Filed with the Securities and Exchange Commission on December ___, 1998
                                 Securities Act Registration No. 333-
                                                                              

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                   FORM S-8

                         REGISTRATION STATEMENT UNDER
                          THE SECURITIES ACT OF 1933


                             LITHIA MOTORS, INC.
            (Exact name of registrant as specified in its charter)

        Oregon                                           93-0572810
(State of incorporation)                  (I.R.S. Employer Identification No.)

360 E. Jackson St., Medford, Oregon                                    97501
(Address of principal executive offices)                            (Zip Code)

            LITHIA MOTORS, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
                           (Full title of the plan)


                  Sidney B. DeBoer, Chief Executive Officer
                              360 E. Jackson St.
                            Medford, Oregon 97501
                                (541) 776-6899
                      (Name, address and telephone number
                            of agent for service)

                                  Copies to:
                           Kenneth E. Roberts, Esq.
                          Foster Pepper & Shefelman
                         101 S.W. Main St., 15th Fl.
                            Portland, Oregon 97204

<TABLE>
                               CALCULATION OF REGISTRATION FEE
_____________________________________________________________________________________________

<S>                     <C>            <C>                  <C>                <C>
                                          Proposed            Proposed
                          Number of       Maximum             Maximum           Amount of
Title of Securities     Shares Being   Offering Price         Aggregate        Registration
Being Registered         Registered      Per Share (1)      Offering Price (1)      Fee       
_____________________________________________________________________________________________

Class A Common Stock      250,000          $17.50            $4,375,000.00      $1,216.25
_____________________________________________________________________________________________

</TABLE>

 (1)  The shares of Common Stock  represent  the number of shares which may be
      issued  pursuant to the 1998 Stock Purchase Plan. In addition,  pursuant
      to Rule 416, this  Registration  Statement also covers an  indeterminate
      number of  additional  shares  which may be  issuable as a result of the
      anti-dilution provisions of Plan.

(2)   The  maximum   offering  price  for  the  shares  cannot   presently  be
      determined as the offering  price is  established at the time shares are
      issued.  Pursuant to Rule 457(h),  the offering price is estimated based
      on the last  sale  price  reported  for the  Common  Stock on  NASDAQ on
      December 10, 1998, and the maximum  offering price is calculated for the
      sole purpose of determining the Registration Fee.

<PAGE>
                                   PART II

              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.     Incorporation of Documents by Reference.

      The following  documents  filed by Lithia Motors,  Inc. (the  "Company")
with the Securities and Exchange  Commission are  incorporated by reference in
this registration statement:

      1.    The   Company's   annual  report  on  Form  10-K  filed  with  the
      Commission on March 31, 1998 (File No. 000-21789).

      2.    The  description  of the  Class A Common  Stock  contained  in the
      Company's  registration statement on Form S-1, as amended and filed with
      the Commission on May 1, 1998, (File No. 333-47525).

      All  documents  filed by the Company  subsequent  to those  listed above
pursuant to Sections  13(a),  13(c),  14, or 15(d) of the Securities  Exchange
Act of 1934,  as amended,  prior to the filing of a  post-effective  amendment
which  indicates  that all  securities  offered hereby have been sold or which
deregisters  all  securities  then  remaining  unsold,  shall be  deemed to be
incorporated  by  reference  herein and to be a part  hereof  from the date of
filing of such documents.

Item 4.     Description of Securities.

      Not Applicable.

Item 5.     Interests of Named Experts and Counsel.

      Not Applicable.

Item 6.     Indemnification of Directors and Officers.

