Lithia Motors (LAD) 8-K Lithia Motors Announces Earnings Per Share from Continuing Operations of 53 Cents; Up 4% from the Prior Year

EXHIBIT 99.1

LITHIA MOTORS ANNOUNCES EARNINGS PER SHARE FROM CONTINUING
 OPERATIONS OF 53 CENTS; UP 4% FROM THE PRIOR YEAR

MEDFORD, OREGON, October 25^th, 2007 (4:05 p.m. EDT) –Lithia Motors, Inc. (NYSE: LAD) today announced that third quarter 2007 sales increased 3% to $859.7 million as compared to $834.4 million in the same period last year. New vehicle sales increased 1.4%, used vehicle sales increased 2.4%, finance/insurance sales increased 0.2%, and parts/service sales increased 14.7% .

Third quarter 2007 income from continuing operations was $11.3 million as compared to $10.7 million in the third quarter of 2006. Diluted earnings per share from continuing operations were $0.53 as compared to $0.51 in the third quarter of 2006.

Sid DeBoer, Lithia’s Chairman and CEO, commented, “In spite of the current headwinds we face in today’s retail environment, Lithia has been successful in adapting to these conditions while still pursuing our new business initiatives. We continue to redesign operations to not only weather the current economic situation, but prevail in the sector as an innovator.”

“Third quarter sales were steadied by strong parts and service sales and revenues from acquisitions made in the past 12 months. Third quarter total same-store sales declined 5.6% . We believe that we are still seeing a challenging retail environment for automotive sales in our markets that will continue for the rest of this year and well into 2008. This is related to the ripple effects from the struggling housing market, high gas prices and consumer debt pressures. In response to these challenges, we are successfully reducing employee headcount in the stores. Our advertising expenses are down by almost 12% on a same-store basis. Our vehicle inventory levels are being carefully managed, and we have held our new and used vehicle margins steady,” concluded Sid DeBoer.

For the nine month period ending September 30, 2007, total sales increased 7.6% to $2.5 billion as compared to $2.3 billion in the same period last year. New vehicle sales increased 6.4%, used vehicle sales increased 6.6%, finance/insurance sales increased 5.5%, and parts/service sales increased 18%.

For the first nine months, Lithia’s net income from continuing operations was $29.2 million as compared to $33.6 million in 2006. Diluted earnings per share from continuing operations were $1.38 as compared to $1.58 in the first nine months of 2006.

Jeff DeBoer, Senior Vice President and CFO added, “We have provided fourth quarter EPS guidance and have narrowed the range on our full year 2007 guidance as shown below. For the full year and first quarter of 2008, we have projected the guidance which is also shown below. These projections call for a continuation of difficult economic

conditions through 2008, but we expect that our efficiency initiatives and our Assured Selling Program will successfully grow our EPS.”

“Our guidance is based on income from continuing operations and assumes a steady pace of acquisitions, dispositions, and fifteen to twenty cents of development costs associated with L2," concluded Jeff DeBoer.

Earnings per Share
From Continuing Operations:

	Guidance		Guidance		Guidance		Guidance
	Q4 2007		FY 2007		Q1 2008		FY 2008
$	0.26 - $0.31	$	1.65 - $1.70	$	0.25 - $0.30	$	1.75 - $1.95

Conference Call InformationLithia Motors will be providing more detailed information on the results for the third quarter 2007 in its conference call scheduled for today at 2 p.m. PDT and 5 p.m. EDT. The call can be accessed live by calling 973-582-2717; Conference ID #: 9348443. To listen LIVE on our website or for REPLAY: Log-on towww.Lithia.com – Go to Investor Relations – and click on the Conference Call Icon.

About Lithia
Lithia Motors, Inc. is a Fortune 700 and Russell 2000 Company. Lithia sells 30 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 atwww.Lithia.com , or through the recently launchedwww.L2.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 109,648 new and used vehicles and had $3.17 billion in total revenue in 2006.

