EXHIBIT 5.1


                  [FOSTER PEPPER & SHEFELMAN LLP LETTERHEAD]



May 21, 1999


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

     Re:  Form S-8 Registration
          615,000   Additional   Shares   under  the  1996   Stock
          Incentive Plan

Gentlemen:

      This firm is 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 an aggregate of 1,700,000  shares
of the Company's common stock ("Shares") in accordance with the Company's 1996
Stock Incentive Plan (the "Plan"); in particular,  the Company's  Registration
Statement on Form S-8 (the "Registration Statement") registering an additional
615,000 shares pursuant to the Plan.

      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,
as amended to date, and minutes of certain  meetings of the Company's Board of
Directors  and  shareholders.  We have also  received from the officers of the
Company  certificates  and other  representations  concerning  factual matters
relevant to this opinion.  We have received such  certificates  from, and have
had conversations  with,  public officials in those  jurisdictions in which we
have deemed it appropriate.

      We have  relied  as to  matters  of fact  upon the  above  certificates,
documents  and  investigation.  We  have  assumed  without  investigation  the
genuineness of all signatures, 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 when
           (i)   the   Registration   Statement   has   become
           effective and such state  securities laws as may be
           applicable  have been complied  with;  and (ii) the
           Shares have been delivered as  contemplated  by the
           Registration  Statement  and the Plan,  the  Shares
           will   be   validly   issued,   fully   paid,   and
           non-assessable.

      Regardless  of the states in which  members of this firm are licensed to
practice,  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.

      This opinion is solely for your  information  and is not to be quoted in
whole or in part or  otherwise  referred  to,  nor is it to be filed  with any
governmental agency or other person, without prior 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,

                                   /s/ Foster Pepper & Shefelman LLP

                                   FOSTER PEPPER & SHEFELMAN, LLP



Portland, Oregon