Lithia Motors Reports 123% Increase in Sales

24 February 1999

    MEDFORD, Ore., Feb. 23 -- Lithia Motors, Inc.
today announced that revenues increased 76% to $199.1 million in the fourth
quarter of 1998 from $113.1 million in the fourth quarter of 1997.  Net
earnings rose 81% to $3.39 million compared to $1.87 million in the fourth
quarter of 1997 or $0.32 per share on 10.5 million diluted shares outstanding
vs. $0.25 per share on 7.4 million diluted shares in the same quarter of 1997.
    For the full year of 1998, Lithia reported that revenues increased 123% to
$714.7 million from $319.8 million in 1997.  Net earnings rose 80% to
$10.79 million compared to $6.0 million in 1997 or $1.14  per share on
9.5 million diluted shares outstanding in 1998 vs. $0.82 per share on
7.3 million diluted shares in 1997.
    Chairman and Chief Executive Officer, Sidney B. DeBoer, stated, "We are
pleased to announce these results which exceed even the most aggressive
estimates that Wall Street had set for us for both the year and the quarter.
This makes nine consecutive quarters that Lithia has exceeded consensus
estimates, the longest successful track record in our sector.  We improved our
operating margins from 4.0% to 4.4% in the fourth quarter, a level which is
70 basis points higher than the next highest pure-play operator in our sector
for the same quarter.  We attained 14.7% same-store sales growth for the full
year of 1998, also the highest in our sector.  Lithia remains the premier
operator/consolidator in our sector and has a plan to continue to deliver
steady growth in earnings per share.  We plan to continue to add and develop
well-run operating platforms in new geographic areas from which to continue
executing our strategy of buying stores very accretively then improving the
operations."
    In 1998, new vehicle sales increased by 140.8%, used vehicle sales
increased by 95.0%, service, body and parts sales increased by 142.1% and
other revenue increased 115.4%.  Lithia sold 40,885 new and used vehicles in
1998 compared to 19,631 in 1997, an increase of 108.3%.  The average price of
a new vehicle sold by Lithia increased year-on-year by 1.9% to $21,935 and for
retail used vehicles by 3.0% to $12,768, as the sales mix continues to shift
to higher priced trucks and mini-vans.
    Dick Heimann, President and COO, commented, "We continue to be reassured
by the number of attractive dealerships available for purchase in our target
acquisition areas at reasonable prices, particularly for platform
acquisitions.  By clustering valuable franchises within strong regional
economies, as well as targeting strategic 'livable' cities, we anticipate
continued operational improvements in the newly acquired stores as we put in
place the proven Lithia operating model.  Lithia now has the ability to
acquire new stores with revenues in excess of $1.5 billion with the unutilized
$75 million acquisition credit facility from Ford Credit, current cash
resources in excess of $45 million and expected future internal cash
generation from operations.  This estimate assumes an average 50/50 split
between cash and shares for acquisition currency."
    During the fourth quarter of 1998, Lithia completed the acquisitions of
Camp Automotive in Spokane, Washington and Hutchins Toyota and Nissan in
Eugene/Springfield, Oregon.  Lithia has successfully completed all previously
announced acquisitions.  Lithia now operates 28 dealerships in California,
Oregon, Washington and Nevada.  The company sells 23 brands of new vehicles
through 56 franchises.  Lithia also sells used vehicles, arranges finance,
warranty and credit insurance contracts, and provides vehicle parts,
maintenance and repair services at all of its locations.  The company operates
three collision repair centers.  Lithia's current annualized revenue run rate
is over $850 million.  Its headquarters are in Medford, Oregon, the site of
Lithia's original group of dealerships.
    This press release includes forward looking statements, which management
believes are a benefit to shareholders.  These statements are necessarily
subject to risk and uncertainty and actual results could differ materially due
to certain risk factors, including without limitation economic conditions,
acquisition risk factors, manufacturer approval, and others set forth from
time to time in the company's filings with the SEC.  Specific risk statements
in this press release include expected earning per share growth, acquisition
pricing and availability, operational improvements and the availability of
financing sources.

