EXHIBIT 5.1

                    [FOSTER PEPPER & SHEFELMAN LETTERHEAD]



December 11, 1998



Board of Directors
Lithia Motors, Inc.
360 E. Jackson St.
Medford, Oregon 97501


      Re:   Form S-8 Registration of 1998 Employee Stock Bonus Plan

Gentlemen:

      This  firm  is  special  counsel  to  Lithia  Motors,  Inc.,  an  Oregon
corporation,  (the  "Company")  and,  in that  capacity  has  assisted  in the
preparation  of certain  documents  relating  to the  issuance  of up to 2,000
shares  of the  Company's  common  stock  ("Shares")  in  accordance  with the
Company's  1998 Employee  Stock Bonus Plan (the "Plan");  in  particular,  the
Company's Registration Statement on Form S-8 (the "Registration Statement").

      In  the  course  of our  representation  as  described  above,  we  have
examined the Plan, the Registration  Statement as prepared for filing with the
Securities and Exchange  Commission and related documents and  correspondence.
We have received from officers of the Company having custody  thereof and have
reviewed  the  Restated  Articles  of  Incorporation  and  the  Bylaws  of the
Company,   and  minutes  of  certain   meetings  of  the  Company's  Board  of
Directors.   We  have  also   received   from  the  officers  of  the  Company
certificates and other  representations  concerning  factual matters.  We have
received such  certificates  from,  and have had  conversations  with,  public
officials in those jurisdictions in which we have deemed it appropriate.

      As to  matters  of fact,  we have  relied  upon the above  certificates,
documents  and  investigation.  We  have  assumed  without  investigation  the
genuineness of all signatures and the  authenticity and completeness of all of
the  documents  submitted to us as originals  and the  conformity to authentic
and complete original documents of all documents  submitted to us as certified
or photostatic copies.

      Based upon and  subject to all of the  foregoing,  we are of the opinion
that:




            The Shares have been  validly  authorized,  and (i) when the
            Registration  Statement  has  become  effective;   (ii) such
            state  securities  laws  as  may  be  applicable  have  been
            complied with,  and (iii) the  Shares have been delivered as
            contemplated by the Registration Statement,  the Shares will
            be validly issued, fully paid and non-assessable.

      This  opinion is limited to the present  laws of the State of Oregon and
the United  States of America and to the facts bearing on this opinion as they
exist on the date of this  letter.  We disclaim  any  obligation  to review or
supplement this opinion or to advise you of any changes in the  circumstances,
laws or  events  that may  occur  after  this date or  otherwise  update  this
opinion.

      This opinion is provided to you as a legal  opinion  only,  and not as a
guaranty or warranty of the matters discussed  herein.  Our opinion is limited
to the matters  expressly stated herein,  and no other opinions may be implied
or inferred.

      The opinions  expressed  herein are for the benefit of and may be relied
upon only by you in  connection  with the Plan.  Neither  this opinion nor any
extract  therefrom  nor  reference  thereto shall be published or delivered to
any other  person or  otherwise  relied  upon  without our  expressed  written
consent.

      We hereby  consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement.

                                    Very truly yours,

                                    FOSTER PEPPER & SHEFELMAN, LLP



                                    By:   /s/  Kenneth E. Roberts             
                                       Kenneth E. Roberts

Portland, Oregon