      Under the Oregon  Business  Corporation  Act  (Oregon  Revised  Statutes
("ORS")  Sections 60.387 to 60.414),  applicable to the Company,  a person who
is made a party to a  proceeding  because  such person is or was an officer or
director  of a  corporation  may be  indemnified  by the  corporation  against
liability  incurred by such person in  connection  with the  proceeding if (i)
the  person's  conduct was in good faith and in a manner he or she  reasonably
believed  was in the  corporation's  best  interest or at least not opposed to
its best interests and (ii) if the proceeding was a criminal  proceeding,  the
Indemnitee  had  no  reasonable  cause  to  believe  his or  her  conduct  was
unlawful.  Indemnification  is not permitted if the person was adjudged liable
to the corporation in a proceeding by or in the right of the  corporation,  or
if the Indemnitee  was adjudged  liable on the basis that he or she improperly
received a personal  benefit.  Unless the articles of the corporation  provide
otherwise,  such  indemnification  is  mandatory if the  Indemnitee  is wholly
successful on the merits or  otherwise,  or if ordered by a court of competent
jurisdiction.



                                      II-1
<PAGE>

      The Oregon  Business  Corporation  Act also  provides  that a  company's
Articles of Incorporation  may limit or eliminate the personal  liability of a
director to the  corporation  or its  shareholders  for  monetary  damages for
conduct as a director,  provided that no such  provision  shall  eliminate the
liability of a director for (i) any breach of the  directors'  duty of loyalty
to the  corporation  or its  shareholders;  (ii) acts or omissions not in good
faith or which involve  intentional  misconduct or a knowing violation of law;
(iii)  any  unlawful  distribution;  or (iv) any  transaction  from  which the
director derived an improper personal benefit.

      The Company's  Articles of Incorporation  (the "Articles")  provide that
the Company will  indemnify its directors and officers,  to the fullest extent
permissible  under the Oregon  Business  Corporation  Act  against all expense
liability and loss  (including  attorney  fees) incurred or suffered by reason
of  service as a director  or officer of the  company or is or was  serving at
the request of the company as a director,  officer, partner, trustee, employee
or agent of another corporation,  partnership,  joint venture, trust, employee
benefit plan or other enterprise.

      The effect of these  provisions  is to limit the  liability of directors
for monetary  damages,  and to  indemnify  the  directors  and officers of the
Company  for  all  costs  and  expenses  for  liability  incurred  by  them in
connection  with any  action,  suit or  proceeding  in which  they may  become
involved  by reason of their  affiliation  with the  Company,  to the  fullest
extent  permitted  by law.  These  provisions  do not limit the  rights of the
Company or any  shareholder to see  non-monetary  relief,  and do not affect a
director's  or  officer's  responsibilities  under  any  other  laws,  such as
securities or environmental laws.

Item 7.     Exemption from Registration Claimed.

      Not applicable.

Item 8.     Exhibits.

      The  exhibits  required  by  Item  601 of  Regulation  S-K  being  filed
herewith or incorporated herein by reference are as follows:


Exhibit

3.1   Restated Articles of Incorporation of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.1 to the Company's  registration
      statement on Form S-1, as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

3.2   Bylaws of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.2 to the Company's  registration
      statement on Form S-1, as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

4.1   The  description of the Class A Common Stock  contained in the Company's
      registration  statement  on Form S-1,  as  amended  and  filed  with the
      Commission on May 1, 1998, (File No. 333-47525).



                                      II-2
<PAGE>

5.1   Opinion of Foster Pepper & Shefelman

23.1  Consent of KPMG Peat Marwick LLP

23.2  Consent of Foster Pepper & Shefelman
            (Included in Exhibit 5.1)

24.1  Power of Attorney
      (Included in the signature page)

99    Lithia Motors, Inc. 1998 Employee Stock Purchase Plan

                                      II-3
<PAGE>

Item 9.     Undertakings.

