SecProbe.io

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Mail Stop 3561
								December 29, 2005

Mr. Jeffrey B. DeBoer
Senior Vice President and Chief Executive Officer
Lithia Motors, Inc.
360 E. Jackson Street
Medford, Oregon 97501

	RE:	Lithia Motors, Inc.
		Form 10-K for the Fiscal Year Ended December 31, 2004
		Filed March 15, 2005
		File No. 1-15035

Dear Mr. DeBoer:

      We have reviewed your filing and have the following comment.
We have limited our review of your filing to the issue we have
addressed in our comment.  Where indicated, we think you should
revise your document in response to this comment.  If you
disagree,
we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Please be as detailed
as
necessary in your explanation.  We may ask you to provide us with
information so we may better understand your disclosure.  After
reviewing this information, we may or may not raise additional
comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comment or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form 10-K for the Year Ended December 31, 2004

Financial Statements, page F-1

Consolidated Statements of Cash Flows, page F-6

1. We note that flooring financing related to vehicles not
purchased
from the manufacturer providing the financing (non-trade flooring
notes payable) is classified as cash flows from operating
activities.
We also note that proceeds from sale of vehicles leased to others
and
expenditures for vehicles leased to others are classified as cash
flows from investing activities.  In addition, we note that you
corrected the classification of these cash flows in your Form 10-Q
for the quarter ended September 30, 2005 and that you separately
reported trade and non-trade flooring notes payable in the balance
sheets included in the filing.  Please tell us:

* the aggregate amounts of cash inflows and cash outflows under
non-
trade flooring notes payable for each year presented;

* why you characterize the change in the classification of cash
flows
from non-trade flooring notes payable as a reclassification rather
than as a correction of an error in accordance with APB 20 in Form
10-Q for the quarter ended September 30, 2005; and

* why the change in the classification of cash flows related to
vehicles leased to others is not disclosed as a reclassification
or
correction of an error in Form 10-Q for the quarter ended
September
30, 2005.

Please also tell us whether you intend to revise the
classification
of these cash flows in your Form 10-K for the year ended December
31,
2005.  If not, tell us why.  If so, tell us:

* how you intend to disclose and characterize the corrections; and

* whether you intend to disclose non-trade flooring notes payable
on
a gross or net basis; and

* the justifications in GAAP for each.

      As appropriate, please respond to this comment within 10
business days or tell us when you will provide us with a response.
Please furnish a letter that keys your response to our comment and
provides any requested information.  Detailed letters greatly
facilitate our review.  Please understand that we may have
additional
comments after reviewing your response to our comment.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings to be certain that the
filings include all information required under the Securities
Exchange Act of 1934 and they have provided all information
investors
require for an informed investment decision.  Since the company
and
its management are in possession of all facts relating to a
company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.

	In connection with responding to our comment, please provide,
in
writing, a statement from the company acknowledging that:

* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;

* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and

* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comment on your filing.

		You may contact Yong Kim at (202) 551-3323 if you have
any
questions regarding these comments.  Please contact me at (202)
551-
3716 with any other questions.

							Sincerely,

							William Choi
							Branch Chief

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0404

        	DIVISION OF
	    CORPORATION FINANCE

Mr. Jeffery B. DeBoer
Lithia Motors, Inc.
December 29, 2005
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