions added approximately $26.0 million, which was
partially off-set by the exclusion of the Performance dealerships. Same store
sales decreased approximately 13.6% or $2.6 million.  The same store decrease in
used retail sales was attributable to lower used retail unit sales largely
because of manufacturer incentives at the end of the model year increased the
attraction of new vehicles relative to used vehicles, and to lower average
selling prices.  Same store retail used unit sales decreased 7.5% to 1,205 for
the quarter and average selling prices decreased 6.7% per unit to $13,491.

     Overall, the average used car selling prices decreased by 13.3% to $11,897.
Acquisitions have historically had a lower used car average selling price, when
combined with the Company's same store used vehicle sales, resulted in an
overall lower average selling price.

     Used vehicle retail gross profit margin was 14.9%, compared to 11.4% in the
third quarter of 1996.  The increase was primarily attributable to the higher
gross margins at the Acquisitions, which added approximately $4.3 million in
gross profit and the Acquisitions have historically had higher margins on used
vehicle sales.  The increase from Acquisitions was partially off-set by the
exclusion of the Performance dealerships and a reduction of $270,000 in same
store gross profit.

     The Company's other operating revenue increased 74.1% to $16.7 million for
the quarter compared to $9.6 million in the comparable period last year,
primarily because of increased finance and insurance revenue and parts and
service revenue.


                                      18

<PAGE>

     Finance and insurance revenue increased 56.9% to $5.2 million for the
quarter.  Acquisitions added $3.0 million, which was partially off-set by the
exclusion of the Performance dealerships and a reduction in same store sales of
$305,000.  The decrease in same store sales was attributable to the decrease in
used retail vehicles sold during the quarter.

     Gross profit margin on finance and insurance was 91.2% which represents an
increase of 3.7 percentage points over last year.  Acquisitions account for the
majority of the increase, which was partially off-set by the exclusion of the
Performance dealerships and a reduction of $304,000 in same store gross profit.

     Parts and service revenue increased 67.3% to $10.2 million, largely because
of the inclusion of the Acquisitions which added approximately $5.8 million. 
The Acquisitions increase was off-set by the exclusion of the Performance
dealerships.  Same store sales increased by $353,000 or 8.5% over the same
period last year. 

     Gross profit margin on parts and service revenue was 51.9% which represents
an increase of 3.9 percentage points over last year.  Acquisitions added
approximately $3.1 million in gross profit which was partially off-set by the
divestiture of the Performance dealerships.

     The increase in other revenue is primarily attributable to miscellaneous
fee income recorded by the Acquisitions.  Fees, which are collected on vehicle
sales, are usually governed by state regulatory agencies.  The Acquisitions are
located in states which permit higher fees compared to the Company's same store
dealerships.  The Company expects this component of other operating revenue to
increase as the Company acquires additional dealerships.
     
     Total Company gross profit increased 96.8% for the quarter to $23.7
million, compared to $12.1 million for 1996.  Acquisitions accounted for $15.1
million of the increase, which was off-set by the exclusion of the Performance
dealerships and a decrease in same store gross profit of $672,000, or 7.2%.  The
decrease in same store gross profit was primarily attributable to a reduction in
used retail unit sales, increased losses on wholesale used unit sales and a
reduction in finance and insurance gross profit, which was partially off-set by
an increase in gross profit from parts and service and other operating revenue.

     Total Company gross profit as a percentage of sales was 17.6% for the
quarter compared to 15.7% for the third quarter of 1996.  The increase in gross
profit as a percentage of sales is primarily attributable to higher gross
margins on other operating revenue (including finance and insurance, and parts
and service) and higher used vehicle margins from the Acquisitions, partially
off-set by decreased gross margin on same store sales which was primarily
attributable to a decline in new vehicle margins, wholesale used vehicle margins
and finance and insurance margins.

     The Company anticipates a reduction in overall gross profit as a percentage
of revenue for the remainder of 1997.  The Company believes margins may decline
if the trend of lower demand for vehicles continues.  


                                      19

<PAGE>

Also, lower vehicle sales would directly affect finance and insurance 
revenue, which is one of the Company's highest gross margin revenue item.






















                                      20

<PAGE>

     Additionally, the amount of revenue recognized related to the in-house
warranties sold in prior periods, which was deferred and amortized over the
contractual service period of the warranty contracts, will decline each quarter
and will eventually cease at the expiration of the warranty periods.  As a
result, gross margin will be negatively impacted during future periods.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     The Company's selling, general and administrative expenses were $16.8
million, or 12.5% of the Company's revenues, for the quarter ended September 30,
1997, compared to $8.3 million, or 10.9% of total revenues, for the quarter
ended September 30, 1996. The increase was primarily attributable to the
Acquisitions which accounted for $11.1 million of the increase.  The
Acquisitions have historically had a higher percentage of expense to revenue
ratio attributable to higher commission expenses in comparison to same store
dealerships.