      The undersigned registrant hereby undertakes:

      (A) To file,  during  any  period  in which  offers  or sales  are being
made, a post-effective amendment to this registration statement:

      (1)      To include any prospectus  required by Section  10(a)(3) of the
               Securities Act of 1933;

      (2)      To reflect in the  prospectus any facts or events arising after
               the effective date of the  registration  statement (or the most
               recent  post-effective  amendment thereof) which,  individually
               or in the  aggregate,  represent  a  fundamental  change in the
               information set forth in the registration statement;

      (3)      To include any  material  information  with respect to the plan
               of distribution  not previously  disclosed in the  registration
               statement or any  material  change to such  information  in the
               registration statement;

Provided  however,  that  paragraphs  1 and 2 do not apply if the  information
required to be included in a  post-effective  amendment by those paragraphs is
contained in periodic  reports filed by the registrant  pursuant to Section 13
or Section 15(d) of the Securities  Exchange Act of 1934 that are incorporated
by reference in the registration statement.

      (B)  That,  for the  purpose  of  determining  any  liability  under the
Securities Act of 1933, each such post-effective  amendment shall be deemed to
be a new registration  statement  relating to the securities  offered therein,
and the  offering  of such  securities  at that time shall be deemed to be the
initial bona fide offering thereof.

      (C) To remove from  registration by means of a post-effective  amendment
any of the securities  being registered which remain unsold at the termination
of the offering.

      (D)  That,  for  purposes  of  determining   any  liability   under  the
Securities  Act of  1933,  each  filing  of  the  registrant's  annual  report
pursuant to Section 13(a) or Section 15(d) of the  Securities  Exchange Act of
1934 that is incorporated by reference in the registration  statement shall be
deemed to be a new registration  statement  relating to the securities offered
herein,  and the offering of such  securities  at that time shall be deemed to
be the initial bona fide offering thereof.

      (E)  Insofar  as  indemnification  for  liabilities  arising  under  the
Securities   Act  of  1933  may  be  permitted  to  directors,   officers  and
controlling  persons of the registrant,  pursuant to the provisions  described
in Item 6, or otherwise,  the  registrant has been advised that in the opinion
of the  Securities and Exchange  Commission  such  indemnification  is against
public  policy as expressed in the Act and is,  therefore,  unenforceable.  In
the event that the claim for  indemnification  against such liabilities (other
than  the  payment  by the  registrant  of  expenses  incurred  or  paid  by a
director,  officer or  controlling  person of the registrant in the successful
defense of any action,  suit or  proceeding)  is  asserted  by such  director,


                                      II-4
<PAGE>

officer  or  controlling  person  in  connection  with  the  securities  being
registered,  the  registrant  will,  unless in the  opinion of its counsel the
matter  has  been  settled  by  controlling  precedent,  submit  to a court of
appropriate  jurisdiction the question whether such  indemnification  by it is
against  public  policy as  expressed  in the Act and will be  governed by the
final  adjudication of such issue. The foregoing  undertaking  shall not apply
to indemnification which is covered by insurance.

                                      II-5
<PAGE>

                                 SIGNATURES


      Pursuant  to  the  requirements  of the  Securities  Act  of  1933,  the
registrant  certifies that it has reasonable  grounds to believe that it meets
all of the  requirements  for  filing  on Form  S-8 and has duly  caused  this
Registration  Statement  to be  signed  on  its  behalf  by  the  undersigned,
thereunto duly  authorized,  in the City of Medford,  State of Oregon,  on the
11th day of December, 1998.

                              LITHIA MOTORS, INC.


                              By: /s/ M. L. Dick Heimann
                              M.L. Dick Heimann
                              President and Chief Operating Officer

                              POWER OF ATTORNEY

      Each person whose individual  signature  appears below hereby authorizes
and appoints SIDNEY B. DeBOER and BRIAN R. NEILL,  and each of them, with full
power  of  substitution  to act as his true and  lawful  attorney  in fact and
agent to act in his name,  place and stead,  and to execute in the name and on
behalf of each person,  individually and in each capacity stated below, and to
file  any  and all  amendments  to this  registration,  including  any and all
post-effective amendments or new registration pursuant to Rule 462.

     Pursuant  to  the  requirements  of the  Securities  Act  of  1933,  this
Registration  Statement has been signed below by the following  persons in the
capacities and on the date indicated.


