DETROIT (Reuters) - Auto retail chain Group 1 Automotive Inc (GPI.N: Quote, Profile, Research) posted a quarterly profit on Tuesday that exceeded the expectations of analysts amid the slump in U.S. auto sales and its shares rose 19 percent.

Group 1, the No. 4 U.S. auto retail chain in terms of sales, posted a 29 percent drop in net earnings due to the industrywide slump in U.S. auto sales, but posted revenue increases in parts and service and in finance and insurance.

Goldman Sachs analyst Matthew Fassler said Group 1's results indicated it was outperforming the industry overall, which saw a marked deterioration in fundamentals over the course of the second quarter.

"The beat is significant, and guidance is highly credible given the beat," Fassler said in a note to clients,

Net income fell to $17.2 million, or 76 cents per share, in the second quarter, from $24.2 million, or $1.01 per share, a year earlier.

Earnings from continuing operations excluding one-time charges were 84 cents per share, while analysts on average expected Group 1 to report earnings of 70 cents per share, according to Reuters Estimates.

Same-store revenue fell 7.1 percent to $1.5 billion, hurt by a 9.9 percent decrease in new-vehicle revenues and a 5.8 percent decline in total used-vehicle revenues.

Parts and service revenues rose 4.8 percent and finance and insurance revenues ticked up 0.6 percent. Same-store gross margin improved 60 basis points to 15.9 percent.

"The challenges of the new-vehicle retail market became even more severe in the second quarter," Chief Executive Earl Hesterberg said in a statement.