Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, For Use
of the Commission
Only (as permitted by
Rule 14a-6(e)(2)
[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-(11(c) or Rule 14a-12

HOMETOWN AUTO RETAILERS, INC.
-----------------------------
(Name of Registrant as Specified in Its Charter)

Name of Person(s) Filing Proxy Statement, if other than the registrant)
------------------------------------------------------------------------

Payment of Filing Fee (Check the appropriate box):

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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 011.

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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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HOMETOWN AUTO RETAILERS, INC.

Notice of Annual Meeting of Stockholders
To Be Held On June 8, 2004 at 10:00 A.M.

TO THE STOCKHOLDERS OF HOMETOWN AUTO RETAILERS, INC.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Hometown Auto Retailers, Inc. ("Hometown") will be held at the Hilton of
Southbury, 1284 Strongtown Road, Southbury, Connecticut 06488, on Tuesday, June
8, 2004 at 10:00 A.M., Eastern Standard Time, for the following purposes:

1. To elect seven directors for one-year terms or until their
successors shall have been duly elected and qualified.

2. To ratify the selection of BDO Seidman, LLP as independent
auditors for the year ending December 31, 2004.

3. To transact such other business as may properly be brought
before the meeting or any adjournment or postponements
thereof.

The Board of Directors has fixed the close of business on April 23,
2004 as the record date for the determination of the stockholders entitled to
notice of and to vote at this meeting and at any adjournment or postponements
thereof.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Charles F. Schwartz
-----------------------
Charles F. Schwartz, Chief Financial Officer and Secretary

Dated: Watertown, Connecticut
April 23, 2004

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IMPORTANT: Whether or not you expect to attend in person, please complete, sign, date, and return
the enclosed Proxy at your earliest convenience. This will ensure the presence of a
quorum at the meeting. Promptly signing, dating, and returning the Proxy will save
Hometown the expense and extra work of additional solicitation. An addressed envelope
for which no postage is required has been enclosed for that purpose. Sending in your
Proxy will not prevent you from voting your stock at the meeting if you desire to do
so, as your Proxy is revocable at your option.
----------------------------------------------------------------------------------------

HOMETOWN AUTO RETAILERS, INC.

-------------------------------

PROXY STATEMENT

-------------------------------

FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 8, 2004

This Statement is furnished to the stockholders of Hometown Auto
Retailers, Inc., a Delaware corporation ("Hometown"), in connection with the
solicitation by the Board of Directors of proxies to be used at the 2004 Annual
Meeting of Stockholders of Hometown to be held at the Hilton of Southbury, 1284
Strongtown Road, Southbury, Connecticut 06488, on Tuesday, June 8, 2004 at 10:00
A.M., Eastern Standard Time, and at any adjournments thereof. The approximate
date on which this Statement and the accompanying proxy will be mailed to
stockholders is April 27, 2004.

THE VOTING AND VOTE REQUIRED

On the record date for the meeting, the close of business on April 23,
2004 (the "Record Date"), there were outstanding 3,655,853 shares of Class A
common stock, par value $.001 per share, each of which will be entitled to one
vote, and there were outstanding 3,519,252 shares of Class B common stock, par
value $.001 per share, each of which will be entitled to ten votes. Shares
represented by each properly executed, unrevoked proxy received in time for the
meeting will be voted as specified.

Directors are elected by a plurality of the votes cast at the meeting.
In the case of election of directors, shares represented by a proxy which are
marked "WITHHOLD" to vote for all seven nominees will not be counted in
determining whether a plurality vote has been received for the election of
directors. Ratification of selection of auditors requires a majority of votes
cast at the meeting provided a quorum is present.

All shares represented by valid proxies will be voted in accordance
with the instructions contained therein. If the proxy does not specify how the
shares are to be voted, they will be voted in accordance with the
recommendations of the Board of Directors. A proxy may be revoked by the
stockholder giving the proxy at any time before it is voted by delivering oral
or written notice to the Chief Financial Officer of Hometown at or prior to the
meeting, and a prior proxy is automatically revoked by a stockholder giving a
subsequent proxy or attending and voting at the meeting. Attendance at the
meeting in and of itself does not revoke a prior proxy.

PROPOSAL NO. 1

ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
------------------------------------------------

At this meeting seven directors are to be elected to serve for one-year
terms, each to hold office until his successor is duly elected and qualified. It
is not contemplated that any nominee will be unable to serve as a director, but
if such contingency should occur prior to the meeting, the persons named as
proxies in the enclosed proxy or their substitutes will have the right to vote
for substitute nominees. The nominees were selected by the Board of Directors of
Hometown and are all currently directors. Certain information with respect to
each nominee is stated below.

Directors Nominated for One-Year Terms:

Name Age Position with Hometown Director Since
- ---- --- ---------------------- --------------

Corey E. Shaker 46 President, Chief Executive Officer and 1997
Director
William C. Muller Jr. 52 Regional Vice President - South Division 1997
and Director
Joseph Shaker 36 Regional Vice President - East Division 1997
and Director
Bernard J. Dzinski Jr. * 40 Director 2003
Steven A. Fournier * 49 Director 2002
H. Dennis Lauzon 55 Director 2002
Timothy C. Moynahan * 64 Director 2002

- --------------
*Member of Audit, Compensation and Nominating/Governance Committees

Corey E. Shaker was named President and Chief Operating Officer on
February 7, 2000, and added the title of Chief Executive Officer on August 29,
2000. In addition, he was Vice President-Connecticut Operations since October 1,
1997 and was in charge of Hometown's Company-wide sales training efforts. Prior
to that, from 1989 he was Chief Operating Officer and General Manager of Family
Ford Inc. where he was responsible for all aspects of its operations. He is a
past member of NADA Ford F01 20 group. He was awarded the Lincoln Mercury
Salesperson of the Nation award in 1980 and is a three-time winner of the
Lincoln Mercury Inner Circle award. He is also a first cousin to Steven Shaker,
the Regional VP - North Division, and Joseph Shaker, the Regional VP - East
Division and director of Hometown. He holds a B.S. in Business Administration
from Providence College.

William C. Muller Jr. has been Regional Vice President - South Division
since March 2000. Mr. Muller has been Vice President-New Jersey Operations since
October 1, 1997. In addition, from 1980 he was the President of Muller Toyota,
Inc. and of Muller Chevrolet, Oldsmobile, Isuzu, Inc (both of which are
currently known as Muller Automotive Group, Inc. and Muller Chevrolet, Isuzu,
Inc., respectively.) Under his management, Muller Toyota has been: (a) a 13-time
recipient of Toyota's Prestigious President's Award, given to those dealers with
superior levels of customer satisfaction who also exceed capital standards and
have high market penetration and facilities that meet or exceed Toyota
standards; (b) a 13-time recipient of Toyota Parts Excellence Award; (c) a
9-time winner of the Toyota Service Excellence Award; and (d) a 3-time winner of
Toyota's Sales Excellence Award. He holds a B.A. degree from Fairleigh Dickinson
University.

