Group 1 Automotive Inc , the No. 4 U.S. auto dealership, posted a quarterly profit on Tuesday that was double the year-earlier figure, but its cautious outlook for the current quarter sent its shares down 12 percent.

Sonic Automotive Inc , the No. 3, dealership, also reported a third-quarter profit compared with a year-earlier loss after refinancing its debt in late September.

But Sonic also projected 2010 sales would be flat from this year's depressed levels of near 10.5 million vehicles in the U.S. market.

The shares of Charlotte, North Carolina-based Sonic closed down 17 percent.

Both auto dealerships saw their results boosted by the one- time boom in auto sales created by the U.S. government's Cash for Clunkers trade-in incentive program this summer.

But investor attention has shifted to the prospect of a slow finish to 2009. Industry-wide auto sales have dropped 27 percent through September.

Sonic projected 2010 U.S. auto sales would be about flat from 2009 levels at 10.5 million vehicles. That is sharply lower than the outlook of industry tracking services that have projected a double-digit percentage rebound in U.S. sales.

CSM Worldwide has forecast industry-wide U.S. sales of 11.8 million cars and light trucks. J.D. Power forecasts 11.5 million vehicle sales in 2010.

If the other guys are right, we'll take that too. We're just planning our business conservatively, said Sonic Chief Financial Officer Dave Cosper.

Houston-based Group One offered a full-year 2009 profit forecast that implied fourth-quarter earnings could be lower than the current consensus among analysts tracking the stock.

The company, which operates 96 dealerships, expected flat revenue from its parts and service operations, an area that contributed almost half of its gross earnings in the third quarter.

For the full year, Group One forecast earnings per share of $1.66 to $1.76. That would imply fourth-quarter earnings of between 31 cents and 41 cents per share. Analysts on average had been expecting fourth-quarter earnings of 39 cents per share.

Group One shares, which rallied over 40 percent over the past month, dropped 12 percent in trading on the New York Stock Exchange to close at $29.12. Sonic shares closed at $10.38, down 17 percent.

For the third-quarter, Group One posted adjusted income of $16.8 million, or 71 cents per share, compared with $8.2 million, or 37 cents per share a year earlier.

Sonic reported third-quarter earnings from continuing operations of $15.6 million, or 22 cents per share, compared with a lost of almost $27 million, or 38 cents in the same quarter a year earlier.

Group One, which like other major dealerships scrambled to cut spending, said it had reduced annual costs by almost $113 million by the end of the third quarter from 2008 levels. Most of the savings came from the 1,850 jobs it cut this year.

Group One has set a target of $120 million in cost-cutting and expects that a quarter of that will be permanent.

AutoNation Inc , the largest U.S. auto retail group is scheduled to announce quarterly results on Thursday.

AutoNation said on Tuesday it was acquiring two dealerships in Spokane, Washington. The company said the Valley Honda and Valley Acura stores accounted for $38 million in sales in 2008.

AutoNation Chief Executive Mike Jackson said last month the company was ready to begin acquiring independent dealerships, including Ford Motor Co and General Motors Co franchises.

Penske Automotive Group Inc

, the No. 2 U.S. auto retailer, is set to report on Friday.

(Reporting by Kevin Krolicki; editing by Andre Grenon)