Exhibit 99.1

LITHIA MOTORS REPORTS THIRD QUARTER 2010 EARNINGS OF $0.37 PER SHARE, INTRODUCES 2011 GUIDANCE IN RANGE OF $1.03-1.11 PER SHARE

Medford, Oregon, October 27, 2010 (1:05 p.m. PT) – Lithia Motors, Inc. (NYSE: LAD) today reported 2010 third quarter net income from continuing operations of $0.37 per diluted share. This compares to a 2009 adjusted third quarter net income from continuing operations of $0.40 per diluted share. The results include 23% more shares outstanding in 2010 compared to 2009 primarily due to the equity offering at the end of 2009. Third quarter 2010 revenue from continuing operations increased 15% to $582.7 million, compared to $508.0 million in the year-ago period, mainly driven by improved vehicle sales.

Third Quarter Operating Highlights:

·         Total same store sales increased 12%, including increases of 8% in new vehicle sales and 2.5% in service, body and parts sales

·         Same store used vehicle retail sales increased 20% and the used retail to new vehicle unit sales ratio was 1.05 : 1

·         Selling, general & administrative costs as a percent of gross profit was 74%, an improvement of 70 basis points over the prior year

·         Repurchased approximately 100,000 shares in the quarter

·         Unfinanced new vehicle inventory totaled $65.2 million at the end of the quarter, an increase of $33.6 million from June 30, 2010

Sid DeBoer, Lithia’s Chairman and CEO, commented, “Our continued focus on operations and improving our performance in all business lines is evident in our third quarter results. Despite a difficult comparison due to the Cash for Clunkers program last year, we grew same store sales in all categories. Lithia’s store leaders are responding to our customers’ needs and local competition quickly and decisively.  Our information systems and centralized administrative processes allow our team more time to do what they do best – service our customers.”

As shown in the attached reconciliation table, the 2009 third quarter adjusted results from continuing operations exclude non-core charges of $(0.07) per share on asset impairments. Unadjusted, net income from continuing operations for the third quarter of 2009 was $7.0 million, or $0.33 per diluted share.

For the nine-month period ended September 30, 2010, total revenues increased 16% to $1.6 billion as compared to $1.4 billion in the same period last year. Same store new vehicle sales increased 15%, retail used vehicle sales increased 19% and service, body and parts sales decreased 1%. For the first nine months, Lithia’s adjusted income from continuing operations, net of tax, and excluding non-core charges and gains was $0.74 per share as compared to $0.62 per share in 2009. Unadjusted, net income from continuing operations for the first nine months was $0.37 per diluted share, compared to net income from continuing operations of $0.42 per diluted share for the same period last year.

Balance Sheet Update

Lithia ended the period with $110.9 million in immediately available funds, including $15.3 million in cash, $30.4 million in availability on its revolving credit facility, and $65.2 million in unfinanced new vehicle inventory.

Dividend Payment

Lithia announced that the Board of Directors has approved a dividend of $0.05 per share for the third quarter 2010. Lithia will pay the dividend November 26^th to shareholders of record on November 12^th, 2010.

Outlook for 2010 and 2011

Lithia is increasing 2010 fourth quarter earnings guidance to a range of $0.11 to $0.13 per diluted share, for full-year 2010 earnings in a range of $0.84 to $0.86 per diluted share. Both projections are based on the following annual assumptions:

·         Total revenues in range of $1.95 to $2.0 billion

·         New vehicle same store sales increasing 15.7%

·         New vehicle gross margin ranging from 8.1% to 8.3%

·         Used vehicle same store sales increasing 16.6%

·         Used vehicle gross margin ranging from 14.2% to 14.5%

·         Service body and parts same store sales decreasing 0.6%

·         Service body and parts gross margin ranging from 48.4% to 48.7%

·         Finance and insurance gross profit of $955 per unit

·         Tax rate of 40%

·         Estimated average diluted shares outstanding of 26.3 million

·         Capital expenditures of approximately $9.3 million

·         Chrysler market share consistent with full year 2009 levels

·         Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items

Lithia projects its 2011 first quarter earnings guidance within a range of $0.15 to $0.17 per diluted share. Full-year 2011 earnings guidance is projected within a range of $1.03 to $1.11 per diluted share. Both projections are based on the following annual assumptions:

·         Total revenues in range of $2.2 to $2.35 billion

·         New vehicle same store sales increasing 10.0%

·         New vehicle gross margin ranging from 8.0% to 8.2%

·         Used vehicle same store sales increasing 8.8%

·         Used vehicle gross margin ranging from 14.0% to 14.3%

·         Service body and parts same store sales increasing 1.9%

·         Service body and parts gross margin ranging from 48.6% to 48.9%

·         Finance and insurance gross profit of $970 per unit

·         Tax rate of 40%

·         Estimated average diluted shares outstanding of 26.9 million

·         Capital expenditures of approximately $10.6 million

·         Guidance excludes the impact of future acquisitions, dispositions, and any potential non-core items

Third Quarter Earnings Conference Call and Updated Presentation

The third quarter conference call may be accessed at 2:00 p.m. PT today by telephone at (877) 407-8029 (Conference ID: 358497). An updated presentation highlighting the third quarter results has been added to Investor Relations on www.lithia.com.

To listen live on our website or for replay, visit Investor Relations on www.lithia.com and click on the conference call icon. A playback of the conference call will be available after 5:00 p.m. PT on October 27, 2010 through November 3, 2010 by calling 877-660-6853 (Conference ID: 358497 Account: 305).

About Lithia

Lithia Motors, Inc. is the ninth largest automotive retailer in the United States and a Fortune 800 company. Lithia sells 26 brands of new and all brands of used vehicles at 85 stores, which are located in 12 states. 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.

For additional information on Lithia Motors, contact the Investor Relations Department at (541) 618-5748 or visit www.lithia.com and click on “Investor Relations.”

Sites

www.lithia.com

www.lithiacares.com

www.lithiajobs.com

Lithia Motors on Facebook

http://www.facebook.com/profile.php?id=1270221622&ref=ts

Lithia Life on Facebook

http://www.facebook.com/pages/Lithia-Lifecom/34360183908?ref=ts

Lithia Life on YouTube

http://www.youtube.com/user/LithiaLife

Lithia Life on Twitter

http://twitter.com/LithiaLife

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. Forward-looking statements in this press release include our guidance regarding fourth quarter and full year 2010 results and first quarter and full year 2011 results, our ability to utilize our information systems and the leverage produced by our centralized administrative operations. Forward looking statements include statements regarding our goals, plans, projections and guidance regarding our financial position, results of operations, market position, pending and potential future acquisitions and business strategy, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks" or "will."  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 urge you to carefully consider this information. We undertake no duty to update our forward-looking statements, including our earnings outlook.

Non-GAAP Financial Measures

This press release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as adjusted net income and diluted earnings per share from continuing operations, adjusted SG&A as a percentage of revenues and gross profit, adjusted operating margin, adjusted operating profit as a percentage of gross profit and adjusted pre-tax margin adjusted to exclude certain items disclosed in the attached financial tables. Cash flows from operations were adjusted to include the change in non-trade floorplan debt to improve the visibility of cash flows related to vehicle financing. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides a meaningful presentation of the Company's results from its core business operations excluding adjustments for items not related to the Company's ongoing core business operations or other non-cash adjustments, and improves the period-to-period comparability of the Company's results from its core business operations. These presentations are not intended to provide net income, cash flows from operations, operating income or selling, general and administrative costs in accordance with GAAP and should not be considered an alternative to GAAP measures.

Lithia Motors, Inc.

Consolidated Statement of Operations (Unaudited)

(In thousands except per share data)

Lithia Motors, Inc.

Key Performance Metrics (Unaudited)

Lithia Motors, Inc.

Key Performance Metrics (Unaudited)

Lithia Motors, Inc.

Consolidated Statement of Operations (Unaudited)

(In thousands except per share data)

NM – not meaningful Lithia Motors, Inc.

Key Performance Metrics (Unaudited)

Lithia Motors, Inc.

Key Performance Metrics (Unaudited)