Forward Looking StatementsThis 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, economic conditions, acquisition risk factors and others set forth from time to time in the company’s filings with the SEC. Specific risks in this press release include the accuracy of the company’s comments and predictions related to the retail sales environment and its ability to successfully adjust to those conditions and achieve the earnings per share projected.

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

LITHIA MOTORS, INC.
(In Thousands except per share data)
			Three Months Ended								%
			September 30,						Increase		Increase
			2007			2006			(Decrease)		(Decrease)
New vehicle sales	$	494,882			$	488,113		$	6,769		1.4		%
Used vehicle sales			231,868			226,468			5,400		2.4
Finance and insurance			32,701			32,644			57		0.2
Service, body and parts			97,913			85,360			12,553		14.7
Fleet and other revenues			2,343			1,832			511		27.9
Total revenues			859,707			834,417			25,290		3.0
Cost of sales			715,016			695,657			19,359		2.8
Gross Profit			144,691			138,760			5,931		4.3
SG&A expense			107,387			102,225			5,162		5.0
Depreciation and amortization			5,289			4,204			1,085		25.8
Income from operations			32,015			32,331			(316	)	(1.0	)
Floorplan interest expense			(8,236	)		(12,358	)		(4,122	)	(33.4	)
Other interest expense			(4,900	)		(3,482	)		1,418		40.7
Other income, net			144			128			16		12.5
Income from continuing operations			19,023			16,619			2,404		14.5
before income taxes
Income tax expense			7,713			5,933			1,780		30.0
Income Tax Rate			40.5	%		35.7	%
Income from continuing operations			11,310			10,686			624		5.8		%
Discontinued Operations:
Loss from operations			(336	)		(170	)		166		97.6
Gain (Loss) from sale			263			-			263
Net income	$	11,237			$	10,516			721		6.9		%
Diluted net income per share:
Continuing Operations	$	0.53			$	0.51		$	0.02		3.9
Discontinued Operations:
Loss from operations, net of income tax			(0.01	)		(0.01	)
Gain from sale, net of income tax			0.01			-
Net income per share	$	0.53			$	0.50		$	0.03		6.0
Diluted shares outstanding			22,058			22,128			(70	)	(0.3	)	%

LITHIA MOTORS, INC.
(Continuing Operations)
		Three Months Ended								%
		September 30,						Increase		Increase
		2007			2006			(Decrease)		(Decrease)
Unit Sales:
New Vehicle		16,884			17,860			(976	)	(5.5	)	%
Used - Retail Vehicle		10,928			11,395			(467	)	(4.1	)
Used - Wholesale		7,364			7,218			146		2.0
Total Units Sold		35,176			36,473			(1,297	)	(3.6	)
Average Selling Price:
New Vehicle	$	29,311		$	27,330		$	1,981		7.2		%
Used - Retail Vehicle		16,867			16,110		$	757		4.7
Used - Wholesale		6,457			5,943		$	514		8.6
Key Financial Data:
Gross Profit Margin		16.8	%		16.6	%		20	bps
SG&A as a % of Gross Profit		74.2	%		73.7	%		50	bps
Operating Margin		3.7	%		3.9	%		-20	bps
Pre-Tax Margin		2.2	%		2.0	%		20	bps
Gross Margin/Profit Data
New Vehicle Retail		7.6	%		7.6	%		0	bps
Used Vehicle Retail		14.9	%		14.4	%		50	bps
Used Vehicle Wholesale		0.5	%		1.1	%		-60	bps
Service, Body & Parts		47.3	%		48.6	%		-130	bps
Finance & Insurance		100.0	%		100.0	%		0	bps
New Retail Gross Profit/Unit	$	2,237		$	2,088		$	149
Used Retail Gross Profit/Unit	$	2,505		$	2,325		$	180
Used Wholesale Gross Profit/Unit	$	33		$	66		-$	33
Finance & Insurance/Retail Unit	$	1,176		$	1,116		$	60
Revenue Mix:
New Vehicles		57.6	%		58.5	%
Used Retail Vehicles		21.4	%		22.0	%
Used Wholesale Vehicles		5.5	%		5.2	%
Finance and Insurance, Net		3.8	%		3.9	%
Service and Parts		11.4	%		10.2	%
Fleet and other		0.3	%		0.2	%
New Vehicle Unit Sales Brand Mix:
Chrysler Brands		40.0	%		40.3	%
General Motors & Saturn		16.9	%		17.6	%
Toyota		13.1	%		12.9	%
Honda		6.8	%		5.3	%
Ford		5.5	%		7.8	%
Hyundai		4.1	%		4.3	%
Nissan		3.5	%		3.2	%
BMW		3.4	%		1.6	%
Subaru		2.1	%		3.2	%
Volkswagen, Audi		2.0	%		1.8	%
Mercedes		1.0	%		0.5	%
Other		1.6	%		1.5	%