Joseph Shaker has been Regional Vice President - East Division since
2002. Mr. Shaker served as President and Chief Executive Officer of CarDay,
Inc., an internet based used vehicle exchange company between 2000 and 2002. He
was President and Chief Operating Officer of Hometown from 1997 to 2000. In
addition, between 1991 and 1997 he served as the Chief Operating Officer of
Shaker's Lincoln Mercury, Shaker's Jeep Eagle and Lincoln Mercury Autocare in
Connecticut. Since 2002 he has served as a member of the Mazda Dealer Advisory
Counsel and was elected as Chairman of the Counsel for 2004. In 1992, at the
request of Ford Motor Company, he developed the pilot free standing neighborhood
Autocare Center which has become the model for free standing neighborhood auto
maintenance centers established by Ford Motor with certain of its other dealers.
He is the brother of Steven Shaker, the Regional VP - North Division, and a
first cousin of Corey Shaker, the Chief Executive Officer and a director of
Hometown. He holds a B.S. (Management) degree from Bentley College.

Bernard J. Dzinski, Jr. has been a partner with Charles Heaven & Co.,
CPA's since 2000 and was a manager since 1990. He currently serves on the Board
of Directors of the Waterbury Rotary Club and Holy Cross High School, located in
Waterbury, Connecticut. Mr. Dzinski received a Bachelor of Science in Accounting
from Providence College in 1985 and is a Certified Public Accountant. He is a
member of the American Institute of Certified Public Accountants and the
Connecticut Society of Certified Public Accountants.

Steven A. Fournier has been the President and Chief Executive Officer
of Gar-Kenyon Technologies, a manufacturer of hydraulic aerospace components,
since December 2001. He previously was President and Chief Operating Officer of
Matthews Ventures, a diversified holding company, from 1992. Mr. Fournier has
recently served as Director, Treasurer, and member of the executive committee of
the Greater New Haven Chamber of Commerce. Mr. Fournier received a Bachelor of
Science Degree in Accounting from Bentley College in 1975 and is a Certified
Public Accountant.

H. Dennis Lauzon has been the President and owner of Parkway Toyota
since 1978. Mr. Lauzon is on the Toyota Dealers Advertising Board as well as the
Dealer Council. He is also on the board of Trustees for Hackensack University
Medical Center. Mr. Lauzon attended Fairleigh Dickinson University.

Timothy C. Moynahan has been a founding partner in the law firm
Moynahan, Minnella, Broderick and Tindall since 1974. Mr. Moynahan is a director
of The Institute of Human Virology, at the University of Maryland School of
Medicine. He is also the President of the Connecticut Chapter of the Ireland
Chamber of Commerce, a non-profit organization which promotes economic
relationships between the United States and Ireland and is Vice-President of the
Paula A. Moynahan Skin Care Company, a manufacturer of skin care products. Mr.
Moynahan holds a BS degree in History from Providence College and a JD degree
from Catholic University School of Law.

The Board Recommends A Vote FOR The Election Of Each Of The Nominees.

Committees of the Board of Directors

During the last fiscal year, Hometown's Board of Directors held 8
meetings. Hometown's Board of Directors has established standing Audit,
Compensation and Nominating/Governance Committees, whose members are composed of
three non-employee directors: Messrs. Dzinski, Fournier and Moynahan. It is the
intention of Hometown to appoint only independent directors to the Audit,
Compensation and Nominating/Governance Committees. The members of the three
standing Committees are Messrs. Dzinski, Fournier and Moynahan, all of who are
independent (as defined in Rule 4200(a)(14) of the National Association of
Securities Dealers'). The charters of the Committees as well as the Governance
Guidelines, Code of Business Conduct and Ethics for all employees, officers and
directors and the Code of Ethics for the Chief Executive Officer, Chief
Financial Officer and Chief Accounting Officer are all available on the
Corporate page of the Corporation's website at www.htauto.com.

Hometown's Board of Directors has adopted a written charter for the
Audit Committee, which is attached hereto as an Appendix. The Audit Committee
meets with management and Hometown's independent public accountants to determine
the adequacy of internal controls and other financial reporting matters. The
Audit Committee met with the auditors to review the planned scope and the
results of the audit. The Audit Committee met 4 times in fiscal year 2003. The
report of the Audit Committee appears below.

The Compensation Committee reviews and recommends to the Board of
Directors the compensation and benefits of all officers of Hometown, reviews
general policy matters relating to compensation and benefits of employees of
Hometown and administers the issuance of stock options and discretionary cash
bonuses to Hometown's officers, employees, directors and consultants. The
Compensation Committee met 3 times in fiscal year 2003. The report of the
Compensation Committee appears below.

The Nominating/Corporate Governance Committee was recently formed. The
functions of the Committee were previously performed by the Board of Directors
as a whole. The Committee assists the Board with respect to corporate governance
matters, including the composition and function of the Board. The Committee has
the responsibilities set forth in its Charter with respect to identifying
individuals qualified to become members of the Board, recommending qualified
members to the Board when vacancies occur, recommending changes in the size and
composition of the Board or any Committees, periodically developing and
recommending to the Board updates to the Governance Guidelines, and overseeing
the annual evaluation of the Board and Committees. The criteria that the
Committee applies to Director nominees is set forth in the Charter of the
Committee. The Committee considers suggestions from many sources, including
shareholders, regarding possible candidates for director. The Committee reviews
the qualifications and backgrounds of all the candidates and recommends the
slate of candidates to be nominated for election at the annual meeting of
shareholders. Shareholder recommendations for nominees to the Board will be
given appropriate consideration by the Committee for recommendation to the Board
based upon the nominee's qualifications in the same manner as all other
candidates. Shareholder nominee recommendations should be submitted in writing
to the Chairman of the Nominating/Governance in care of the Corporate Secretary.
The Committee has recommended that the seven directors presently in office be
re-elected as Directors of Hometown.

All directors attended at least 75% of the aggregate of the total
number of meetings of the Board of Directors and of all committees of the Board
on which that director served during the full fiscal year, except for H. Dennis
Lauzon who attended fewer than 75% of the Board meetings due to unavoidable
business conflicts.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Leases

Hometown has leased from various affiliates the premises occupied by
certain of its dealerships. Each of the governing leases became effective as of
the closing of the initial public offering, has a term expiring in 2013, is on a
triple net basis and provides for a consumer price index ("CPI") increase to the
base rent for the five-year periods commencing January 1, 2004 and 2009.
Hometown believes that each lease was at their fair market value at inception.
The annual base rentals reflect the CPI increase that is effective January 1,
2004.

Hometown leases, for an annual base rental of approximately $274,000,
the premises occupied by its Lincoln Mercury dealership in Watertown,
Connecticut, from Shaker Enterprises, a Connecticut general partnership whose
seven partners include Joseph Shaker, Corey Shaker, Steven Shaker and Janet
Shaker. Hometown leases, for an annual base rental of approximately $274,000 and
$82,000 respectively, the premises occupied by the Family Ford and Shaker Auto
Outlet dealerships in Waterbury, CT from Joseph Shaker Realty, a Connecticut
general partnership whose three partners are Richard Shaker, Edward Shaker and
Rose Shaker. Richard Shaker is the father of Steven Shaker and Joseph Shaker,
Edward Shaker is the father of Corey Shaker and Janet Shaker and Rose Shaker is
the aunt of Steven Shaker, Joseph Shaker, Corey Shaker and Janet Shaker. Corey
Shaker is the CEO, Director and a principal stockholder of Hometown. Steven
Shaker is the Regional Vice President - North Division and a principal
stockholder of Hometown. Joseph Shaker is the Regional Vice President - East
Division, Director and a principal stockholder of Hometown. Janet Shaker is a
principal stockholder of Hometown.