By: /s/ Sidney B. DeBoer                  Date: December 11, 1998
   Sidney B. DeBoer
   Chief Executive Officer and
   Chairman of the Board of Directors


By: /s/ M. L. Dick Heimann                Date: December 11, 1998
   M.L. Dick Heimann
   President, Chief Operating Officer, Director


By: /s/ R. Bradford Gray                  Date: December 11, 1998
   R. Bradford Gray, Director


By: /s/ Thomas Becker                     Date: December 11, 1998
   Thomas Becker, Director


<PAGE>


By: /s/ William Young                     Date: December 11, 1998
   William Young, Director


By: /s/ Brian R. Neill                    Date: December 11, 1998
   Brian R. Neill
   Senior Vice President, Chief Financial Officer
   (Chief Accounting and Financial Officer)

<PAGE>

                                EXHIBIT INDEX


Exhibit

3.1   Restated Articles of Incorporation of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.1 to the Company's  registration
      statement on Form S-1, as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

3.2   Bylaws of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.2 to the Company's  registration
      statement  on Form S-1 as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

4.1   Specimen  Stock  Certificate.  Incorporated  by reference to Exhibit 4.1
      to the  Company's  registration  statement  on Form S-1,  as amended and
      filed with the Commission on May 1, 1998, (File No. 333-47525).

5.1   Opinion of Foster Pepper & Shefelman

23.1  Consent of KPMG Peat Marwick LLP

23.2  Consent of Foster Pepper & Shefelman
            (Included in Exhibit 5.1)

24.1  Power of Attorney
      (Included in the signature page)

99    Lithia Motors, Inc. 1998 Employee Stock Purchase Plan
[{"type": "S-8", "sequence": "1", "description": "FORM S-8 REGISTRATION STMT (STOCK PURCH PLAN)", "secsgml_size_bytes": 16403}]
{"company-data": {"conformed-name": "LITHIA MOTORS INC", "cik": "0001023128", "assigned-sic": "5500", "irs-number": "930572810", "state-of-incorporation": "OR", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-69169", "film-number": "98771566"}, "business-address": {"street1": "360 E JACKSON ST", "city": "MEDFORD", "state": "OR", "zip": "97501", "phone": "5417766899"}, "mail-address": {"street1": "LITHIA MOTORS INC", "street2": "360 E JACKSON", "city": "MEDFORD", "state": "OR", "zip": "97501"}}
Filed with the Securities and Exchange Commission on December ___, 1998
                                 Securities Act Registration No. 333-
                                                                              

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM S-8

                         REGISTRATION STATEMENT UNDER
                          THE SECURITIES ACT OF 1933

                             LITHIA MOTORS, INC.
            (Exact name of registrant as specified in its charter)

        Oregon                                           93-0572810
(State of incorporation)                  (I.R.S. Employer Identification No.)

360 E. Jackson St., Medford, Oregon                                    97501
(Address of principal executive offices)                            (Zip Code)

            LITHIA MOTORS, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
                           (Full title of the plan)

                  Sidney B. DeBoer, Chief Executive Officer
                              360 E. Jackson St.
                            Medford, Oregon 97501
                                (541) 776-6899
                      (Name, address and telephone number
                            of agent for service)

                                  Copies to:
                           Kenneth E. Roberts, Esq.
                          Foster Pepper & Shefelman
                         101 S.W. Main St., 15th Fl.
                            Portland, Oregon 97204

                               CALCULATION OF REGISTRATION FEE
_____________________________________________________________________________________________
Proposed            Proposed
                          Number of       Maximum             Maximum           Amount of
Title of Securities     Shares Being   Offering Price         Aggregate        Registration
Being Registered         Registered      Per Share (1)      Offering Price (1)      Fee       
_____________________________________________________________________________________________

Class A Common Stock      250,000          $17.50            $4,375,000.00      $1,216.25
_____________________________________________________________________________________________
(1)  The shares of Common Stock  represent  the number of shares which may be
      issued  pursuant to the 1998 Stock Purchase Plan. In addition,  pursuant
      to Rule 416, this  Registration  Statement also covers an  indeterminate
      number of  additional  shares  which may be  issuable as a result of the
      anti-dilution provisions of Plan.