     The Company also incurred increased expenses related to higher corporate
expenses associated with public company administration and the assimilation of
Acquisitions.  The increase was partially off-set by a decrease in staff at one
of the Company's recently acquired dealerships and the elimination of certain
non-essential contracts and leases. In addition, officers' pay plans were
modified for the quarter resulting in a reduction of compensation expense of
approximately $495,000.  Employee pay plans were also modified resulting in an
additional reduction of expenses for the quarter of $828,000.  Options to
purchase 492,000 shares of the Company's common stock were issued to these
officers and employees during the quarter at an exercise price of $8.06 per
share which approximated the market price at the date of grant.  These options
are fully vested (See Note 10).

     The Company expects that it may lose expense leverage during the next two
quarters because the fourth and first quarters are seasonally slower selling
quarters.  Additionally, as the Company continues to acquire additional
dealerships, the Company's assimilation expenses are expected to continue to
rise.

INTEREST EXPENSE

     The Company's interest expense, net of interest income, increased
approximately 124.3% to $2.0 million for the quarter ended September 30, 1997
compared to $871,000 for the quarter ended September 30, 1996.

     Net interest expense is expected to increase throughout 1997 and into 1998
as the Company uses debt to acquire additional dealerships.  Additionally,
interest expense on floorplan debt will increase as the Company acquires
additional dealerships.

INCOME TAXES

     The Company's effective tax rate for the quarter ended September 30, 1997
approximated 37.4%.  The tax rate for the same quarter of 1996 was 37.0%. 
Management expects the effective tax rate in 1997 to approximate 37.4% to 38.0%.


                                      21

<PAGE>

RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1997

     Total revenue increased approximately 64.9% to $359.2 million for the
period ended September 30, 1997, compared with total revenue of $217.8 million
last year.

     New vehicle sales revenue increased approximately 65.6% to $163.6 million,
compared with $98.8 million in 1996.  The increase in new vehicle sales for the
period was primarily attributable to Acquisitions which added $77.1 million. 
This increase was partially off-set by the absence of revenue from the two
Performance dealerships which were sold in July, 1997.  Same store sales
decreased by $860,000 over the comparable period a year ago, largely because of
weak market conditions in the Company's Amarillo trade area.

     New unit sales increased 2,749 units for the nine month period to 7,393
units compared to 4,644 units for the same nine month period in 1996. 
Acquisitions accounted for 3,483 units of the increase and was partially off-set
by the absence of units from the two Performance dealerships which were sold in
July, 1997, and a 124 unit decrease in same store new unit sales.  The Company
attributes the lower demand for new vehicles to trends consistent within the
automotive retail industry.  The average selling price of a new vehicle was
$22,122, a 4.0% increase.

     New vehicle gross margins were 10.6%, a decrease of .20 percentage points,
largely attributable to lower margins at the Performance dealerships.
Acquisitions added approximately $8.0 million in gross profit and have
historically had higher margins.

     Used vehicle retail sales revenue increased approximately 81.5% to $120.7
million, compared to $66.5 million in 1996.  Acquisitions accounted for $59.2
million of the increase in used vehicle retail sales.  Used vehicle retail sales
revenue from Acquisitions was partially off-set by the exclusion of the
Performance dealerships in the third quarter of 1997.  Same store sales
decreased $3.2 million or 6.4%, largely because same store unit sales decreased
129 units.  Consistent with trends in the quarter, lower average selling prices
at the Acquisitions reduced the retail used vehicle average selling price to
$11,918, compared to $13,241 last year. For the remainder of 1997 the Company
will continue to place an increased emphasis on used vehicle retail sales
because of customer buying patterns and the higher gross margins associated with
used vehicle sales.

     Gross margins on used retail sales were 13.8%, an increase of 1.1
percentage points in comparison with last year.  The increase was primarily
attributable to the higher gross margins at the Acquisitions.  The Acquisitions
added approximately $9.5 million in gross profit and have historically had
higher margins.  The increase from Acquisitions was partially off-set by the
exclusion of the Performance dealerships during the third quarter and a
reduction of $494,000 in same store gross profit.

     For the nine months ended September 30, 1997 other operating revenue
increased 77.1% to $44.2 million, compared to $24.9 million during the


                                      22

<PAGE>

comparable period last year, primarily because of increased finance and
insurance revenue and parts and service revenue.
