LITHIA MOTORS, INC.
(Selected Same Store Data)
		Three Months Ended										%
		September 30,								Increase		Increase
		2007				2006				(Decrease)		(Decrease)
Same Store Unit Sales:
New Vehicle		15,801				17,882				(2,081	)	(11.6	)	%
Used - Retail Vehicle		10,093				11,410				(1,317	)	(11.5	)
Used - Wholesale		6,822				7,226				(404	)	(5.6	)
Total Units Sold		32,716				36,518				(3,802	)	(10.4	)
Same Store Average Selling Price:
New Vehicle	$	28,899			$	27,330			$	1,569		5.7		%
Used - Retail Vehicle		16,637				16,110				527		3.3
Used - Wholesale		6,396				5,943				453		7.6
Same Store Revenue:
New Vehicle Retail Sales		(6.6	)	%		(4.8	)	%
Used Vehicle Retail Sales		(8.6	)	%		(2.4	)	%
Used Wholesale Sales		1.6		%		12.3		%
Total Vehicle Sales (excluding Fleet)		(6.6	)	%		(3.3	)	%
Finance & Insurance Sales		(5.9	)	%		(2.0	)	%
Service, Body and Parts Sales		3.3		%		4.3		%
Total Sales (excluding Fleet)		(5.6	)	%		(2.6	)	%
Total Gross Profit (excluding Fleet)		(4.4	)	%		(3.0	)	%
Same Store Average Gross Profit Data:
New Retail Gross Profit/Unit	$	2,198			$	2,087			$	111
Used Retail Gross Profit/Unit	$	2,475			$	2,286			$	189
Used Wholesale Gross Profit/Unit	$	37			$	66			$	(29	)
Same Store Total Sales Geographic Mix:
Texas		23.2		%		18.9		%
Oregon		15.2		%		17.1		%
California		11.9		%		13.8		%
Washington		11.1		%		11.2		%
Montana		7.2		%		6.0		%
Alaska		7.1		%		7.6		%
Colorado		6.7		%		6.9		%
Idaho		6.4		%		7.1		%
Nevada		3.9		%		5.0		%
Nebraska		2.7		%		2.5		%
South Dakota		2.4		%		1.9		%
New Mexico		1.3		%		1.2		%
Wisconsin		0.6		%		0.5		%