(2)   The  maximum   offering  price  for  the  shares  cannot   presently  be
      determined as the offering  price is  established at the time shares are
      issued.  Pursuant to Rule 457(h),  the offering price is estimated based
      on the last  sale  price  reported  for the  Common  Stock on  NASDAQ on
      December 10, 1998, and the maximum  offering price is calculated for the
      sole purpose of determining the Registration Fee.
PART II

              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.     Incorporation of Documents by Reference.

      The following  documents  filed by Lithia Motors,  Inc. (the  "Company")
with the Securities and Exchange  Commission are  incorporated by reference in
this registration statement:

      1.    The   Company's   annual  report  on  Form  10-K  filed  with  the
      Commission on March 31, 1998 (File No. 000-21789).

      2.    The  description  of the  Class A Common  Stock  contained  in the
      Company's  registration statement on Form S-1, as amended and filed with
      the Commission on May 1, 1998, (File No. 333-47525).

      All  documents  filed by the Company  subsequent  to those  listed above
pursuant to Sections  13(a),  13(c),  14, or 15(d) of the Securities  Exchange
Act of 1934,  as amended,  prior to the filing of a  post-effective  amendment
which  indicates  that all  securities  offered hereby have been sold or which
deregisters  all  securities  then  remaining  unsold,  shall be  deemed to be
incorporated  by  reference  herein and to be a part  hereof  from the date of
filing of such documents.

Item 4.     Description of Securities.

      Not Applicable.

Item 5.     Interests of Named Experts and Counsel.

      Not Applicable.

Item 6.     Indemnification of Directors and Officers.

      Under the Oregon  Business  Corporation  Act  (Oregon  Revised  Statutes
("ORS")  Sections 60.387 to 60.414),  applicable to the Company,  a person who
is made a party to a  proceeding  because  such person is or was an officer or
director  of a  corporation  may be  indemnified  by the  corporation  against
liability  incurred by such person in  connection  with the  proceeding if (i)
the  person's  conduct was in good faith and in a manner he or she  reasonably
believed  was in the  corporation's  best  interest or at least not opposed to
its best interests and (ii) if the proceeding was a criminal  proceeding,  the
Indemnitee  had  no  reasonable  cause  to  believe  his or  her  conduct  was
unlawful.  Indemnification  is not permitted if the person was adjudged liable
to the corporation in a proceeding by or in the right of the  corporation,  or
if the Indemnitee  was adjudged  liable on the basis that he or she improperly
received a personal  benefit.  Unless the articles of the corporation  provide
otherwise,  such  indemnification  is  mandatory if the  Indemnitee  is wholly
successful on the merits or  otherwise,  or if ordered by a court of competent
jurisdiction.

                                      II-1
The Oregon  Business  Corporation  Act also  provides  that a  company's
Articles of Incorporation  may limit or eliminate the personal  liability of a
director to the  corporation  or its  shareholders  for  monetary  damages for
conduct as a director,  provided that no such  provision  shall  eliminate the
liability of a director for (i) any breach of the  directors'  duty of loyalty
to the  corporation  or its  shareholders;  (ii) acts or omissions not in good
faith or which involve  intentional  misconduct or a knowing violation of law;
(iii)  any  unlawful  distribution;  or (iv) any  transaction  from  which the
director derived an improper personal benefit.

      The Company's  Articles of Incorporation  (the "Articles")  provide that
the Company will  indemnify its directors and officers,  to the fullest extent
permissible  under the Oregon  Business  Corporation  Act  against all expense
liability and loss  (including  attorney  fees) incurred or suffered by reason
of  service as a director  or officer of the  company or is or was  serving at
the request of the company as a director,  officer, partner, trustee, employee
or agent of another corporation,  partnership,  joint venture, trust, employee
benefit plan or other enterprise.