                                      23

<PAGE>

     Finance and insurance revenue increased 82.1% to $14.0 million, largely
attributable to the Acquisitions.  Acquisitions added $6.2 million and same
store sales increased approximately $853,000, which were partially off-set by
the exclusion of the Performance dealerships.  The same store sales increase can
be largely attributed to third party extended warranty sales; the commissions
from the sale of third party warranties are recognized immediately into income
as opposed to in-house warranty revenue which is amortized ratably into income
over the life of the contracts.  The Company commenced the sale of third party
warranties in 1996.

     Gross profit margin on finance and insurance was 90.1% which represents an
increase of 14.8 percentage points over last year.  The Acquisitions accounted
for a majority of the increase.  Same store gross profit margin increased by
10.1 percentage points, largely attributable to third party extended warranty
sales. 

     Parts and service revenue increased 62.1% to $26.9 million, largely because
of the Acquisitions, which added approximately $11.3 million. The same store
parts and service sales increased by $730,000 over the same period last year.

     Gross profit margin on parts and service revenue was 51.7% which represents
an increase of 2.1 percentage points over the comparable period last year. 
Acquisitions added approximately $6.3 million in gross profit, which was
partially off-set by the divestiture of the Performance dealerships in July,
1997. The increase in margin was largely attributable to lower wholesale parts
sales, which typically generate lower gross profit margins.

     The increase in other revenue was primarily attributable to miscellaneous
fee income recorded at the Acquisitions.  Fees, which are collected on vehicle
sales, are usually governed by state regulatory agencies.  The Acquisitions are
located in states which permit higher fees compared to the Company's same store
dealerships. The Company also experienced an increase in same store sales of
$538,000.  The Company expects this component of other operating revenue to
increase as the Company acquires additional dealerships.

     Total Company gross profit increased 87.1% to $62.4 million for the nine
month period of 1997, compared to $33.4 million for the 1996 period.  The
Acquisitions accounted for $31.3 million of the increase, partially off-set by
the exclusion of the Performance dealerships in the third quarter of 1997.  Same
store gross profit increased by $1.4 million, which was primarily attributable
to increased gross profit on finance and insurance revenue, parts and service
revenue, and other revenue.

     Total Company gross profit as a percentage of sales was 17.4% for the
period, compared to 15.3% for the comparable period in 1996.  The increase in
gross profit as a percentage of sales was primarily attributable to higher
margins on other operating revenue (including parts and service, and finance and
insurance) and stronger used vehicle margins from the Acquisitions.  The
increase added by the Acquisitions was partially off-set by the effect of the
Performance dealerships which were sold in July of 1997.


                                      24

<PAGE>

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses for the nine months ended
September 30, 1997 were $45.4 million, or 12.6% of the Company's revenues,
compared to $24.0 million, or 11.0% of the Company's revenues, for the nine
months ended September 30, 1996.  The Acquisitions accounted for $22.9 million
of the increase in expenses for the nine month period.  The Acquisitions have
historically had a higher expense to revenue ratio attributable to higher
commission expense in comparison to same store dealerships.  Expenses as a
percentage of revenue increased for the nine month period largely because of
higher dealership assimilation and corporate overhead costs.  The Company
expects that it may lose expense leverage during the next two quarters because
the fourth and first quarters are seasonally slower quarters.

INTEREST EXPENSE

     Net interest expense for the nine months ended September 30, 1997 increased
56.8% to $4.1 million compared to $2.6 million for the nine months ended
September 30, 1996.  The Acquisitions accounted for approximately $1.5 million
of the increase in interest expense.  The increase is primarily attributable to
an increase in borrowings to finance the Acquisitions and increased floorplan
financing.  This increase is partially off-set by interest income earned on
proceeds from the Offering.  For the nine months ended September 30, 1997 this
income approximated $595,000. 

     Net interest expense is expected to increase throughout 1997 and into 1998
as the Company uses debt to acquire additional dealerships.  Additionally,
interest expense on floorplan debt will increase as the Company acquires
additional dealerships.

INCOME TAXES

     The Company's effective income tax rate for the nine months ended September
30, 1997 approximated 38.6% as compared to 45.1% for the comparable period of
1996.  The decrease in the effective rates relates to certain non-deductible
expenses incurred during the first nine months of 1996.  The effective tax rate
for the period ended September 30, 1997 was 37.4%.  Management expects the
effective tax rate in 1997 to approximate 37.4% to 38.0%.

LIQUIDITY AND CAPITAL RESOURCES

     The Company requires cash primarily for financing its inventory of new and
used vehicles and replacement parts, acquisitions of additional dealerships,
capital expenditures and transition expenses in connection with its
acquisitions.  Historically, the Company has met these liquidity requirements
primarily through cash flow generated from operating activities, floor plan
financing and borrowings under the Credit Facility and other credit agreements. 
Floor plan financing from GMAC currently represents the primary source of
financing for vehicle inventories.