Hometown leases, for an annual base rental of approximately $411,000
and $452,000 respectively the premises occupied by its Toyota dealership in
Clinton, New Jersey and its Chevrolet/Oldsmobile dealership in Stewartsville,
New Jersey from Rellum Realty Company, a New Jersey general partnership, one of
whose two partners is William C. Muller Jr. Mr. Muller is Regional Vice
President - South Division, director and a principal stockholder of Hometown.
The Toyota and Chevy leases are treated as capital leases. In connection with
the acquisition in 1999 of real estate used by Baystate Lincoln Mercury,
Hometown guaranteed the mortgage debt of Rellum Realty Company. The 1999
guaranty was given in substitution for a February 1998 guaranty of that debt by
the Muller Group, a subsidiary of Hometown. As of December 31, 2003, the
mortgage debt balance is $4.7 million. Hometown makes annual lease payments of
$756,000, increasing to approximately $864,000 effective January 1, 2004 to the
landlord. The annual mortgage payments made by the landlord total approximately
$774,000. The mortgage matures March 2013.

Hometown leases, for an annual base rental of approximately $411,000
the premises occupied by its Lincoln Mercury dealership in Emerson, New Jersey
from Salvatore A. Vergopia and his wife. Mr. Vergopia is a principal stockholder
and former officer and director of Hometown.

Legal Proceedings

In May 2001, Hometown's wholly-owned subsidiary Morristown Auto Sales,
Inc. ("Morristown") assigned the lease for the premises, where it was operating
its Lincoln Mercury dealership in Morristown, New Jersey to Crestmont MM, L.P.
(the "Assignee"). On or about July 12, 2002, Morristown received notice from the
landlord that the Assignee had not paid the required monthly rent, maintained
the premises in accordance with the lease, nor provided the required insurance
for the premises. In September 2002, Hometown received notice of a complaint
filed by the landlord against Hometown, Morristown and certain former officers
seeking payment of rent and other obligations through June 2005. In October
2002, Morristown filed a complaint against the Assignee to recover any potential
damages from the Assignee as provided under the lease assignment. The Assignee
has made a claim against Hometown for breach of the assignment agreement and
misrepresentation of the use of the subject property. The Assignee has also
brought a claim against Morristown's president, Hometown's Chief Executive
Officer, for misrepresentation. Total anticipated costs for the remainder of the
lease term, through June 2005, is $540,000 for rent plus certain other costs.
Hometown believes it has meritorious defenses to the claim and cross-claim and
intends to vigorously defend this action. In addition, the landlord has leased
the premises to another tenant for the period from January 29, 2003 through
January 29, 2005 for a total of $240,000, thereby significantly reducing
Morristown's exposure to a damages judgment for lost rent. The landlord has also
amended its complaint to state a claim directly against the assignee. Hometown
does not believe that the eventual outcome of the case will have a material
adverse effect on Hometown's consolidated financial position or results of
operations.

On or about February 7, 2001, Salvatore A. Vergopia and Edward A.
Vergopia, former directors and executive officers of Hometown, and Janet
Vergopia, the wife of Salvatore A. Vergopia (the "Vergopias") filed a complaint
in the Superior Court of New Jersey in Bergen County, against Hometown, its
officers and directors, certain holders of its Class B common stock, and certain
other unnamed persons, alleging breach of two employment agreements, wrongful
termination of employment, breach of a stockholders' agreement and certain other
wrongful conduct, including age discrimination and breach of fiduciary duty. The
Vergopias are seeking back pay, front pay, compensatory, consequential and
punitive damages, for an unspecified amount as well as, reinstatement,
injunctive and other legal and equitable relief. Salvatore A. Vergopia and
Edward A. Vergopia have also commenced a second action for defamation against
Hometown and its Chief Executive Officer, which has been consolidated with the
action initially filed.

Litigation counsel has been retained by our insurers to represent us in
this action. A motion has been granted such that only a single shareholder
remains as an individual shareholder defendant. Also, Hometown has filed
counterclaims to recover damages associated with the Vergopias breaches of
certain agreements, as well as breaches of their fiduciary duties. Discovery is
proceeding in this action.

Hometown and its chief executive officer have also been served with a
third lawsuit brought by Edward and Salvatore Vergopia claiming defamation and
tortious interference with contract arising out of a letter allegedly sent to
one of Hometown's automobile manufacturers. Litigation counsel has been retained
by our insurers to represent us in this action as well. The suit is in its
earliest stages and Hometown has not been required to respond to the Complaint.
However, Hometown presently believes that this third action by the Vergopias
involves damage claims that are similar to those already made in the two pending
actions in the Superior Court of New Jersey in Bergen County.

We believe that the Vergopias commenced this action in response to our
dismissal of both Salvatore A. Vergopia and Edward A. Vergopia from their
officerships and employment positions with us. We believe we have meritorious
defenses and are vigorously defending these actions. Hometown does not believe
that the eventual outcome of the case will have a material adverse effect on
Hometown's consolidated financial position or results of operations.

Universal Underwriters Group ("Universal"), Hometown's insurance
provider, commenced a lawsuit against The Chubb Group of Insurance Companies
("Chubb"), Hometown's Director and Officer Liability Insurance provider,
Hometown, certain officers, directors and shareholders of Hometown and the
Vergopias seeking a declaration of its coverage obligations with respect to the
suit brought by the Vergopias discussed above. The suit has been consolidated
with the suit brought by the Vergopias for discovery and case management
purposes. Universal originally acknowledged its obligation to defend and
indemnify Hometown against the Vergopias claims and engaged separate counsel to
represent Hometown and its directors. Universal is now seeking to limit its
obligations under the comprehensive insurance policy as well as require Chubb to
share in defense and indemnity obligations. Hometown originally commenced an
action seeking affirmative declaration of its rights under its policy with
Universal, but allowed this action to be stayed pending a resolution of the
action brought by Universal. Hometown has brought counterclaims against
Universal and a cross-claim for declaratory judgment against Chubb. Hometown
maintains that the insurers are obligated to defend and indemnify on all claims
brought by the Vergopias. Hometown's former counsel and assistant secretary has
been added to the case as a defendant in the action and has made cross-claims
against Hometown demanding indemnification for claims made by the Vergopias
against him in the underlying action. Discovery is ongoing on this matter.
Hometown believes it has meritorious claims and is vigorously defending this
action and prosecuting its counterclaims and cross-claims. Hometown does not
believe that the eventual outcome of the case will have a material adverse
effect on Hometown's consolidated financial position or results of operations.

Hometown from time to time may be a defendant in lawsuits arising from
normal business activities. Management reviews pending litigation with legal
counsel and believes that the ultimate liability, if any, resulting from such
actions will not have a material adverse effect on Hometown's consolidated
financial position or results of operations.

