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Lithia Motors to Acquire Two Stores in Redding, CA

27 May 1998

Lithia Motors to Acquire Two Stores in Redding, California; Reaches a Master Agreement with General Motors

    MEDFORD, Ore., May 27 -- Lithia Motors, Inc.
announced today that it has received manufacturer approval to acquire two
adjacent stores in Redding in Northern California - Rodway Chevrolet and
Boyland Toyota.  Lithia will begin operation as Lithia Chevrolet of Redding
and Lithia Toyota of Redding by the middle of June 1998.
    The dealerships had combined sales of $54 million in 1997.  The
acquisitions will be accounted for as purchases and are the company's
eighteenth and nineteenth since going public in December 1996.  Lithia now has
24 locations under operation-fourteen in California, seven in Oregon and three
in Nevada.  Lithia sells 23 brands of domestic and imported vehicles.
    Sidney B. DeBoer, Chairman and CEO, stated, "Both franchises are exclusive
in the Redding market and represent substantial future growth potential.
Redding is located 146 miles south of our home base in Medford, Oregon on
Interstate 5 and supports our strategy of regional growth through the
acquisition of franchises in medium-sized cities in the Western United States.
Shasta County, where the two stores are located, is about the same size as
Jackson County, where our core stores currently operate.  We expect to realize
operational efficiencies through clustering franchises in this market, like we
have done in Medford."
    "This is our third Toyota franchise and first Chevrolet franchise. We have
now completed a master agreement with General Motors that will allow us to
acquire additional Chevrolet or other GM brand stores.  This is the first
store to receive approval under the new agreement, and we are very positive
about this new relationship and plan to aggressively seek additional GM
stores," Sid DeBoer continued.
    Separately, Lithia announced that its eight-bank syndicate, lead by U.S.
Bank, has increased the credit facility by $20 million.  Sid DeBoer,
commented, "Due to the strong relationship with our bank syndicate, Lithia has
demonstrated its ability to expand its credit facility, as needed, for future
growth."
    In addition, Lithia announced that Lithia's Dick Donnelley stores in Reno,
Nevada have achieved some important milestones just seven months after joining
the Lithia group.  Lithia's Dick Donnelley Isuzu sold 157 new Isuzus in Reno
during April, making it the number one volume Isuzu dealer in the country.
Lithia's Dick Donnelley Volkswagen also sold 50 new Volkswagens in Reno during
April, making it the number one Volkswagen dealer in its zone and putting it
on pace to more than triple the prior year's Volkswagen performance in that
market.
    After a 9.9% increase in same-store sales in the first quarter of 1998,
Lithia announced that same-store sales in April continued to improve.
    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.