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Lithia Motors, Inc. to Acquire Dick Donnelly Automotive in Reno and Sparks, Nevada

17 July 1997

Lithia Motors, Inc. to Acquire Dick Donnelly Automotive in Reno and Sparks, Nevada

    MEDFORD, Ore., July 17 -- Lithia Motors, Inc.
announced today that it has signed a definitive agreement to acquire Dick
Donnelly Automotive of Reno, Nevada, selling the Isuzu, Lincoln/Mercury,
Suzuki and Audi brands as well as used automobiles and ancillary products in
Reno and Sparks, Nevada.  Reno is located 445 miles northwest of Las Vegas,
Nevada and only 293 miles from Lithia's primary market in Medford, Oregon.
Sparks is adjacent to Reno.
    The transaction is valued at approximately $12.8 million depending on
inventory levels at closing.  Payment will be made in cash and notes.  Bank
financing will be utilized to fund the majority of the purchase, including new
and used inventory and equipment.  Closing is expected in the middle of the
fourth quarter of 1997 and is subject to the customary conditions, including
approval by the manufacturers.  The dealerships had combined sales of
$78 million in 1996 with 1738 new vehicles and 2704 retail used vehicles
generated from the two locations.
    These acquisitions will be accounted for as a purchase and are the
company's ninth and tenth since November 1996, bringing the total locations
under operation to fifteen, with seven in California, six in Oregon and two in
Nevada.  Lithia will sell 21 brands of new vehicles through 40 franchises
following closing of these acquisitions.
    Sidney B. DeBoer, Chairman and CEO, stated, "This acquisition is our first
in Nevada and the growing Reno market and fits perfectly with our disciplined
acquisition strategy.  Dick Donnelly shares many of our core operating
philosophies and has achieved outstanding sales levels for the four brands.
We are very excited that he has agreed to continue to operate the stores.  His
team of managers and employees have proven that they are dedicated to the
highest standards of quality customer service."
    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 and others set forth from time to time in the
company's filings with the SEC.

SOURCE  Lithia Motors Inc.