     During the first nine months of 1997, the Company generated net cash of
$9.0 million from operating activities, compared to $6.2 million 


                                      25

<PAGE>

generated for the nine months ended September 30, 1996.  The increase in net 
cash provided by operating activities was primarily attributable to a 
decrease in accounts receivable and inventory and an increase in net income 
which was partially off-set by a decrease in accounts payable and an increase 
in other assets.  The increase in other assets relates to debt financing 
costs and advances made to certain officers and employees.

     Cash used in investing activities totaled $48.1 million during the first
nine months of 1997.  Expenditures relating to the purchase of Spedding Toyota
and Nissan West totaled approximately $41.6 million.  The Company spent $4.9
million as of September 30, 1997, and expects to spend an additional $8.0
million (a total of $20.4 million, including $7.5 million in land financed by
seller and construction costs), to construct two new dealership facilities in
order to relocate Toyota West and Douglas Toyota.  Funds will be provided by
cash on hand and interim financing provided by a $7.4 million note from a
certain officer of the Company dated September 30, 1997 (See Note 8).  The
Company plans to convert interim financing to permanent financing when
construction is completed in the second quarter of 1998.  The Company currently 
anticipates that any future acquisitions will be financed with a combination of
debt, stock and cash.

     Cash generated from financing activities totaled $4.3 million for the nine
months ended September 30, 1997.  The increase was mainly attributable to a
$24.0 million advance under the Credit Facility for debt repayment and the
Nissan West acquisition which was partially off-set by the repayment of 
long-term debt in conjunction with the sale of the Performance dealerships, a 
decrease in floor plan debt related to decreased inventory levels and a 
decrease in due to affiliates.

     The Company currently finances its purchases of new vehicle inventory with
GMAC, CFC and TMCC.  The Company also maintains lines of credit with GMAC, CFC
and TMCC for the financing of used vehicles.  GMAC, CFC and TMCC receive a
security interest in all inventory they finance.  The Company makes monthly
interest payments on the amounts financed by GMAC, CFC and TMCC.  The Company
must repay the principal amount of indebtedness with respect to any vehicle
generally within two to three days of the sale of such vehicle by the Company. 
The Company periodically renegotiates the terms of its financing with GMAC, CFC
and TMCC, including the interest rate.  As of September 30, 1997, the Company
had outstanding floor plan debt of $53.1 million and paid an average annual
interest rate of 8.8%.

     The Company plans to use the Credit Facility to finance the major portion
of any future acquisitions (See Note 7).  The Company is negotiating to increase
the Credit Facility by an additional $35 million, which will bring the total
Credit Facility to $75 million and, is subject to syndication on a best-efforts
basis by the agent bank; however, no assurance can be given as to whether the
line will be increased or whether the agent bank will be able to syndicate
future loan requests.  At September 30, 1997 the Company had $16 million
available under this credit agreement.  The Company believes that its existing
capital resources will be sufficient to fund its current acquisition
commitments.

     The Company believes that its existing capital resources, including cash on
hand, cash from operations, and funds available under the Credit 


                                      26

<PAGE>

Facility will be sufficient to run the Company's operations in the ordinary 
course and fund its debt service requirements.  To the extent the Company 
pursues additional acquisitions, it may need to raise additional capital 
either through the public or private issuance of equity or debt securities or 
through additional bank borrowings.  

     The Company estimates that it will incur a tax liability of approximately
$4 million in connection with the change in its tax basis of accounting for
inventory from LIFO to FIFO.  The Company is required to pay this liability in
six equal annual installments, which commenced in March 1997, and believes that
it will be able to pay such obligation with cash provided by operations.

SEASONALITY

     The Company generally experiences a higher volume of new and used vehicle
sales in the second and third quarters of each year.  If the Company acquires
dealerships in other markets, it may be affected by other seasonal or consumer
buying trends.

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     From time to time, the Company is named in claims involving the manufacture
of automobiles, contractual disputes and other matters arising in the ordinary
course of the Company's business.  Currently, no legal proceedings are pending
against or involve the Company that, in the opinion of management, could be
expected to have a material adverse effect on the business, financial condition
or results of operations of the Company.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  EXHIBITS

               A list of exhibits required by Item 601 of Regulation S-K and
               filed as part of this report is set forth in the Exhibit Index,
               which immediately precedes such exhibits.

          (b)  REPORTS ON FORM 8-K

               (1)  A Form 8-K was filed on April 25, 1997 reporting the
                    purchase of all the outstanding capital stock of each of
                    Douglas Toyota, Inc., a Colorado corporation, and Toyota
                    West Sales & Service, Inc., a Nevada corporation, together
                    with certain real estate to be used in connection with both
                    dealerships.