EXECUTIVE COMPENSATION AND TRANSACTIONS WITH DIRECTORS, OFFICERS AND PRINCIPAL
HOLDERS

The following table presents certain information concerning
compensation paid or accrued for services rendered to Hometown in all capacities
during the three years ended December 31, 2003, for the Chief Executive Officer
and the other executive officers of Hometown whose aggregate annual base salary
exceeded $100,000 (collectively, the "Named Executive Officers").

COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------

Annual Compensation
-----------------------------------------------------------------------------------

Name and Principal Fiscal Annual Option
Position Year Compensation $ Salary Bonus (1) Other Grants
-------------------------- ------------------ --------------- ----------- ---------- ----------

Corey E. Shaker, 2003 250,000 66,923 16,073 -
President and Chief 2002 250,000 - 6,840 50,000
Executive Officer 2001 250,000 (2) - 7,000 50,000

William C. Muller, Jr. 2003 215,000 155,319 17,384 -
Regional Vice 2002 200,000 101,844 9,673 -
President-South Division 2001 200,000 130,372 - 30,000

Steven Shaker, 2003 125,000 - 3,542 -
Regional Vice 2002 125,000 1,325 2,600 -
President-North Division 2001 118,600 10,000 2,600 30,000

Joseph Shaker, 2003 200,000 53,461 10,400 -
Regional Vice 2002 (3) 196,350 - 8,000 -
President-East Division

Charles F. Schwartz, 2003 180,000 39,385 5,402 50,000
Chief Financial Officer 2002 (4) 160,000 20,000 1,749 -

- -------------------------

(1) The amounts shown are cash bonuses earned in the specified year. A
portion of these bonuses may be paid in the first quarter of the
following year.

(2) Includes amounts paid after year-end.

(3) Named Regional Vice President-East Division in 2002. Includes
compensation for entire year.

(4) Has been Chief Financial Officer since January 2002.

OPTION GRANTS IN LAST FISCAL YEAR

Number of Percent of Potential Realizable
Shares Total Options Value At Assumed Annual
Underlying Granted to Rates of Stock Price
Options Employees in Exercise Appreciation for Option
Granted(#) Fiscal Year Price Expiration Term(2)
Name (1) 2003 ($/Share) Date 5% 10%
---- --- ---- --------- ---- -- ---

Charles F. Schwartz 50,000 100% $0.34 March 2013 $10,691 $27,094

(1) The options vest with respect to one-third of the shares of Common
Stock covered by the options on each of the first, second and third
anniversary of the Option Grant Date, March 24, 2003.

(2) Potential realizable values are net of exercise price but before taxes,
and are based on the assumption that the Common Stock of Hometown
appreciates at the annual rate shown (compounded annually) from the
date of grant until the expiration date of the respective options. All
the options issued in 2003 were issued at the market price at the date
of issuance. These numbers are calculated based on Securities and
Exchange Commission requirements and do not reflect Hometown's
projection or estimate of future stock price growth. Actual gains, if
any, on stock option exercises are dependent on the future financial
performance of Hometown, overall market conditions and the option
holder's continued employment through the vesting period. This table
does not take into account any appreciation in the price of the Common
Stock from the date of grant to the date of this Form 10-K.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

The following table summarizes options exercised during fiscal 2003 and
presents the value of unexercised options held by the Named Executive Officers
at fiscal year end:

Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year-End at Fiscal Year-End
Acquired Value Exercisable (E) Exercisable (E)
Name on Exercise Realized Unexercisable (U) Unexercisable (U)
--------------------------- ------------ ------------- -------------------------- ------------------------

Corey E. Shaker ---- ---- 80,000 E $12,000 E
President and Chief 50,000 U $24,000 U
Executive Officer

William C. Muller, Jr. ---- ---- 20,000 E $ 0 E
Regional Vice President - 10,000 U $ 0 U
South

Steven Shaker ---- ---- 20,000 E $ 0 E
Regional Vice President - 10,000 U $ 0 U
North

Charles F. Schwartz, ---- ---- 33,333 E $17,333 E
Chief Financial Officer 66,667 U $51,667 U
and Secretary

In general, the option agreements shall be exercisable only so long as
the Optionee shall continue to be an employee of Hometown and within the
thirty-day period after the date of termination of his employment to the extent
it was exercisable on the day prior to the date of termination. In the event the
Optionee is unable to continue his employment with Hometown as a result of his
total and permanent disability, he may, but only within three (3) months from
the date of disability, exercise the option to the extent he was entitled to
exercise it at the date of such disability. In the event of death of the
Optionee, the option may be exercised, at any time within twelve (12) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise this option by bequest or inheritance, but only
to the extent of the right that would have accrued had the Optionee continued
living one (1) month after the date of death, provided that at the time of his
death the Optionee is an employee of Hometown and shall have been in Continuous
Status (as defined in Hometown's Stock Option Plan) as an employee from the date
hereof; or within thirty (30) days after the termination of Continuous Status as
an employee, the option may be exercised, at any time within three (3) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination.

Employment Contracts

In April 1998, Hometown entered into five-year employment agreements,
effective as of the closing of Hometown's initial public offering in July 1998,
with Corey E. Shaker, William C. Muller, Jr., Joseph Shaker and Steven Shaker.
While these agreements expired in July 2003, these employees continue to work
for Hometown while new agreements are being negotiated.

Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

None of the directors serving on the Compensation Committee are
employees or officers of Hometown. No director or executive officer of Hometown
is a director or executive officer of any other corporation that has a director
or executive officer who is also a director of Hometown.

1998 Stock Option Plan

In February 1998, as further amended in August 2002, in order to
attract and retain persons necessary for the success of Hometown, Hometown
adopted its 1998 Stock Option Plan (the "Stock Option Plan") covering up to
830,000 shares of Class A Common Stock. Pursuant to the Stock Option Plan
officers, directors and key employees of Hometown and consultants to Hometown
are eligible to receive incentive and/or non-incentive stock options. The Board
of Directors will administer the Stock Option Plan, which expires in January
2008, or a committee designated by the Board of Directors. The selection of
participants, allotment of shares, determination of price and other conditions
relating to the purchase of options will be determined by the Board of
Directors, or a committee thereof, in its sole discretion. Stock options granted
under the Stock Option Plan are exercisable for a period of up to 10 years from
the date of grant at an exercise price which is not less than the fair market
value of the Common Stock on the date of the grant, except that the term of an
incentive stock option granted under the Stock Option Plan to a stockholder
owning more than 10% of the outstanding Common Stock may not exceed five years
and its exercise price may not be less than 110% of the fair market value of the
Common Stock on the date of the grant. For grants to the Named Executive
Officers see the chart above titled "AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR END OPTION VALUES."

Employee Benefit Plan

In October 1999, Hometown amended and restated the E.R.R. Enterprises,
Inc. Profit Sharing/401(k) Plan, (the "Amended Plan") into the HOMETOWN AUTO
RETAILERS, INC. 401K Plan (the "Plan") effective October 1, 1999, for the
benefit of eligible employees, as defined. Participants may make voluntary
contributions of up to 15% of their compensation, subject to certain IRS
limitations. Hometown may make annual matching contributions to the Plan at its
discretion. Hometown made contributions of $24,000, $0 and $0 to the Plan for
the years ended December 31, 2003, 2002 and 2001, respectively.