    LITHIA MOTORS, INC.
    (In Thousands except per share and unit data)

                                                                 Audited
                                     Three Months Ended    Fiscal Year Ended
                                         December 31,         December 31

                                       1997        1998       1997      1998
    New Vehicle Sales               $60,276    $108,322   $161,294  $388,431
    Used Vehicle Sales               35,717      58,245    113,099   220,544
    Service, Body & Parts Sales      11,806      22,959     29,828    72,216
    Other Revenues                    5,297       9,560     15,574    33,549
    Total Revenues                  113,096     199,086    319,795   714,740
    Cost of Sales(A)                 93,216     165,521    265,049   599,379
    Gross Profit                     19,880      33,565     54,746   115,361
    SG&A Expense                     14,586      23,845     40,625    85,188
    Depreciation & Amortization(A)      762       1,013      2,483     3,469
    Income from Operations            4,532       8,707     11,638    26,704
    Flooring Interest Expense         1,214       1,907      2,179     7,108
    Other Interest Expense              416         837        824     2,735
    Other Income, net                   -69        -242        862       921
    Pre-Tax Profit                    2,833       5,721      9,497    17,782
    Income Tax                          965       2,332      3,538     6,993
    Income Tax Rate                   34.1%       40.8%      37.3%     39.3%
    Net Profit                       $1,868      $3,389     $5,959   $10,789
    Shares Outstanding               7.356m     10.532m     7.303m    9.470m
    Fully Diluted EPS                 $0.25       $0.32      $0.82     $1.14

    (A) Depreciation on leased vehicles has been reclassified from cost of
    sales to depreciation and amortization expense.

    LITHIA MOTORS, INC.
    (In Thousands except per share and unit data)
                                                                 Audited
                                      Three Months Ended   Fiscal Year Ended
                                          December 31,          December 31,

    Other Data:                          1997       1998      1997      1998
    EBITDA                             $5,225     $9,478   $14,983   $31,094
    EBITDA/Interest Coverage             3.2x       3.5x      5.0x      3.2x
    Gross Margin                        17.6%      16.9%     17.1%     16.1%
    SG&A Expense                        12.9%      12.0%     12.7%     11.9%
    Operating Margin                     4.0%       4.4%      3.6%      3.7%
    Pre-tax Margin                       2.5%       2.9%      3.0%      2.5%
    Unit Sales:
    New                                 2,725      4,782     7,493    17,708
    Used - Retail                       2,354      3,686     7,148    13,645
    Used - Wholesale                    1,452      2,403     4,990     9,532
    Total Units Sold                    6,531     10,871    19,631    40,885

    Average Selling Price:
    New                               $22,120    $22,652   $21,526   $21,935
    Used - Retail                     $12,509    $12,783   $12,391   $12,768
    Used - Wholesale                   $4,319     $4,630    $4,915    $4,860

    Balance Sheet Highlights
    (In Thousands)                           Period Ended   Period Ended
                                              December 31,  December 31,
                                                   1997           1998

      Cash & Cash Equivalents                   $18,454        $20,879
      Inventories                                89,845        157,455
      Other Current Assets                       11,588         25,862
    Total Current Assets                        119,887        204,196
    Property & Equipment, net                    16,265         32,933
    Goodwill, net                                24,062         42,951
    Other Assets                                  6,312         14,318
    TOTAL ASSETS                               $166,526       $294,398

      Floorplan Notes Payable                   $82,598       $124,167
      Other Current Liabilities                  13,418         26,476
    Total Current Liabilities                    96,016        150,643
    Long-Term Debt                               24,242         38,994
    Other Liabilities                             8,391         13,250

    Total Liabilities                          $128,649       $202,887

    Shareholders' Equity                         37,877         91,511

    TOTAL LIABILITIES & SHAREHOLDERS' EQUITY   $166,526       $294,398