---

Lithia Motors To Acquire Two Dealerships

16 July 1998

Lithia Motors To Acquire Two Dealerships In Eugene-Springfield, Oregon

    MEDFORD, Ore., July 16 -- Lithia Motors, Inc.
announced today that it has entered into definitive agreements to acquire the
Hutchins Toyota and the Hutchins Nissan dealerships in Eugene-Springfield,
Oregon.  These two dealerships had combined sales of $88 million in 1997.
Upon the completion of the acquisitions, Lithia Motors' 1997 proforma
annualized sales including previously completed 1998 acquisitions will be
approximately $730 million.  The dealerships are being managed by Lithia
Motors until the completion of the transaction which is scheduled for the
latter half of the third quarter of 1998.  The dealerships will operate as
Lithia Nissan of Eugene and Lithia Toyota of Springfield.
    Lithia's investment in the stores will total approximately $8.0 million.
The acquisitions will be accounted for as purchases and represent the
twentieth and twenty-first dealerships acquired since the completion of its
public offering in December 1996.  Lithia will now operate 26 locations in
three states - fourteen in California, nine in Oregon and three in Nevada.
    Sidney B. DeBoer, Chairman and CEO, stated, "These acquisitions are our
second and third in the Eugene-Springfield, Oregon market and, as such, will
create significant economies of scale.  Lithia has been very successful in the
Eugene market with our Lithia Dodge, of Eugene operation.  We believe the
addition of these two stores will further strengthen our presence in this
market."
    Hutchins Toyota has received the Toyota President's award for the last
four consecutive years.  It is currently ranked as the fourth largest Toyota
dealership in the Pacific Northwest.
    Separately, the Company announced the successful completion of the
Chevrolet and Toyota acquisitions in Redding, California.  Lithia's total
investment for the two dealerships was $6.4 million.  The combined sales for
the two dealerships was $54 million in 1997.  The dealerships began their
operations as Lithia Chevrolet of Redding and Lithia Toyota of Redding during
the month of June.
    In addition, Lithia announced that the bank syndicate, led by U.S. Bank,
has increased the Company's credit facility by $45 million, resulting in a
total credit facility of $240 million.  The credit facility is used primarily
for inventory financing and acquisitions.  Nine financial institutions
participated in the syndication including NationsBank who joined the syndicate
in this funding.
    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.