Compensation of Directors

Each non-employee Director receives a fee of $1,000, for each meeting
attended in person and $250 for each meeting attended telephonically and
reimbursement for travel costs and other out-of-pocket expenses incurred in
attending each Directors' meeting. In addition, committee members receive $500
for each committee meeting attended in person, other than meeting directly
following or preceding Board meetings and $125 for each committee meeting
attended telephonically. In addition, each non-employee Director receives
options to purchase an additional 2,500 shares of Common Stock on the date of
Hometown's annual stockholders' meeting. Such options will have an exercise
price equal to the fair market value of the Common Stock on the date of grant
and will vest one-third upon grant and one-third on each of the first and second
anniversary of the date of grant.

Limitation of Directors' Liability and Indemnification

The Delaware General Corporation Law (the "DGCL") authorizes
corporations to limit or eliminate the personal liability of directors to
corporations and their shareholders for monetary damages for breach of
directors' fiduciary duty of care. Hometown's Certificate of Incorporation
limits the liability of Directors of Hometown to Hometown or its shareholders to
the fullest extent permitted by Delaware law.

Hometown's Certificate of Incorporation provides mandatory
indemnification rights to any officer or Director of Hometown who, by reason of
the fact that he or she is an officer or Director of Hometown, is involved in a
legal proceeding of any nature. Such indemnification rights include
reimbursement for expenses incurred by such officer or Director in advance of
the final disposition of such proceeding in accordance with the applicable
provisions of the DGCL. Insofar as indemnification for liabilities under the
Securities Act may be provided to officers and Directors or persons controlling
Hometown, Hometown has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.

Except for the litigation described in Legal Proceedings above, there
is no pending litigation or proceeding involving a Director, officer, employee
or agent of Hometown in which indemnification by Hometown will be required or
permitted.

Report of the Compensation Committee on Executive Compensation

The primary purposes of the Compensation Committee are to establish and
maintain competitive, fair and equitable compensation practices designed to
attract and retain key management employees throughout the Corporation and to
establish appropriate incentives to motivate and reward key management employees
for achieving or exceeding established performance goals; and to oversee the
competency and qualifications of senior management personnel and the provisions
of senior management succession planning. The Compensation Committee is
responsible for a broad range of activities which include (i) recommending to
the full Board of Directors the salary(ies) of the Chairman of the Board, Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer after an
evaluation of market data, internal salary relationships as provided by the
Corporation's executive compensation professionals, and such other factors as
the Committee deems appropriate; (ii) recommending to the full Board of
Directors the salaries for other elected Corporate Officers and selected key
management employees after reviewing the recommendations made by the Chief
Executive Officer and the Chief Operating Officer; (iii) recommending to the
full Board of Directors the type of incentive plans, if any, which will be
offered to management employees; and (iv) administering the Corporation's 1998
Incentive Stock Option Plan, to include, after reviewing the recommendations of
the Chief Executive Officer and the Chief Operating Officer, determining the
employees to be eligible for plan participation.

COMPENSATION COMMITTEE

Steven A. Fournier
Chairman

COMPARE CUMULATIVE TOTAL RETURN
AMONG HOMETOWN AUTO RETAILERS, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX

[PERFORMANCE GRAPH]

1998 1999 2000 2001 2002 2003

HOMETOWN AUTO RETAILERS, INC. 100.00 82.61 11.59 17.86 8.81 27.83
SIC CODE INDEX 100.00 63.51 42.10 102.67 89.81 147.17
NASDAQ MARKET INDEX 100.00 176.37 110.86 88.37 61.64 92.68

ASSUMES $100 INVESTED ON DEC. 31, 1998
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2003

The above graph shows a comparison of cumulative total returns for Hometown, the
NASDAQ Market Index, and a Peer Group from Hometown's SIC Code Index from the
date of the initial public offering.

(1) The Peer Group Index includes the following companies: Asbury Automotive
Group, Auto Nation Inc., CarMax Inc., Group 1 Automotive, Inc., Lithia Motors
Inc., Major Automotive Companies, Inc., Motorcars Automotive Group, Rush
Enterprises, Inc., Sonic Automotive Inc. and United Auto Group, Inc.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to Hometown
regarding the beneficial ownership of Common Stock as of April 9, 2004 by (i)
each person known to Hometown to be the beneficial owner of more than 5% of its
outstanding shares of Common Stock, (ii) each Director of Hometown, (iii) each
Named Executive Officer and (iv) all Directors, and Executive Officers of
Hometown as a group. Except as otherwise indicated, the persons or entities
listed below have sole voting and investment power with respect to all shares of
Common Stock owned by them.

A person is deemed to be a beneficial owner of securities that can be
acquired by such person within 60 days from the filing of this proxy statement
upon the exercise of options and warrants or conversion of convertible
securities. Each beneficial owner's percentage ownership is determined by
dividing the number of shares beneficially owned by that person by the total
number of shares beneficially owned, increased to reflect the shares underlying
the options, warrants and convertible securities that are held by such person,
but not held by any other person.

o As of April 9, 2004, the total number of shares outstanding is
7,175,105, of which 3,655,853 shares are Class A common stock
and 3,519,252 shares are Class B common stock.

The total number of votes is based on the combined total of Class A and
Class B common stock beneficially owned by the beneficial owner. The voting
power percentage of each beneficial owner is determined by dividing the number
of votes held by that person by the total number of votes outstanding, increased
to reflect the number of votes of the shares underlying the options, warrants
and convertible securities that are held by such person, but not held by any
other person.

o As of April 9, 2004, the total number of votes outstanding is
38,848,373, of which 3,655,853 votes are from Class A common
stock outstanding and 35,192,520 votes are from Class B common
stock outstanding;

o Class A common stock have one (1) vote per share; and

o Class B common stock have ten (10) votes per share.