      The effect of these  provisions  is to limit the  liability of directors
for monetary  damages,  and to  indemnify  the  directors  and officers of the
Company  for  all  costs  and  expenses  for  liability  incurred  by  them in
connection  with any  action,  suit or  proceeding  in which  they may  become
involved  by reason of their  affiliation  with the  Company,  to the  fullest
extent  permitted  by law.  These  provisions  do not limit the  rights of the
Company or any  shareholder to see  non-monetary  relief,  and do not affect a
director's  or  officer's  responsibilities  under  any  other  laws,  such as
securities or environmental laws.

Item 7.     Exemption from Registration Claimed.

      Not applicable.

Item 8.     Exhibits.

      The  exhibits  required  by  Item  601 of  Regulation  S-K  being  filed
herewith or incorporated herein by reference are as follows:

Exhibit

3.1   Restated Articles of Incorporation of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.1 to the Company's  registration
      statement on Form S-1, as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

3.2   Bylaws of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.2 to the Company's  registration
      statement on Form S-1, as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

4.1   The  description of the Class A Common Stock  contained in the Company's
      registration  statement  on Form S-1,  as  amended  and  filed  with the
      Commission on May 1, 1998, (File No. 333-47525).

                                      II-2
5.1   Opinion of Foster Pepper & Shefelman

23.1  Consent of KPMG Peat Marwick LLP

23.2  Consent of Foster Pepper & Shefelman
            (Included in Exhibit 5.1)

24.1  Power of Attorney
      (Included in the signature page)

99    Lithia Motors, Inc. 1998 Employee Stock Purchase Plan

                                      II-3
Item 9.     Undertakings.

      The undersigned registrant hereby undertakes:

      (A) To file,  during  any  period  in which  offers  or sales  are being
made, a post-effective amendment to this registration statement:

      (1)      To include any prospectus  required by Section  10(a)(3) of the
               Securities Act of 1933;

      (2)      To reflect in the  prospectus any facts or events arising after
               the effective date of the  registration  statement (or the most
               recent  post-effective  amendment thereof) which,  individually
               or in the  aggregate,  represent  a  fundamental  change in the
               information set forth in the registration statement;

      (3)      To include any  material  information  with respect to the plan
               of distribution  not previously  disclosed in the  registration
               statement or any  material  change to such  information  in the
               registration statement;

Provided  however,  that  paragraphs  1 and 2 do not apply if the  information
required to be included in a  post-effective  amendment by those paragraphs is
contained in periodic  reports filed by the registrant  pursuant to Section 13
or Section 15(d) of the Securities  Exchange Act of 1934 that are incorporated
by reference in the registration statement.

      (B)  That,  for the  purpose  of  determining  any  liability  under the
Securities Act of 1933, each such post-effective  amendment shall be deemed to
be a new registration  statement  relating to the securities  offered therein,
and the  offering  of such  securities  at that time shall be deemed to be the
initial bona fide offering thereof.

      (C) To remove from  registration by means of a post-effective  amendment
any of the securities  being registered which remain unsold at the termination
of the offering.

      (D)  That,  for  purposes  of  determining   any  liability   under  the
Securities  Act of  1933,  each  filing  of  the  registrant's  annual  report
pursuant to Section 13(a) or Section 15(d) of the  Securities  Exchange Act of
1934 that is incorporated by reference in the registration  statement shall be
deemed to be a new registration  statement  relating to the securities offered
herein,  and the offering of such  securities  at that time shall be deemed to
be the initial bona fide offering thereof.

