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Lithia Motors Completes Acquisition of Parkway Auto Group

1 September 1999

Lithia Motors Completes Acquisition of Parkway Auto Group in Roseburg, Oregon And an Additional Company-Wide Cost Savings Agreement

    MEDFORD, Ore., Sept. 1 -- Lithia Motors, Inc.
announced that it has completed the acquisition of Parkway Auto Group in
Roseburg, Oregon. The group consists of two stores that operate the franchises
for nine product lines:  Ford, Lincoln/Mercury, Dodge, Dodge Truck, Toyota,
GMC/Oldsmobile, and Nissan. The dealerships had combined sales of $66 million
in 1998. The dealerships began operation under the Lithia name as of
August 30, 1999.
    Lithia's net investment in the stores totaled approximately $6.9 million.
Payment consisted of a combination of cash and 122,770 shares of Lithia
Motors' stock. The acquisition will be accounted for as a purchase and
represents the thirty-second and thirty-third stores acquired since the
completion of its public offering in December 1996.
    Don Jones, Jr., Vice President of Operations of Lithia Motors, stated,
"These stores are strategically located between Eugene and Medford, completing
our network of five Dodge stores in Central and Southwest Oregon. This is our
first Ford store in Oregon and is a continuation of our strategy to develop a
significant Ford presence in the western and inter-mountain states."
    Separately, Lithia announced the selection of The Reynolds and Reynolds
Company to be the exclusive provider of business forms and
document management services to Lithia Motors' 92 automobile franchises.
Reynolds will supply all required documents, warehousing and distribution
services throughout Lithia's automotive retailing network in five western and
inter-mountain states. The Reynolds agreement is one of many examples of
Lithia's ability to substantially reduce costs through macro-economies of
scale that result from Lithia's increasing size. Other areas where Lithia has
been able to reduce its costs over the past two years include insurance,
finance contracts, service contracts, detail chemicals, oil products and
computer services. As Lithia continues to grow it expects to realize further
cost savings with its vendors.
    Lithia now operates 92 franchises in California, Oregon, Washington,
Nevada and Colorado and sells 24 brands of new vehicles at 38 stores and over
the Internet through "Lithia.com -- America's Car & Truck Store." 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. Lithia retailed 31,353 new and used vehicles in 1998.
Lithia's current annualized revenue run rate, including all completed
acquisitions, is just over $1.3 billion or approximately 58,600 retail new and
used units.
    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. Specific risks included in this press release
include future acquisitions, expected cost savings, revenue run rate and unit
sales run rate.
    CONTACT:  Jeff DeBoer, Vice President of Finance/Investor Relations for
Lithia Motors, Inc., 541-776-6868, or invest@lithia.com.