LITHIA MOTORS, INC.
(In Thousands except per share data)
			Nine Months Ended								%
			September 30,						Increase		Increase
			2007			2006			(Decrease)		(Decrease)
New vehicle sales	$	1,447,623			$	1,360,912		$	86,711		6.4		%
Used vehicle sales			683,838			641,737			42,101		6.6
Finance and insurance			95,488			90,549			4,939		5.5
Service, body and parts			288,020			244,045			43,975		18.0
Fleet and other revenues			4,339			3,781			558		14.8
Total revenues		2,519,308				2,341,024			178,284		7.6
Cost of sales		2,090,893				1,943,164			147,729		7.6
Gross Profit			428,415			397,860			30,555		7.7
SG&A expense			326,500			296,241			30,259		10.2
Depreciation and amortization			15,149			12,052			3,097		25.7
Income from operations			86,766			89,567			(2,801	)	(3.1	)
Floorplan interest expense			(24,070	)		(25,219	)		(1,149	)	(4.6	)
Other interest expense			(14,567	)		(9,817	)		4,750		48.4
Other income, net			469			765			(296	)	(38.7	)
Income from continuing operations			48,598			55,296			(6,698	)	(12.1	)
before income taxes
Income tax expense			19,411			21,670			(2,259	)	(10.4	)
Income Tax Rate			39.9	%		39.2	%
Income from continuing operations			29,187			33,626			(4,439	)	(13.2	)	%
Discontinued Operations:
Loss from operations, net of income tax			(714	)		(1,851	)		(1,137	)	(61.4	)
Loss from sale, net of income tax			(2,218	)		-			2,218
Net income	$	26,255			$	31,775			(5,520	)	(17.4	)	%
Diluted net income per share:
Continuing Operations	$	1.38			$	1.58		$	(0.20	)	(12.7	)	%
Discontinued Operations:
Loss from operations			(0.03	)		(0.08	)
Gain (Loss) from sale			(0.10	)		-
Net income per share	$	1.25			$	1.50		$	(0.25	)	(16.7	)
Diluted shares outstanding			22,102			22,120			(18	)	(0.1	)	%

LITHIA MOTORS, INC.
(Continuing Operations)
		Nine Months Ended								%
		September 30,						Increase		Increase
		2007			2006			(Decrease)		(Decrease)
Unit Sales:
New Vehicle		50,049			49,658			391		0.8	%
Used - Retail Vehicle		33,375			32,939			436		1.3
Used - Wholesale		20,051			18,392			1,659		9.0
Total Units Sold		103,475			100,989			2,486		2.5
Average Selling Price:
New Vehicle	$	28,924		$	27,406		$	1,518		5.5	%
Used - Retail Vehicle		16,591			16,102		$	489		3.0
Used - Wholesale		6,490			6,054		$	436		7.2
Key Financial Data:
Gross Profit Margin		17.0	%		17.0	%		0	bps
SG&A as a % of Gross Profit		76.2	%		74.5	%		170	bps
Operating Margin		3.4	%		3.8	%		-40	bps
Pre-Tax Margin		1.9	%		2.4	%		-50	bps
Gross Margin/Profit Data
New Vehicle Retail		7.5	%		7.6	%		-10	bps
Used Vehicle Retail		15.0	%		15.2	%		-20	bps
Used Vehicle Wholesale		2.3	%		2.9	%		-60	bps
Service, Body & Parts		47.6	%		48.6	%		-100	bps
Finance & Insurance		100.0	%		100.0	%		0	bps
New Retail Gross Profit/Unit	$	2,174		$	2,087		$	87
Used Retail Gross Profit/Unit	$	2,481		$	2,451		$	30
Used Wholesale Gross Profit/Unit	$	151		$	174		-$	23
Finance & Insurance/Retail Unit	$	1,145		$	1,096		$	49
Revenue Mix:
New Vehicles		57.5	%		58.1	%
Used Retail Vehicles		22.0	%		22.7	%
Used Wholesale Vehicles		5.1	%		4.7	%
Finance and Insurance, Net		3.8	%		3.9	%
Service and Parts		11.4	%		10.4	%
Fleet and other		0.2	%		0.2	%
New Vehicle Unit Sales Brand Mix:
Chrysler Brands		40.0	%		40.8	%
General Motors & Saturn		16.4	%		16.8	%
Toyota		13.4	%		12.6	%
Honda		6.5	%		5.4	%
Ford		5.9	%		7.6	%
Hyundai		3.8	%		4.4	%
BMW		3.7	%		2.1	%
Nissan		3.5	%		3.5	%
Subaru		2.1	%		3.0	%
Volkswagen, Audi		2.0	%		1.7	%
Mercedes		1.1	%		0.6	%
Other		1.5	%		1.5	%