      (E)  Insofar  as  indemnification  for  liabilities  arising  under  the
Securities   Act  of  1933  may  be  permitted  to  directors,   officers  and
controlling  persons of the registrant,  pursuant to the provisions  described
in Item 6, or otherwise,  the  registrant has been advised that in the opinion
of the  Securities and Exchange  Commission  such  indemnification  is against
public  policy as expressed in the Act and is,  therefore,  unenforceable.  In
the event that the claim for  indemnification  against such liabilities (other
than  the  payment  by the  registrant  of  expenses  incurred  or  paid  by a
director,  officer or  controlling  person of the registrant in the successful
defense of any action,  suit or  proceeding)  is  asserted  by such  director,

                                      II-4
officer  or  controlling  person  in  connection  with  the  securities  being
registered,  the  registrant  will,  unless in the  opinion of its counsel the
matter  has  been  settled  by  controlling  precedent,  submit  to a court of
appropriate  jurisdiction the question whether such  indemnification  by it is
against  public  policy as  expressed  in the Act and will be  governed by the
final  adjudication of such issue. The foregoing  undertaking  shall not apply
to indemnification which is covered by insurance.

                                      II-5
SIGNATURES

      Pursuant  to  the  requirements  of the  Securities  Act  of  1933,  the
registrant  certifies that it has reasonable  grounds to believe that it meets
all of the  requirements  for  filing  on Form  S-8 and has duly  caused  this
Registration  Statement  to be  signed  on  its  behalf  by  the  undersigned,
thereunto duly  authorized,  in the City of Medford,  State of Oregon,  on the
11th day of December, 1998.

                              LITHIA MOTORS, INC.

                              By: /s/ M. L. Dick Heimann
                              M.L. Dick Heimann
                              President and Chief Operating Officer

                              POWER OF ATTORNEY

      Each person whose individual  signature  appears below hereby authorizes
and appoints SIDNEY B. DeBOER and BRIAN R. NEILL,  and each of them, with full
power  of  substitution  to act as his true and  lawful  attorney  in fact and
agent to act in his name,  place and stead,  and to execute in the name and on
behalf of each person,  individually and in each capacity stated below, and to
file  any  and all  amendments  to this  registration,  including  any and all
post-effective amendments or new registration pursuant to Rule 462.

     Pursuant  to  the  requirements  of the  Securities  Act  of  1933,  this
Registration  Statement has been signed below by the following  persons in the
capacities and on the date indicated.

By: /s/ Sidney B. DeBoer                  Date: December 11, 1998
   Sidney B. DeBoer
   Chief Executive Officer and
   Chairman of the Board of Directors

By: /s/ M. L. Dick Heimann                Date: December 11, 1998
   M.L. Dick Heimann
   President, Chief Operating Officer, Director

By: /s/ R. Bradford Gray                  Date: December 11, 1998
   R. Bradford Gray, Director

By: /s/ Thomas Becker                     Date: December 11, 1998
   Thomas Becker, Director
By: /s/ William Young                     Date: December 11, 1998
   William Young, Director

By: /s/ Brian R. Neill                    Date: December 11, 1998
   Brian R. Neill
   Senior Vice President, Chief Financial Officer
   (Chief Accounting and Financial Officer)
EXHIBIT INDEX

Exhibit

3.1   Restated Articles of Incorporation of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.1 to the Company's  registration
      statement on Form S-1, as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

3.2   Bylaws of Lithia Motors, Inc.
      Incorporated  by reference to Exhibit 3.2 to the Company's  registration
      statement  on Form S-1 as amended and filed with the  Commission  on May
      1, 1998, (File No. 333-47525).

4.1   Specimen  Stock  Certificate.  Incorporated  by reference to Exhibit 4.1
      to the  Company's  registration  statement  on Form S-1,  as amended and
      filed with the Commission on May 1, 1998, (File No. 333-47525).

5.1   Opinion of Foster Pepper & Shefelman

23.1  Consent of KPMG Peat Marwick LLP

23.2  Consent of Foster Pepper & Shefelman
            (Included in Exhibit 5.1)

24.1  Power of Attorney
      (Included in the signature page)

99    Lithia Motors, Inc. 1998 Employee Stock Purchase Plan