UPDATE 1-Car dealer Group 1 warns on quarterly profits

DETROIT, Oct 10 (Reuters) - U.S. car dealer Group 1 Automotive Inc (GPI.N) warned on Friday that quarterly results would fall below prior expectations due to two hurricanes and the U.S. consumer credit crunch that pressured September sales.

Operations are beginning to return to normal after hurricanes that struck the New Orleans and Houston, Texas areas in September, but the impact from the storms is projected to pressure results by 15 cents per share, Group 1 said.

The dealer also said September sales were "noticeably impacted" by declines in customer traffic as consumers focused on the U.S. financial crisis, and a recent dramatic decline in the availability of loans for new and used vehicles.

Group 1 said loan rejection rates had increased and customers also have been required to pay higher interest rates and provide larger down payments. The dealer is reviewing the potential impact to its full-year outlook, it said.

It expects third-quarter earnings of 39 cents to 44 cents per share, while analysts on average had expected Group 1 to report earnings of 64 cents per share, according to Reuters Estimates.

Hurricane Gustav landed Sept. 1 and Hurricane Ike near mid month causing significant loss of customer traffic in New Orleans and the Houston areas respectively, Group 1 said.

The Houston and Beaumont, Texas areas that were hard hit by Hurricane Ike account for more than 20 percent of the dealership group's revenue and an even higher percentage of profit, with the loss of two-weeks sales having a serious impact on the quarter, Group 1 said.

Shares of Group 1 closed at $13.62 Friday on the New York Stock Exchange. (Reporting by David Bailey, editing by Leslie Gevirtz)