Common Stock % of Outstanding
Name of Beneficial Owner Beneficially Owned Equity Owned % of
----------------------------- ------------------------- Aggregate
Class Class Class Class voting Power
A B A B Total of all Classes
- ----------------------------------- ------------ ------------- -------- ------- -------- -----------------

Officers and Directors
Corey E. Shaker 233,547 265,080 6.14 7.53 6.81 7.40
William C. Muller, Jr. 336,750 453,034 8.89 12.87 10.81 12.49
Steven Shaker 145,142 206,424 3.90 5.87 4.86 5.68
Joseph Shaker 147,826 321,812 4.00 9.14 6.51 8.66
Charles F. Schwartz 49,999 -- 1.35 -- ** **
Bernard J. Dzinski, Jr. 10,000 -- ** -- ** **
Steven A. Fournier 32,501 -- ** -- ** **
H. Dennis Lauzon 10,000 -- ** -- ** **
Timothy C. Moynahan 32,501 -- ** -- ** **
All Directors, and Executive
Officers as a group (9 persons) 998,266 1,246,350 23.93 35.42 29.19 34.20

5% Beneficial Owners
William C. Muller, Sr. 259,400 308,718 6.91 8.77 7.81 8.59
Salvatore Vergopia -- 705,000 -- 20.03 9.83 18.15
Edward Vergopia -- 235,000 -- 6.68 3.28 6.05
Janet Shaker 107,142 227,668 2.90 6.47 4.64 6.13
Paul Shaker -- 218,268 -- 6.20 3.04 5.62
Edward D. Shaker 124,642 206,612 3.36 5.87 4.58 5.63
Steven N. Bronson 361,817 -- 9.90 -- 5.04 **
Louis Meade 200,000 -- 5.47 -- 2.79 **

** Ownership is less than 1%

Corey Shaker has an address at c/o Hometown Auto Retailers, Inc., 774
Straits Turnpike, Watertown, Connecticut 06795. His beneficial ownership of our
common stock includes:

o 265,080 shares of Class B common stock, of which 15,980 shares
are held by the Edward Shaker Family Trust of which he is the
Trustee and a beneficiary;

o 84,500 shares of Class A common stock, including 72 shares (24
shares each for his children, Lindsay, Kristen and Edward) of
which he is custodian;

o Options exercisable within the next 60 days to purchase shares
of Class A common stock as follows:

o 30,000 shares at $3.00 per share;

o 25,000 shares at $2.25 per share;

o 25,000 shares at $1.25 per share;

o 33,333 shares at $0.48 per share;

o Warrants immediately exercisable to purchase 35,714 shares of
Class A common stock at $1.20 per share.

William Muller, Jr. has an address at c/o Muller Toyota Inc., Route 31,
PO Box J, Clinton, New Jersey 08809. His beneficial ownership of our common
stock includes:

o 453,034 shares of Class B common stock; o 205,500 shares of
Class A common stock;

o 1,250 shares of Class A common stock owned by his wife,
Michele;

o Options exercisable within the next 60 days to purchase shares
of Class A common stock as follows:

o 15,000 shares at $2.25 per share;

o 15,000 shares at $1.25 per share;

o Warrants immediately exercisable to purchase 100,000 shares of
Class A common stock at $1.20 per share.

Steven Shaker has an address at c/o Family Ford, Inc., 1200 Wolcott
Street, Waterbury, Connecticut 06705. His beneficial ownership of our common
stock includes:

o 206,424 shares of Class B common stock;

o 79,428 shares of Class A common stock;

o Options exercisable within the next 60 days to purchase shares
of Class A common stock as follows:

o 15,000 shares at $2.25 per share;

o 15,000 shares at $1.25 per share;

o Warrants immediately exercisable to purchase 35,714 shares of
Class A common stock at $1.20 per share.

Joseph Shaker has an address at c/o Baystate Lincoln Mercury, 571
Worcester Road, Framingham, Massachusetts 01701. His beneficial ownership of our
common stock includes:

o 321,812 shares of Class B common stock of which 15,980 shares
are held by the Richard Shaker Family Trust which Mr. Shaker
is the Trustee and a beneficiary; and 40,000 shares are held
by the Shaker Irrevocable Trust of which Mr. Shaker is
Trustee;

o 112,112 shares of Class A common stock;

o Warrants immediately exercisable to purchase 35,714 shares of
Class A common stock at $1.20 per share.

Charles F. Schwartz has an address at c/o Hometown Auto Retailers,
Inc., 774 Straits Turnpike, Watertown, Connecticut 06795. His beneficial
ownership of our common stock consists of options exercisable within the next 60
days to purchase shares of Class A common stock as follows:

o 33,333 shares at $0.68 per share;

o 16,666 shares at $0.40 per share.

Bernard J. Dzinski, Jr. has an address at 207-231 Bank Street,
Waterbury, CT 06702. His beneficial ownership of our common stock consist of
options exercisable within the next 60 days to purchase shares of Class A common
stock as follows:

o 10,000 shares at $0.42 per share;

Steven A. Fournier has an address at 238 Water Street, Naugatuck,
Connecticut 06770. His beneficial ownership of our common stock consist of
options exercisable within the next 60 days to purchase shares of Class A common
stock as follows:

o 30,000 shares at $0.58 per share;

o 2,501 shares at $0.42 per share;

H. Dennis Lauzon has an address at 854 Sunset Avenue, Haworth, New
Jersey 07641. His beneficial ownership of our common stock consists of options
exercisable within the next 60 days to purchase shares of Class A common stock
as follows:

o 5,000 shares at $0.65 per share;

o 5,000 shares at $0.42 per share.

Timothy C. Moynahan has an address at 141 East Main Street, Waterbury,
Connecticut 06722. His beneficial ownership of our common stock consists of
options exercisable within the next 60 days to purchase shares of Class A common
stock as follows:

o 30,000 shares at $0.48 per share;

o 2,501 shares at $0.42 per share;

William Muller, Sr. has an address at c/o Muller Toyota Inc., Route 31,
PO Box J, Clinton, New Jersey 08809. His beneficial ownership of our common
stock includes:

o 308,718 shares of Class B common stock;

o 159,400 shares of Class A common stock; and

o Warrants immediately exercisable to purchase 100,000 shares of
Class A common stock at $1.20 per share.

All shares and warrants are owned by The William C. Muller Revocable
Living Trust of which William C. Muller Sr. is Trustee. William C. Muller Sr. is
neither an officer nor director.

Salvatore Vergopia has an address at 20 Bayberry Drive, Saddle River,
New Jersey 07458. His beneficial ownership of our Class B common stock includes
225,600 shares owned by his wife, Janet. Mr. Vergopia is a former officer and
director of Hometown.

Edward A. Vergopia has an address at 4912 Pine Street Drive, Miami
Beach, Florida 33140. Mr. Vergopia is a former officer and director of Hometown.

Janet Shaker has an address at c/o Hometown Auto Retailers, Inc., 774
Straits Turnpike, Watertown, Connecticut 06795. Her beneficial ownership of our
common stock includes:

o 227,668 shares of Class B common stock;

o 71,428 shares of Class A common stock; and

o Warrants immediately exercisable to purchase 35,714 shares of
Class A common stock at $1.20 per share.

Paul Shaker has an address at 210 Munson Road, Middlebury, Connecticut
06762.

Edward D. Shaker has an address at c/o Shakers Lincoln Mercury, Inc.
831 Straits Turnpike, Watertown, Connecticut 06795. His beneficial ownership of
our common stock includes:

o 206,612 shares of Class B common stock;

o 71,428 shares of Class A common stock; and

o Options exercisable within the next 60 days to purchase shares
of Class A common stock as follows:

o 8,750 shares at $2.25 per share;

o 8,750 shares at $1.25 per share;

o Warrants immediately exercisable to purchase 35,714 shares of
Class A common stock at $1.20 per share.

Steven N. Bronson has an address at 100 Mill Plain Road, Danbury,
Connecticut 06811.

Louis Meade has an address at 44 Red Road, Chatham, New Jersey 07928.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires
Hometown's officers and directors, and persons who own more than ten-percent of
a registered class of Hometown's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC").
Officers, directors and greater than ten-percent stockholders are required by
SEC regulation to furnish Hometown with copies of all Section 16(a) forms they
file.