               (2)  A Form 8-K/A No. 1 was filed on June 24, 1997 completing
                    Item 7 Financial Statements and Pro Forma Financial
                    Information.

               (3)  A Form 8-K was filed on July 15, 1997 reporting the purchase
                    of all the outstanding stock of Sahara Nissan, Inc., a
                    Nevada corporation.


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<PAGE>

               (4)  A Form 8-K/A No. 1 was filed on August 13, 1997 completing
                    Item 7 Financial Statements and Pro Forma Financial
                    Information.

               (5)  A Form 8-K was filed on September 2, 1997 reporting the sale
                    of all the outstanding capital stock of Performance Dodge,
                    Inc., an Oklahoma corporation, and Performance Nissan, Inc.,
                    an Oklahoma corporation.


                                      SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                   CROSS-CONTINENT AUTO RETAILERS, INC.



DATE: November 12, 1997                By: /s/ JAMES F. PURSER
                                          -----------------------------------
                                           James F. Purser,
                                           Chief Financial Officer



DATE: November 12, 1997                By: /s/ CHARLES D. WINTON
                                          -----------------------------------
                                           Charles D. Winton, 
                                           Vice President and
                                           Chief Accounting Officer








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<PAGE>

                                 EXHIBIT INDEX

EXHIBIT
NUMBER              DESCRIPTION
-------     ---------------------------------------------------

2.1       Asset Purchase Agreement dated as of June 17, 1996, among Lynn Hickey
          Dodge, Inc., Lynn Hickey, and Cross Country Dodge, Inc. (1)
2.2       Stock Purchase Agreement, dated as of January 23, 1997, by and between
          Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding (2)
2.3       Amendment to Stock Purchase Agreement dated as of April 1, 1997, by
          and between Cross-Continent Auto Retailers, Inc. and R. Douglas
          Spedding (3)
2.4       Stock Purchase Agreement dated as of February 28, 1997, among Cross-
          Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
          Datsun, Inc., d/b/a Jack Biegger Nissan, as amended by the Amendment
          to Stock Purchase Agreement dated as of March 17, 1997, among Cross-
          Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
          Nissan, Inc., d/b/a Jack Biegger Nissan (10)
2.5       Second Amendment to Stock Purchase Agreement dated as of April 30,
          1997, by and between Cross-Continent Auto Retailers, Inc., Jack
          Biegger, Dale Edwards, and Sahara Datsun, Inc., d/b/a Jack Biegger
          Nissan, as amended by the Amendment to Stock Purchase Agreement dated
          as of March 17, 1997, among Cross-Continent Auto Retailers, Inc., Jack
          Biegger, Dale Edwards, and Sahara Nissan, Inc., d/b/a Jack Biegger
          Nissan (10)
2.7       Purchase Agreement dated as of March 1, 1997, between RDS, Inc. and
          Cross-Continent Auto Retailers, Inc. (omitting exhibits thereto, which
          will be furnished supplementally to the Commission upon request) (3)
2.8       Purchase Agreement dated as of March 1, 1997, between R. Douglas
          Spedding and Cross-Continent Auto Retailers, Inc. (omitting exhibits
          thereto, which will be furnished supplementally to the Commission upon
          request) (3)
2.9       Third Amendment to Stock Purchase Agreement, dated as of May 9, 1997,
          among Cross-Continent Auto Retailers, Inc., The Jack Biegger Revocable
          Living Trust, The Dale M. Edwards Revocable Family Trust, and Sahara
          Nissan, Inc. d/b/a Jack Biegger Nissan. (9)
2.10      Stock Purchase Agreement dated as of June 20, 1997 between Cross-
          Continent Auto Retailers, Inc. and Benji Investments, Ltd. (omitting
          exhibits thereto, which will be furnished supplementally to the
          Commission upon request). (11)
2.11      Stock Purchase Agreement dated as of October 8, 1997, by and among
          Cross-Continent Auto Retailers, Inc., The Chaisson Family Trust R-501,
          and JRJ Investments, Inc. (omitting exhibits thereto, which will be
          furnished supplementally to the Commission upon request)
2.12      Amendment to Stock Purchase Agreement dated as of October 14, 1997, by
          and among Cross-Continent Auto Retailers, Inc., The Chaisson Family
          Trust R-501, and JRJ Investments, Inc.

