Shares of Lithia Motors traded at more than seven times the usual volume Thursday as investors unloaded the Medford auto retailer's plunging stock.

Shares of Lithia Motors traded at more than seven times the usual volume Thursday as investors unloaded the Medford auto retailer's plunging stock.

A day after the company reported its worst quarter since becoming publicly traded a decade ago, shares traded on the New York Stock Exchange tumbled 31.63 percent. It was the worst showing by any company traded on the big board during the day. At the close of trading, Lithia shares were selling at $10.03, after starting the day at $14.67.

Lithia, the No. 7 U.S. car dealership group based on sales volume, reported a $5.1 million fourth-quarter loss on Wednesday.

On Feb. 26, 2007, Lithia stock sold for $30.54. Since then, it has been on a steady decline, dropping below $25 in July and then falling below $20 in October. The low point Thursday was $9.78.

The Lithia Motors board met on Thursday. Calls to Lithia Chairman and Chief Executive Officer Sid DeBoer, President Bryan DeBoer and Chief Financial Officer Jeff DeBoer were not immediately returned.

Thomas Weisel Partners downgraded Lithia Thursday from "overweight" to "underweight," something investors already had in mind as 2,312,874 shares exchanged hands.

"Our call is that Lithia faces macro and company-specific headwinds that are unlikely to abate in the near future, and we recommend that investors underweight their exposure," wrote analyst Matt Nemer.

"Lithia has been an innovator in the auto retail sector, as the only public operator with a consistent national brand, and an early adopter of common systems and back office centralization," Nemer wrote. "Unfortunately, the high exposure to domestic vehicle brands (60 percent of its new vehicle units) is becoming an increasingly powerful headwind."

The report said Lithia's change to customer-friendly transactions and a more efficient sales model comes at a bad time, given the troubles of the broader economy.

"While the intention behind these changes is the right one," Nemer wrote, "the timing and cadence is not, and we are increasingly concerned with the potential disruption to earnings."

In addition, the company awaits findings in an investigation of reporting irregularities at several dealerships before it closes the books on the dismal fourth-quarter. Sid DeBoer said Wednesday the results should be available by the end of the month. That, along with a franchise impairment charge-off of $1.77 million, has given investors pause.

"In addition, the company has reduced (earnings) guidance three times in the past 12 months, and investors will likely question the credibility of new guidance," Nemer wrote.

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com. The Associated Press contributed to this report.