Exhibit 99.1

LITHIA MOTORS ANNOUNCES SECOND QUARTER 2008 RESULTS

MEDFORD, OREGON, August 7^th, 2008 (4:15 p.m. ET) – Lithia Motors, Inc. (NYSE: LAD) today announced that net income from continuing operations in the second quarter of 2008 was ten cents per diluted share, excluding after-tax adjustments for asset impairments of $243.4 million (or $12.27 per share) and a net loss from discontinued operations of $2.2 million (or ten cents per share).

Sid DeBoer, Lithia’s Chairman and CEO, commented, “Lithia Motors continues to show improved operating results for the third consecutive quarter despite a more difficult operating environment. We were able to return to profitability this quarter on our core operations with the strategic steps we have taken since the start of the year, despite same-store sales declining 20.8% . Our cost-cutting measures and restructuring actions are progressing as planned; the results of which are clearly evident in our second quarter operating results. The asset impairment charges recorded this quarter are non-cash accounting charges. They primarily result from our declining stock price, and franchise locations that have not performed up to our operating expectations, as more fully explained below.”

“Our current book value per basic share is $13.05, which does not include any appreciation of real estate values above our carrying value. Recent pending and completed store sales have indicated that franchise value and “blue-sky” exist, particularly with import and luxury brands and domestic stores in stronger market areas. Additionally, this applies to many stores acquired prior to 2002 when GAAP did not require franchise value to be allocated at the time of purchase.”

“We have shown success this quarter in our efforts to raise capital, restructure our workforce, and continue the strategic shift in our brand mix through the identification of stores for divestiture. These efforts and results show our ability, as a retailer, to adjust to market conditions as necessary. The Company’s reported quarterly sales, general and administrative expenses in continuing operations have represented as a percentage of gross profits 89.9%; 85.9%; and 82.5%, sequentially improving since the fourth quarter of 2007, excluding one-time expenses from terminated construction projects this quarter of $4.5 million. June showed solid progress coming in at 80.7% .”

“Historically, Lithia Motors had been structured and staffed for growth. Our current focus is to keep our company strong and profitable. In the last year, we have successfully reduced our headcount by over 800 employees. In the second quarter, we eliminated over 150 positions and made further reductions in July. The disposition of stores, as we have outlined, will result in even lower costs necessary to run our operations. Our high-caliber team continues to identify opportunities to streamline and operate more efficiently, while not sacrificing the high level of service to our customers.”

On June 2^nd, 2008, the Company announced restructuring plans that would generate annualized savings of $18 million. Additionally, the Company outlined a list of steps it is taking to right-size and realign its business. Mr. DeBoer continued, “Those cost savings have all been completed, and we are now on track for $22 million in total cost reductions – as we have recently added an additional $4 million in planned annualized cost cuts. Since the beginning of the year, we have reduced the outstanding debt on our credit line from $184 million to $138 million. We have sold one domestic store and have agreements on six of the thirteen remaining store divestitures. An additional two domestic stores are pending sale as a result of an unsolicited offer, showing a demand still exists for domestic auto retail stores. These store sales are estimated to generate over $35 million in total net cash proceeds.”

Lithia’s CFO and Senior Vice President, Jeff DeBoer said, “We realized positive cash flows from operations of $15.3 million in the first half of 2008, and we anticipate that our cost cutting measures will continue to increase our cash flows from operations despite the current economic environment.”

“Through the second quarter, financing of real estate has raised net proceeds of approximately $65 million. The depreciated value of our real estate portfolio in continuing operations has book value of over $300 million, and we are confident it would appraise for significantly more; we have real estate debt of approximately $220 million – leaving substantial room for additional financing to be completed throughout the remainder of the year. This does not include $22.8 million in development properties and our airplane which are held for sale – many of which have pending buy-sell agreements.”

“Through the reduction of used vehicle inventory, we estimate to generate another $30 to $40 million of cash. All of these steps create proceeds to further reduce the outstanding borrowings on the line of credit and to help retire the $85 million in subordinated convertible notes due in May 2009,” concluded Mr. Jeff DeBoer.

Under SFAS No. 142, “Goodwill and Other Intangible Assets”, the Company is required to perform a goodwill impairment analysis on an interim basis if certain events or circumstances indicate that it is more likely than not that an impairment loss has been incurred. Recent restructuring actions taken, including the placing of stores up for sale, an adverse change in business climate, reduced earnings forecast and the significant decrease in the Company’s share price required goodwill to be tested on an interim basis in the second quarter. The Company performed the required steps for impairment analysis and concluded that the entire balance of goodwill was impaired. The Company recorded a non-cash impairment charge to write-off the entire balance of goodwill of $210.6 million after tax in the second quarter, of which $24.8 million is classified in discontinued operations. In the quarter, the Company also recorded a non-cash asset impairment charge of $32.8 million after tax related to certain indefinite-lived intangible assets (franchise value) and other long-lived assets, of which $10.0 million is classified in discontinued operations.

Due to the resulting complexities of reporting second quarter results, the Company will be filing a Form 12b-25 with the Securities and Exchange Commission to request an extension of the filing deadline for its Form 10-Q. The expected date for filing the Form 10-Q is August 18, 2008.

About Lithia
Lithia Motors, Inc. is a Fortune 700 Company, selling 28 brands of new and all brands of used vehicles at 109 stores, which are located in 46 markets within 15 states. Internet sales are centralized at www.Lithia.com, or through www.L2Auto.com. 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 105,108 new and used vehicles and had $3.22 billion in total revenue in 2007. Lithia is publicly traded (NYSE:LAD) and is accessible on the web at www.Lithia.com.

Additional Information
For additional information on Lithia Motors, contact the Investor Relations Department: (541) 618-5770 or log-on to: www.lithia.com – go to Investor Relations

Forward Looking Statements

This press release includes forward looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, 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, future economic conditions and others set forth from time to time in the company’s filings with the SEC. We make forward-looking statements about (i) our ability to manage through the current sales and economic environment, (ii) our ability to reduce infrastructure costs, (iii) the sale of stores in discontinued operations and development properties at the prices anticipated, (iv) the raising of cash from our restructuring efforts and ongoing operations and (v) our ability to secure financing on real estate at expected values. We also make forward-looking statements about the filing of our Form 10-Q. Specific risks in this press release include execution of the restructuring plan and macro-economic and market factors affecting the company's profitability and cash flows.

^(A) Excludes shares issuable upon conversion of the convertible debt as well as common stock equivalents, as their effect on EPS would be antidilutive.
NM – Not Meaningful

^(A) Excludes shares issuable upon conversion of the convertible debt as well as common stock equivalents, as their effect on EPS would be antidilutive.
NM – Not Meaningful

The following table reconciles reported GAAP net income (loss) per the income statement to non-GAAP net income (loss):

The following table reconciles reported GAAP diluted earnings (loss) per share (“EPS”) to non-GAAP diluted earnings (loss) per share:

Adjusted results for the periods with net income are shown on a diluted share basis. Due to anti-dilutive effects, adjusted results per basic and diluted share are the same in periods showing a loss.