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<PAGE>

3.1       Amended and Restated Certificate of Incorporation of Cross-Continent
          Auto Retailers, Inc. (4)
3.3       Amended and Restated Bylaws of Cross-Continent Auto Retailers, Inc.
          (4)
4.1       Specimen Common Stock Certificate (4)
4.2       Rights Agreement between Cross-Continent Auto Retailers, Inc. and The
          Bank of New York, as rights agent (4)
4.3       Amended and Restated 1996 Stock Option Plan of Cross-Continent Auto
          Retailers, Inc. (5)
4.4       Registration Rights Agreement dated as of April 1, 1997, by and
          between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
          (3)
10.1      Dealer Sales and Service Agreement dated November 1, 1995, between the
          Chevrolet Division of General Motors Corporation and Plains Chevrolet,
          Inc., as amended by Supplemental Agreement dated as of July 29, 1996
          (1)(6)
10.3      Dealer Sales and Service Agreement dated September 23, 1996, between
          the Nissan Division of Nissan Motor Corporation, U.S.A., Quality
          Nissan, Inc. and Cross-Continent Auto Retailers, Inc. (4)
10.4      Dollar Volume Contract dated April 1, 1997, between Plains Chevrolet,
          Inc., Westgate Chevrolet, Inc., Midway Chevrolet, Inc.,  Quality
          Nissan, Inc. and Amarillo Globe News (1)
10.6      Lease Agreement dated March 1, 1994, among John W. Adams, Eleanore A.
          Braly as Trustee of the Eleanore A. Braly Trust, Romie G. Carpenter,
          Melody Lynn Goff, and Selden Simpson and Quality Nissan, Inc. (1)
10.7      Office Lease dated June 1, 1996, between Gilliland Group Family
          Partnership and Cross-Country Auto Retailers, Inc.(now named Cross-
          Continent Auto Retailers, Inc.) (1)
10.9      Corporation and Shareholders' Agreement of Xaris Management Co. (1)
10.10     Documents dated December 4, 1995, relating to $5,550,000 loan by
          General Motors Acceptance Corporation to Performance Dodge, Inc. (1)
10.10.1   Promissory Note by Performance Dodge, Inc. to General Motors
          Acceptance Corporation, in the amount of $1,850,000 (2)
10.10.2   Promissory Note by Performance Dodge, Inc. to General Motors
          Acceptance Corporation, in the amount of $3,700,000 (fully repaid)(2)
10.10.4   Security Agreement between General Motors Acceptance Corporation and
          Performance Dodge, Inc. (2)
10.10.5   Mortgage, Assignment and Security Agreement between General Motors
          Acceptance Corporation and Performance Dodge, Inc. (2)
10.11     Documents relating to loan by General Motors Acceptance Corporation to
          Midway Chevrolet, Inc. (1)
10.11.1   Promissory Note dated December 15, 1989, by Midway Chevrolet, Inc.  to
          General Motors Acceptance Corporation, in the amount of $977,249.74
          (2)
10.11.2   Renewal, Extension and Modification Agreement dated February 20, 1995,
          between General Motors Acceptance Corporation and Midway Chevrolet,
          Inc. (2)
10.11.3   Security Agreement dated February 20, 1995, between General Motors
          Acceptance Corporation and Midway Chevrolet, Inc. (2)
10.13     Documents relating to used vehicle inventory financing agreements
          between General Motors Acceptance Corporation and 

