LAD Lithia Motors Inc

Lithia Motors, Inc. (NYSE:LAD), today announced its planned actions to address the short and long-term conditions that are impacting the auto retail industry and the company. �As the economic environment has worsened, we have taken a comprehensive look at our business and determined how it can be right-sized to achieve our profit margin and growth objectives for the long term,� said Sid DeBoer, CEO and Chairman of Lithia Motors. The Company noted that although falling consumer confidence, declining home values, tightening credit markets, and domestic auto manufacturers losing market share are all adversely impacting vehicle sales, the driving force is the accelerated rise in gasoline and diesel prices. Oil prices have doubled in the past year, and have increased six-fold since 2002. The company is accelerating its cost cuts because of the reduced sales volume. In addition to the $6 million annualized cuts announced at the end of April on our first quarter conference call, the Company�s plans include further cost reductions that are expected to result in additional savings of $1 million per month for a total of $18 million annualized. This cost cutting plan is partially implemented and should be completed within the next ninety days. Cost cutting measures include: Restructuring store management personnel and duties Reducing headcount across the company Reducing all corporate level expenses where possible Further centralizing offices by region In addition to the $18 million annualized savings above, the following restructuring actions will help to preserve capital and improve profitability: Reducing domestic exposure within our business units by divesting 10 � 15 underperforming stores Deferring all uncommitted capital expenditures Selling all unnecessary property and assets including aircraft and excess land Financing all unfinanced real estate Postponing acquisitions until prices drop further Significantly adjusting pricing on all inventories to match current demand Adjusting inventory mix to meet consumers shift in preference for smaller, more fuel-efficient new and used vehicles Deferring investment in new L2 Auto stores Details on the additional savings and other financial impact of the above noted restructuring plans will be announced by the second quarter earnings release and conference call on July 29th. Mr. DeBoer added, �After improving sequentially to near break-even in the first quarter, we are continuing to improve in the second quarter. April sales volume came in a little below plan but May is tracking in line with our internal projections. With the cost cuts partially in place and the positive trend in May, we are hoping that June comes in ahead of projections.� About Lithia Lithia Motors, Inc. is a Fortune 700 and Russell 2000 Company. Lithia sells 28 brands of new and all brands of used vehicles at 110 stores which are located in 46 markets within 15 states. Internet sales are centralized at www.Lithia.com, or through the recently launched 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 available 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 expected cost savings and improvements in our brand mix and profitability. Specific risks in this press release include future sales performance, realized cost savings, macro-economic factors, planned divestitures, asset sales, real estate financing, and company profitability.