To the best of Hometown's knowledge, based solely on review of the
copies of such forms furnished to Hometown, or written representations that no
other forms were required, Hometown believes that all Section 16(a) filing
requirements applicable with respect to all its current officers, directors and
ten percent shareholders have been complied with as of the filing date of this
Annual Report. However, William Muller, Jr., Bernard J. Dzinski, Jr., Steven A.
Fournier, H. Dennis Lauzon and Timothy Moynahan were late in filing one (1)
Statement of Changes in Beneficial Ownership on Form 4 during 2003 but have
subsequently come into compliance. With respect to any former directors,
officers, and ten-percent shareholders of Hometown, Hometown does not have any
knowledge of any known failures to comply with the filing requirements of
Section 16(a).

Audit Committee Report

The Audit Committee has reviewed Hometown's audited statements for the
year ended December 31, 2003. In conjunction with its review, the Audit
Committee has met with the management of Hometown to discuss the audited
financial statements. In addition, Hometown has discussed with its independent
auditors, BDO Seidman, LLP, the matters required pursuant to Statement on
Accounting Standards No. 61 and has received the written disclosures and the
letter from BDO Seidman, LLP required by Independence Standards Board Standard
No. 1. The Audit Committee has also discussed with BDO Seidman, LLP its
independence from management and Hometown. BDO Seidman, LLP has full and free
access to the Audit Committee.

Based on this review and discussion, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in
Hometown's Annual Report on Form 10-K for the fiscal year ended December 31,
2003 for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE:

Bernard J. Dzinski Jr.
Steven A. Fournier
Timothy C. Moynahan

Audit Fees

The aggregate fees and expenses billed for the professional services
rendered by BDO Seidman, LLP for the audit of Hometown's annual financial
statements included in Hometown's Form 10-K filing for fiscal year 2002 and the
reviews of Hometown's quarterly financial statements included in Hometown's
Second and Third Quarter Form 10-Q filings for fiscal year 2002 totaled
$108,000. The aggregate fees and expenses billed for the professional services
rendered by Arthur Andersen LLP for the review of Hometown's quarterly financial
statements included in Hometown's First Quarter Form 10-Q filing for fiscal year
2002 totaled $20,000.

Audit Related Fees

Hometown did not incur any audit related fees, other than those
included under the paragraph "Audit Fees", for professional services rendered by
BDO Seidman, LLP during the 2003 fiscal year. During the 2002 fiscal year
Hometown incurred $5,500 in audit related fees, other than those included under
the paragraph "Audit Fees", for professional services rendered by BDO Seidman,
LLP. These services were for review of work performed by a third party in
relation to Hometown adopting SFAS 142 in fiscal 2002 and review of
Sarbanes-Oxley requirements.

Tax Fees

Hometown did not incur any tax fees for professional services rendered
by BDO Seidman, LLP for tax compliance, tax advice and tax planning during the
2003 and 2002 fiscal years.

All Other Fees

Hometown did not incur any other fees for professional services
rendered by BDO Seidman, LLP other than the services covered in the paragraphs
above titled "Audit Fees" and "Audit Related Fees" during the 2003 and 2002
fiscal years.

Audit Committee Pre - Approval Policy

Hometown's Audit Committee has authorized the Chief Financial Officer
to incur up to $5,000 per fiscal year on accounting research projects outside
the scope of normal audit services rendered by BDO Seidman, LLP for the audit of
Hometown's annual financial statements included in Hometown's Form 10-K filing
and the reviews of Hometown's quarterly financial statements included in
Hometown's Form 10-Q filings. Such amount is less than 5% of the annual fees
paid to BDO Seidman, LLP for its Form 10-K and Form 10-Q filings. No fees were
incurred in fiscal 2003 that were not approved by the Audit Committee pursuant
to this policy.

Audit Committee Consideration

Hometown's Audit Committee has considered whether BDO Seidman, LLP's
provision of the services which generated the Audit and Other Fees reported
above was compatible with maintaining BDO Seidman, LLP's independence as
Hometown's principal independent accounting firm.

Work Performed by Principal Accountant's Full Time Permanent Employees

BDO Seidman, LLP's services rendered in performing Hometown's audits
for fiscal year 2003 and 2002 were performed by full time, permanent employees
and partners of BDO Seidman, LLP. The report of BDO Seidman, LLP with respect to
Hometown's financial statements appears in Hometown's annual report for the
fiscal year ended December 31, 2003 and 2002. In response to our request, we
have been advised by BDO Seidman, LLP that a representative of BDO Seidman, LLP
will be at the annual meeting and will have an opportunity to make a statement
if he or she desires to do so and will be available to respond to appropriate
questions.

PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Audit Committee of the Board of Directors has selected BDO Seidman,
LLP as the independent public accountants of Hometown and its subsidiaries for
2004. BDO Seidman, LLP has served as the independent public accountants of
Hometown since July 2002. Although stockholder approval is not required,
Hometown desires to obtain from the stockholders an indication of their approval
or disapproval of the Audit Committee of the Board of Directors action in
appointing BDO Seidman, LLP as the independent public accountants of Hometown
and its subsidiaries. If the stockholders do not ratify this appointment, such
appointment will be reconsidered by the Audit Committee and the Board of
Directors. The proxy will be voted as specified, and if no specification is
made, the proxy will be cast "For" this proposal.

On June 20, 2002, Hometown dismissed Arthur Andersen LLP as Hometown's
independent public accountants and on July 11, 2002 appointed BDO Seidman, LLP
as Hometown's new independent public accountants for the fiscal year 2002. This
change was made upon the recommendation of the Audit Committee of Hometown's
Board of Directors and with the approval of Hometown's Board of Directors. The
decision to change independent public accountants was based on the continuing
uncertainty regarding Andersen's future.

Andersen's reports on Hometown's consolidated financial statements for
the years ended December 31, 2001 and December 31, 2000 (Restated) did not
contain an adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2001 and December 31, 2000
(Restated) and through the date of Andersen's dismissal, there were no
disagreements with Andersen on any matter of accounting principle or practice,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to Andersen's satisfaction, would have caused them to make reference to
the subject matter in connection with their report on the Hometown's
consolidated financial statements for such years; and there were no reportable
events as defined in Item 304(a)(1)(v) of Regulation S-K.

Hometown provided Andersen with a copy of the foregoing disclosures.

The Board Recommends A Vote FOR The Ratification of the Appointment of BDO
Seidman, LLP for Fiscal Year 2004.

MISCELLANEOUS

Stockholder Proposals

Stockholder proposals intended to be presented at Hometown's 2005
Annual Meeting must be received by Hometown for inclusion in Hometown's proxy
statement relating to that meeting not later than March 15, 2005. Such proposals
should be addressed to Charles F. Schwartz, Chief Financial Officer and
Secretary, Hometown Auto Retailers, Inc., 774 Straits Turnpike, Watertown,
Connecticut, 06795.

Other Matters

Management knows of no other business, which will be presented for
consideration at the Annual Meeting other than that stated in the notice of
meeting.