                                     30
<PAGE>

          Cross-Continent Auto Retailers, Inc. dealership subsidiaries (1)
10.13.1   Used Vehicle Wholesale Borrowing Base Credit Line Loan Agreement dated
          June 7, 1996, between General Motors Acceptance Corporation and Plains
          Chevrolet, Inc. (2)(7)
10.13.2   Promissory Note dated June 7, 1996, by Plains Chevrolet, Inc. to
          General Motors Acceptance Corporation, in the amount of $3,000,000
          (2)(8)
10.13.3   Cross-Default and Cross-Collateralization Agreements between General
          Motors Acceptance Corporation and Midway Chevrolet, Inc., Plains
          Chevrolet, Inc., Quality Nissan, Inc., and Westgate Chevrolet, Inc.
          (2)
10.14(*)  Employment Contract dated February 21, 1997, by and between Cross-
          Continent Auto Retailers, Inc. and James F. Purser (2)
10.15(*)  Employment Contract dated February 18, 1997, by and between Cross-
          Continent Auto Retailers, Inc. and R. Wayne Moore
10.16(*)  Employment Agreement dated as of April 1, 1997, by and between  R.
          Douglas Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.17(*)  Employment Agreement dated as of April 1, 1997, by and between Douglas
          J. Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.18     Promissory Note dated April 1, 1997, by Cross-Continent Auto
          Retailers, Inc. to the order of R. Douglas Spedding in the principal
          amount of $7,000,000 (fully repaid)(3)
10.19     Promissory Note dated April 4, 1997, by Cross-Continent Auto
          Retailers, Inc. to Amarillo National Bank in the principal amount of
          $8,000,000 (fully repaid)(3)
10.20     Documents dated April 10, 1997, relating to promissory note by Cross-
          Continent Auto Retailers, Inc. to the order of RDS, Inc. in the
          principal amount of $2,000,000 (3)
10.20.1   Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
          of RDS, Inc. (3)
10.20.2   Security Agreement between Cross-Continent Auto Retailers, Inc. and
          RDS, Inc. (3)
10.20.3   Deed of Trust between Cross-Continent Auto Retailers, Inc. and RDS,
          Inc. (3)
10.21     Documents dated April 10, 1997, relating to promissory note by Cross-
          Continent Auto Retailers, Inc. to the order of R. Douglas Spedding in
          the principal amount of $5,500,000 (3)
10.21.1   Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
          of R. Douglas Spedding (3)
10.21.2   Security Agreement between Cross-Continent Auto Retailers, Inc. and R.
          Douglas Spedding (3)
10.21.3   Deed of Trust between Cross-Continent Auto Retailers, Inc. and R.
          Douglas Spedding (3)
10.22     Release and Indemnification Agreement dated as of April 10, 1997,
          between Cross-Continent Auto Retailers, Inc. And R. Douglas Spedding
          (3)
10.23     Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent Auto
          Retailers, Inc. to The Jack Biegger Revocable Living Trust, in the
          principal amount of $360,000.00. (9)
10.24     Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent Auto
          Retailers, Inc. to The Dale M. Edwards Revocable Family Trust, in the
          principal amount of $240,000.00. (9)

                                     31
<PAGE>

10.25     Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan, Inc.
          to The Jack Biegger Revocable Living Trust, in the principal amount of
          $275,000.00.(9)
10.26     Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan, Inc.
          to The Dale M. Edwards Revocable Family Trust, in the principal amount
          of $125,000.00. (9)
10.27     Documents, dated as of June 26, 1997, relating to line of credit for
          Cross-Continent Auto Retailers, Inc. with Texas Commerce Bank National
          Association, individually and as agent. (9)
10.27.1   Revolving Credit Agreement between Cross-Continent Auto Retailers,
          Inc., and Texas Commerce Bank National Association. (9)
10.27.2   Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
          subsidiaries to the order of Texas Commerce Bank National Association.
          (9)
10.27.3   Pledge and Security Agreement between Cross-Continent Auto Retailers,
          Inc. and Texas Commerce Bank National Association. (9)
10.28     Dealer Sales and Service Agreement dated July 1, 1997, between the
          Nissan Division of Nissan Motor Corporation, U.S.A., Sahara Nissan,
          Inc., Cross-Continent Auto Retailers, Inc., and Bill A. Gilliland. (9)
10.29     Environmental Agreement dated July 1, 1997 between Cross-Continent
          Auto Retailers, Inc. and The Jack Biegger Revocable Living Trust. (9)
10.30     Separation Agreement dated as of June 20, 1997 between Cross-Continent
          Auto Retailers, Inc. and Emmett M. Rice, Jr.(11)
10.32     Documents, dated as of August 7, 1997, relating to the line of credit
          for Cross-Continent Auto Retailers, Inc. with Texas Commerce Bank
          National Association, individually and as agent.
10.32.1   First Amendment to Revolving Credit Agreement among Cross-Continent
          Auto Retailers, Inc.; its subsidiaries; Texas Commerce Bank National
          Association; Amarillo National Bank; The Bank of Tokyo-Mitsubishi,
          Ltd., Houston Agency; and U. S. Bank. 
10.32.2   Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
          subsidiaries to the order of Texas Commerce Bank National Association
          in the principal amount of $22,500,000
10.32.3   Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
          subsidiaries to the order of Amarillo National Bank in the principal
          amount of $7,500,000
10.32.4   Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
          subsidiaries to the order of Bank of Tokyo-Mitsubishi, Ltd., Houston
          Agency, in the principal amount of $5,000,000
10.32.5   Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
          subsidiaries to the order of U. S. Bank in the principal amount of
          $5,000,000
10.33     Lease Agreement dated August 15, 1997 between Cross-Continent Auto
          Retailers, Inc. and Performance Dodge, Inc.(12)
10.34     Joinder Agreement dated July 1, 1997 between Sahara Nissan, Inc. and
          Texas Commerce Bank National Association.

