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Lithia Motors Purchases Dealerships in Reno and Medford

13 February 1998

Lithia Motors Acquires Fill-In Stores in Medford and Reno Markets; Reaches Three Agreements For Company-Wide Cost Savings

    MEDFORD, Ore., Feb. 13 -- Lithia Motors, Inc.
announced today that it completed two separate acquisitions -_ Medford
Nissan/BMW in Medford, Oregon and Reno Volkswagen in Reno, Nevada.  Lithia
began operation as Lithia Nissan/BMW of Medford as of February 10, 1998 and
Lithia's Donnelly Volkswagen of Reno as of February 4, 1998.  Manufacturer
approval for both acquisitions has already been received, as is the case with
all previously announced acquisitions.
    The dealerships had combined sales of $24 million in 1997 and Lithia's
investment in the stores is $3.1 million.  The acquisitions will be accounted
for as purchases and are the company's 15th and 16th since going public in
December 1996.  Lithia now has 21 locations under operation_11 in California,
seven in Oregon and three in Nevada.  Lithia sells 22 brands of domestic and
imported vehicles.
    Sidney B. DeBoer, Chairman and CEO, stated, "The Nissan/BMW store is
located on prime real estate on a key corner between the
Honda/Pontiac/Isuzu/VW/Suzuki store and the Toyota/Lincoln/Mercury stores and
within a two block radius from the Saturn store and
Dodge/Chrysler/Plymouth/Jeep/Mazda stores.  We will be developing a separate
service and sales center for the BMW franchise and eventually will operate
this as a separate store on the same property.  Both franchises are exclusive
in the Medford market and represent substantial future growth potential.  We
expect to realize more operational efficiencies through our larger presence in
the growing Southern Oregon market.  This is our third Nissan franchise and
second BMW franchise.  We are deepening our relationship with these two
manufacturers that we believe to have very exciting product line-ups today and
in the coming years."
    "The Reno acquisition is our third in this rapidly growing market area and
it is adjacent to the Isuzu/Lincoln/Mercury/Audi store.  Combined with the
existing two stores in the Reno area, economies of scale will be realized with
these acquisitions and will be realized even further as we acquire additional
stores in this market area.  In addition, the demographics of Reno fit
perfectly with our acquisition and operating strategies.  We are enthused
about operating our third Volkswagen store which is the exclusive outlet for
this brand in the Reno market."
    Separately, Lithia announced that it has reached exclusive agreements with
Pennzoil, Production Chemical Manufacturing, Inc. and Scorcio Distributing Co.
to supply various equipment and supplies related to the servicing, detailing
and preparation of new and used vehicles at Lithia's current and future
locations.  "These arrangements will result in substantial cost reductions
compared to what we were paying prior to the agreements.  We are most pleased
to have reached these agreements with three major suppliers, continuing to
demonstrate that Lithia can realize significant cost reductions through
company-wide volume purchases and contracts."
    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.  For More Information Contact: Jeffrey B.
DeBoer, VP Finance/Investor Relations

SOURCE  Lithia Motors, Inc.