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Auto Dealer Lithia to Cut Jobs, Divest Some Stores

DETROIT, June 2, 2008; Poornima Gupta writing for Reuters reported thatauto dealer Lithia Motors Inc plans to cut jobs, sell underperformingshowrooms and reduce its exposure to U.S. automobile brands to offset fallingsales, the company said on Monday.

High gasoline and diesel prices are the driving force behind therestructuring moves, along with falling consumer confidence, declining homevalues, tight credit markets, and loss of market share by U.S. automanufacturers, Lithia said.

Weak economic conditions have hurt the U.S. light vehicle market, whichis headed for a deeper downturn this year with only limited gains in 2009,according to analysts.

The sales drop has hit U.S. automakers General Motors Corp, Ford MotorCo and Chrysler LLC especially hard. Chrysler brands represent the largestshare of Lithia"s sales.

Lithia said the restructuring, expected to be completed in three months,would result in savings of $1 million per month, or $18 million on anannualized basis.

The saving are in addition to the $6 million annualized cost cutsannounced at the end of April, the company said.

The company did not reveal how many jobs it plans to cut. It said itwould divest 10 to 15 underperforming stores.

The cost-cutting includes deferring uncommitted capital expenditures,selling all unnecessary property and assets, including aircraft and excessland, adjusting pricing of its cars, and focusing on smaller, morefuel-efficient new and used vehicles.

Editing for Reuters by Gerald E. McCormick and John Wallace