                                     32
<PAGE>

10.35     Documents dated as of September 30, 1997 relating to the loan
          agreement between Cross-Continent Auto Retailers, Inc. and R. Douglas
          Spedding (omitting exhibits thereto, which will be furnished
          supplementally to the Commission upon request).
10.35.1   Master Construction and Master Loan Agreement among Toyota West Sales
          and Service, Inc., Douglas Toyota, Inc., Sahara Imports, Inc., and
          Cross-Continent Auto Retailers, Inc. as Borrowers, and R. Douglas
          Spedding as Lender.
10.35.2   Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
          of R. Douglas Spedding in the principal amount of $7,400,000.
10.35.3   Deed of Trust among Cross-Continent Auto Retailers, Inc. as Borrower,
          the Public Trustee of Adams County, Colorado, as Trustee, and R.
          Douglas Spedding as Lender.
10.35.4   Deed of Trust and Assignment of Rents among Cross-Continent Auto
          Retailers, Inc. as Grantor, Old Republic Title Company of Nevada as
          Trustee, and R. Douglas Spedding as Beneficiary.
10.35.5   Security Agreement between Cross-Continent Auto Retailers, Inc.,
          Douglas Toyota, Inc. and Toyota West Sales and Service, Inc. as
          Debtors and R. Douglas Spedding as Lender.
10.35.6   Guaranty by Bill A. Gilliland in favor of R. Douglas Spedding.
10.36     Documents dated August 22, 1997 relating to loans by General Motors
          Acceptance Corporation to Cross-Continent Auto Retailers, Inc. and
          certain subsidiaries.
10.36.1   Cross Default and Cross Collateralization Agreement among General
          Motors Acceptance Corporation and Midway Chevrolet, Inc., Plains
          Chevrolet, Inc., Quality Nissan, Inc., Westgate Chevrolet, Inc.,
          Sahara Nissan, Inc., and Cross-Continent Auto Retailers, Inc.
10.36.2   Guaranty Agreement between Cross-Continent Auto Retailers, Inc. and
          General Motors Acceptance Corporation.
10.37     Assumption Agreement dated August 22, 1997 between General Motors
          Acceptance Corporation and Cross-Continent Auto Retailers, Inc.
          relating to Performance Dodge, Inc.(omitting exhibit thereto, which
          will be furnished supplementally to the Commission upon request)
10.38     Amendment to Office Lease dated October 1, 1997, between Gilliland
          Group Family Partnership and Cross-Country Auto Retailers, Inc. (now
          named Cross-Continent Auto Retailers, Inc.)
10.39     Amendment No. 1 to Nissan Dealer Term Sales and Service Agreement
          dated October 13, 1997, between the Nissan Division of Nissan Motor
          Corporation U.S.A. and Sahara Nissan, Inc. d/b/a Jack Biegger Nissan
27.1      Financial Data Table

-------------
(1)  Previously filed as an exhibit to the Company's Registration Statement on
     Form S-1 (Registration No. 333-0685), incorporated herein by reference.
(2)  Previously filed as an exhibit to the Company's Annual Report on Form 10-K
     for the fiscal year ended December 31, 1996, incorporated herein by
     reference.

                                     33
<PAGE>

(3)  Previously filed as an exhibit to the Company's Current Report on Form 8-K
     dated April 10, 1997, incorporated herein by reference.
(4)  Previously filed as an exhibit to the Company's Quarterly Report on Form
     10-Q for the Quarterly Period Ended September 30, 1996, incorporated herein
     by reference.
(5)  Previously filed as an exhibit to the Company's Registration Statement on
     Form S-8, filed with the Securities and Exchange Commission on March 7,
     1997, incorporated herein by reference.
(6)  Substantially identical agreements exist between the Chevrolet Division and
     each of Midway Chevrolet, Inc. and Westgate Chevrolet, Inc.
(7)  Substantially identical Agreements exist between General Motors Acceptance
     Corporation and each of Midway Chevrolet, Inc., Westgate Chevrolet, Inc.,
     and Quality Nissan, Inc.
(8)  Substantially identical Promissory Notes have been executed by Midway
     Chevrolet, Inc., Westgate Chevrolet, Inc., and Quality Nissan, Inc., in the
     amounts indicated for each dealership subsidiary in the Cross-Default and
     Cross-Collateralization Agreement (Exhibit 10.13.3)
(9)  Previously filed as an exhibit to the Company's Current Report on Form 8-K
     dated July 15, 1997, incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Quarterly Report on Form
     10-Q for the quarterly period ended March 31, 1997, incorporated herein by
     reference.
(11) Previously filed as an exhibit to the Company's Quarterly Report on Form
     10-Q for the quarterly period ended June 30, 1997, incorporated herein by
     reference.
(12) Previously filed as an exhibit to the Company's Current Report on Form 8-K
     dated September 2, 1997, incorporated herein by reference.
(*)  Exhibits followed by an (*) constitute management contracts or 
     compensatory plans or arrangements.

                                     34