SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K


                Current Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):  April 1, 1997


                               Lithia Motors, Inc.
             (Exact Name of Registrant as specified in its charter)


    Oregon                         0-21789                      93-0572810
(State or other                  (Commission                  (IRS Employer
jurisdiction of                   File Number)               Identification No.
of incorporation)

          360 E. Jackson St., Medford, Oregon                      97501
- --------------------------------------------------------------------------
         Address of Principal Executive Office                    Zip Code

         Registrant's telephone number including area code 541-776-6899



          (Former name or former address, if changed since last report)


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Item 2.  Acquisition or Disposition of Assets.

         On April  1,  1997,  the  registrant  completed  the  acquisition  from
Magnussen  Dodge,  a  California  corporation,  of a Dodge and Isuzu  dealership
located at 4901 Marsh Drive, Concord,  California,  pursuant to an Agreement for
the Purchase and Sale of Business  Assets (the  "Agreement")  dated  January 21,
1997. The registrant  acquired the dealership  business  through the purchase of
substantially  all  of  the  assets  used  in the  operation  of  the  business,
consisting of furniture, fixtures, leasehold improvements,  equipment, parts and
accessories,  inventories of new and used vehicles, service supplies and work in
progress, pre-paid expenses and goodwill.

         Total consideration paid for the assets was $10,728,000,  consisting of
(i)  $271,000  for parts and  accessories,  valued at the  seller's  net cost or
replacement  cost; (ii) $7,170,000 for new vehicle  inventory,  at the aggregate
factory invoice cost less factory rebates,  holdbacks,  incentives,  and certain
allowances rebated to the dealer;  (iii) $614,000 for used vehicle  inventories,
based on mutual  agreement  of the  parties  as to the value of each  individual
vehicle;  (iv) $363,000 for  furniture,  fixtures,  leasehold  improvements  and
equipment,  based on an independent  appraisal;  (v) $10,000 for service work in
progress; and (vi) $2,300,000 for intangible assets,  determined by agreement of
the parties.

         The purchase price for tangible  assets was paid in cash,  with new and
used vehicle inventories  subsequently  financed under the registrant's existing
credit facility with United States Bank of Oregon. Payment for intangible assets
consisted of $1,800,000 in cash and an unsecured  promissory  note in the amount
of $500,000,  bearing interest at 8.0% per annum, with principal payable in five
annual installments of $100,000 each.

         Concurrent with the close of the acquisition, a wholly-owned subsidiary
of the  registrant  entered into a lease of the premises on which the dealership
business is conducted,  which lease was subsequently sub-leased on substantially
identical  terms to Lithia DC,  Inc.,  another  wholly-owned  subsidiary  of the
registrant which was formed to operate the dealership.

         The lease (the "Lease"),  between Lithia Real Estate  ("Lessee"),  Inc.
and Solano Way Partnership ("Lessor"),  runs concurrently with, and incorporates
the terms of, a master  lease  between the owner of the  property,  Contra Costa
County,  and  Solano  Way  Partnership.  Both the  Lease  and the  master  lease
terminate on August 20, 2020. The Lease provides for initial monthly payments of
$25,000  for the first two years,  rising to  $26,000  for the third  year,  and
subsequently adjusted upwards to reflect increases in the

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Consumer Price Index - All Urban Consumers (All Items, San Francisco-Oakland-San
Jose,  California)  published by the U.S.  Department  of Labor.  Increases  are
limited to 5% in any one year and 15% in any five-year  period.  The  registrant
has guaranteed performance of the Lessee under the Lease.

         The Lessee  has the  option,  for the first two years of the Lease,  to
purchase  all  of  the  Lessor's  improvements  to the  premises  and  leasehold
interests in the master lease for a purchase price of $2.5 million. The Lease is
assignable,  provided that the proposed assignee has entered into a dealer sales
agreement with Chrysler  Corporation  relating to the leased premises.  Chrysler
Corporation  has the option to purchase  the premises in the event the Lessee or
its  successors  cease  to use the  premises  for the  purpose  of  selling  and
servicing Chrysler Corporation products.

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Item 7.  Financial Statements and Exhibits

         (a)      Financial Statements of Business Acquired.

                  Not Applicable

         (b)      Exhibits.

                  The following exhibits are being filed herewith:

         10.1.             Agreement for the Purchase and Sale of Business
                           Assets, dated January 21, 1997, between Magnussen
                           Dodge and Lithia Motors, Inc.

         10.2.             Lease, dated February 14, 1997, between Solano Way
                           Partnership and Lithia Real Estate, Inc.




                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                             LITHIA MOTORS, INC.
                                                (Registrant)



Date:  June 6, 1997                        By: /s/ Sidney D. DeBoer
                                               Sidney B. DeBoer
                                               President and Chief Executive
                                                Officer


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                                  Exhibit Index



Exhibit


         10.1.             Agreement for the Purchase and Sale of Business
                           Assets, dated January 21, 1997, between Magnussen
                           Dodge and Lithia Motors, Inc.

         10.2.             Lease, dated February 14, 1997, between Solano Way
                           Partnership and Lithia Real Estate, Inc.



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