Solicitation Of Proxies

The cost of this proxy solicitation and any additional material
relating to the meeting which may be furnished to the stockholders will be borne
by Hometown. In addition, solicitation by telephone, telegraph or other means
may be made personally, without additional compensation, by officers, directors
and regular employees of Hometown. Hometown also will request brokers, dealers,
banks and voting trustees and their nominees holding shares of record but not
beneficially to forward proxy soliciting material to beneficial owners of such
shares, and Hometown, upon request, will reimburse them for their expenses in so
doing.

Reports And Financial Statements

Hometown's Annual Report for the year ended 2003, including Audited
Financial Statements is included with this proxy material. The Financial
Statements contained in the Annual Report are incorporated by reference and are
part of this soliciting material.

A copy of Hometown's Annual Report to the Securities and Exchange
Commission on Form 10-K, without exhibits, will be provided without charge to
any stockholder submitting a written request. Such request should be addressed
to Charles F. Schwartz, Chief Financial Officer and Secretary, Hometown Auto
Retailers, Inc., 774 Straits Turnpike, Watertown, Connecticut, 06795.

EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE
ANNUAL MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED BUSINESS REPLY ENVELOPE.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ Charles F. Schwartz
-----------------------
Charles F. Schwartz, Chief Financial Officer and Secretary

Dated: Watertown, Connecticut
April 23, 2004

APPENDIX I (FORM OF PROXY)

HOMETOWN AUTO RETAILERS, INC.
PROXY
FOR ANNUAL MEETING OF THE STOCKHOLDERS
June 8, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Corey E. Shaker and Charles F. Schwartz, and
each of them, with full power of substitution, as proxies to vote the shares
which the undersigned is entitled to vote at the Annual Meeting of the
Stockholders of Hometown Auto Retailers, Inc. ("Hometown") to be held at the
Hilton of Southbury, 1284 Strongtown Road, Southbury, Connecticut 06488, on
Tuesday, June 8, 2004 at 10:00 A.M., Eastern Daylight Time and at any
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of common stock of Hometown held or owned by the undersigned as indicated
on the proposals as more fully set forth in the Proxy Statement, and in their
discretion upon such other matters as may come before the meeting.

Please mark "X" your votes as indicated:

1) ELECTION OF DIRECTORS: Corey E. Shaker, William C. Muller, Jr., Joseph
Shaker, Bernard J. Dzinski, Jr., Steven A. Fournier, H. Dennis Lauzon and
Timothy C. Moynahan

FOR election of all nominees [ ]

WITHHOLD vote from all nominees [ ]

FOR all nominees, [ ]

EXCEPT for nominee(s) listed below from whom Vote is withheld.

2) RATIFICATION of the Appointment of BDO Seidman, LLP for Fiscal Year 2004.
FOR [ ] AGAINST [ ] ABSTAIN [ ]

(Continued, and to be signed, on the Reverse Side)

- --------------------------------------------------------------------------------

FOLD HERE

II-1

THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSAL.

The undersigned hereby acknowledges receipt of the Notice of, and Proxy
Statement for, the aforesaid Annual Meeting.

Dated: , 2004

----------------------------------------------
Signature of Stockholder

NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by an authorized person.

IMPORTANT - PLEASE FILL IN, SIGN AND RETURN PROMPTLY USING THE ENCLOSED
ENVELOPE.

II-2

APPENDIX II (AUDIT COMMITTEE CHARTER)

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS

I. PURPOSE AND SCOPE

The primary purposes of the Audit Committee are, on behalf of the Board
of Directors and through the oversight of the independent auditors: (1) to
obtain a reasonable level of assurance that the Corporation's financial reports,
practices, procedures and controls are within acceptable limits of sound
practice and in accordance with the statutes, regulations, or statements of the
Financial Accounting Standards Board, the Securities and Exchange Commission,
the NASDAQ Stock Market and other relevant agencies; and (2) to review such
reports, practices, procedures and controls at least annually and at such other
times if so desired by the Committee to gain insight as to the financial health
of the Corporation and important factors and trends related thereto and
compliance with the Corporation's practices for managing legal and regulatory
compliance.

The Board of Directors shall annually appoint an Audit Committee, which
shall consist of not less than three members of the Board of Directors. Members
may not be officers of the Corporation or any of its subsidiaries and also shall
be independent of management. At the time of appointment of the Committee, the
Directors shall designate one of the members of the Committee to be its
Chairman, to serve until a successor is designated. The Committee has the
authority to retain counsel and experts as deemed appropriate.

II. DUTIES AND RESPONSIBILITIES

The Audit Committee is responsible for a broad range of activities
which include:

o Recommend to the Board the selection, retention or termination of
the Corporation's independent public accountants.

o Discuss and approve the scope of professional services provided
by the independent public accountants and consider the possible effect of
the performance of such service on the independence of the public
accountants.

o Discuss and approve the arrangements (including the estimated
fee) and the proposed overall scope of the annual audit with management and
the independent public accountants.

o Review and concur in the appointment, replacement, reassignment,
or dismissal of the Corporation's Chief Financial Officer.

o Discuss matters of concern to the Audit Committee, the
independent public accountants or management relating to the annual
financial statements or other results of the audit.

o Consider and review with the independent public accountants and
the Corporation's Chief Financial Officer their opinion as to the adequacy
of the Corporation's system of internal accounting controls.

o Review with management and the independent public accountants at
the completion of the annual examination:

> The Corporation's annual financial statements and related
footnotes.

> The independent public accountants' audit of the financial
statements and their report thereon.

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> The independent public accountants' management letter with
respect to the audit and proposals for changes emanating therefrom.

> Any significant changes required in the independent public
accountants' audit plan.

> Any serious difficulties or disputes with management
encountered during the course of the audit.

> Other matters related to the conduct of the audit which are
to be communicated to the Audit Committee under generally accepted auditing
standards.

o Consider and review with management and the Corporation's Chief
Financial Officer:

> The scope of the annual audit plan.

> Significant findings during the year and management's
responses thereto.

> Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access to required
information.

> Any changes required in the planned scope of their audit
plan.

o Review with the independent public accountants the methods of
establishing and monitoring the Corporation's policies to prohibit
unethical, questionable or illegal activities by employees of the
Corporation.

o Review with management and the independent public accountants the
anticipated effect of any material changes in accounting policies or
standards as well as any unusual or significant commitments or contingent
liabilities.

o Review, with the Corporation's counsel, any legal matters that
could have a significant impact on the Corporation's financial statements.

o Meet with the independent public accountants in separate
executive sessions to discuss any matters that the Audit Committee or the
independent public accountants believe should be discussed privately with
the Audit Committee.

The Audit Committee will perform such other functions as assigned by law,
the Corporation's charter or bylaws, or the Board of Directors.

III. OPERATING PROCEDURES

The operating procedures for this Committee with respect to meetings,
Notice of Meetings, Quorums and Manner of Acting, and Records shall be the same
as stipulated for the Board as spelled out in the Corporation's By-laws.

IV. ACCOUNTABILITY

This Committee shall report to the Board of Directors at its next regular
meeting all such actions it has taken since the previous report.

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