LITHIA MOTORS, INC.
(Selected Same Store Data)
		Nine Months Ended									%
		September 30,							Increase		Increase
		2007				2006			(Decrease)		(Decrease)
Same Store Unit Sales:
New Vehicle		45,631				49,558			(3,927	)	(7.9	)	%
Used - Retail Vehicle		30,476				32,923			(2,447	)	(7.4	)
Used - Wholesale		18,310				18,399			(89	)	(0.5	)
Total Units Sold		94,417				100,880			(6,463	)	(6.4	)
Same Store Average Selling Price:
New Vehicle��	$	28,477			$	27,403		$	1,074		3.9		%
Used - Retail Vehicle		16,377				16,102			275		1.7
Used - Wholesale		6,479				6,052			427		7.0
Same Store Revenue:
New Vehicle Retail Sales		(4.3	)	%		4.4	%
Used Vehicle Retail Sales		(5.8	)	%		3.3	%
Used Wholesale Sales		6.5		%		8.3	%
Total Vehicle Sales (excluding Fleet)		(4.1	)	%		4.3	%
Finance & Insurance Sales		(1.7	)	%		5.9	%
Service, Body and Parts Sales		4.5		%		5.8	%
Total Sales (excluding Fleet)		(3.1	)	%		4.5	%
Total Gross Profit (excluding Fleet)		(2.9	)	%		3.1	%
Same Store Average Gross Profit Data:
New Retail Gross Profit/Unit	$	2,140			$	2,087		$	53
Used Retail Gross Profit/Unit	$	2,439			$	2,417		$	22
Used Wholesale Gross Profit/Unit	$	147			$	181		$	(34	)
Same Store Total Sales Geographic Mix:
Texas		21.8		%		18.4	%
Oregon		16.1		%		17.7	%
California		12.0		%		13.6	%
Washington		11.6		%		11.4	%
Montana		6.9		%		6.1	%
Alaska		7.2		%		7.4	%
Colorado		7.0		%		7.3	%
Idaho		6.2		%		6.6	%
Nevada		4.4		%		5.1	%
Nebraska		2.9		%		3.0	%
South Dakota		2.4		%		2.1	%
New Mexico		1.3		%		1.1	%
Wisconsin		0.2		%		0.2	%

Balance Sheet Highlights (Dollars in Thousands)
		September 31, 2007		December 31, 2006
Cash & Cash Equivalents	$	15,749	$	26,600
Trade Receivables*		112,508		118,528
Inventory		559,267		603,306
Assets held for sale		23,825		15,485
Other Current Assets		16,644		15,721
Total Current Assets		727,993		779,640
Real Estate, net		348,413		327,890
Equipment & Leases, net		96,709		89,213
Goodwill, net		311,467		307,424
Other Assets		76,946		75,190
Total Assets	$	1,561,528	$	1,579,357
Flooring Notes Payable	$	437,607	$	499,679
Liabilities held for sale		18,373		11,610
Other Current Liabilities		115,391		118,650
Total Current Liabilities		571,371		629,939
Used Vehicle Flooring		109,160		95,614
Real Estate Debt		171,789		155,890
Other Long-Term Debt		120,022		140,879
Other Liabilities		74,177		63,642
Total Liabilities	$	1,046,519	$	1,085,964
Shareholders' Equity		515,009		493,393
Total Liabilities & Shareholders'
Equity	$	1,561,528	$	1,579,357

*Note: Includes contracts-in-transit of $48,593 and $56,211 for 2007 and 2006

Other Balance Sheet Data (Dollars in Thousands)
Current Ratio			1.3	x		1.2	x
LT Debt/Total Cap.
(Excludes Real Estate)			31	%		32	%
Working Capital	$	156,622			$	149,701
Book Value per Basic Share			26.40			25.32