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Lithia Motors Announces Comfort With Fourth Quarter

17 December 1998

Lithia Motors Announces Comfort With Fourth Quarter and Reiterates Operating Strategy

    MEDFORD, Ore., Dec. 17 -- Sidney B. DeBoer, Chairman and CEO
of Lithia Motors, Inc. , stated, "Our business has been solid in
the fourth quarter as we continue to improve the operations of the newly
acquired stores.  As expected, October and November showed positive same-store
growth in all of our business areas, including new cars, used cars, service &
parts and finance and insurance.  We are comfortable with the current analyst
estimates and will release earnings on February 24, 1999 at 8:00 a.m. PST.
    "I would like to reiterate that Lithia is an acquirer and operator of auto
dealerships.  We have gained a reputation as the premier operator within the
publicly-owned automobile retail sector due to our strict focus on buying
dealerships right and improving the operations of newly acquired dealerships
over a relatively short time period.  Lithia leads the sector in terms of
earnings track record (8 consecutive quarters of beating Wall Street
estimates), same-store sales growth (15.1% growth for the first nine months of
1998), balance sheet strength (26% long-term debt to equity ratio) and
profitability (3.0% pre-tax margin in the third quarter of 1998)."
    Sid DeBoer continued, "With the twenty-three stores we have acquired since
going public, over $145 million in available capital for acquisitions over the
next two years, and well in excess of $1 billion currently in the acquisition
pipeline, Lithia is well-positioned to continue to successfully execute its
plan of growing earnings per share by 20-25% per year over the coming five to
ten year period."
    Lithia's 28 dealerships in California (14), Oregon (9), Nevada (3) and
Washington (2), sell 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.  Since becoming a public company in December of 1996, Lithia
has acquired 23 stores with annual revenues of approximately $680 million,
boosting its revenue run-rate to over $820 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.  The specific statements
subject to risk include earnings per share growth, earnings per share for the
fourth quarter of 1998, operational improvements in newly acquired stores, the
acquisition pipeline, the availability of capital and revenue run-rate, among
others.