Lithia Motors is geared up for its best annual performance in four years.

Lithia Motors is geared up for its best annual performance in four years.

The Medford-based auto retailer turned in its fifth-straight profitable quarter and has net earnings of $40.1 million through the first nine months of the year.

Lithia's revenue has surpassed $2 billion as well, putting the company on track to meet or exceed 2007's $2.6 billion revenue mark.

Propelled by a 28 percent jump in same-store new vehicle sales, Lithia reported 29 percent growth in third-quarter revenue, while per-share earnings increased 69 percent. Lithia's profit for the quarter ending Sept. 30 was $16.6 million, or 62 cents a share, compared with $9.8 million, or 37 cents a share, in 2010. Revenue grew to $737.9 million for the three months ending Sept. 30, up from $573 million a year ago.

"It's the best we've done in a long time," said Lithia Chairman Sid DeBoer.

"Our plan is in place and people are executing. We now have the lowest selling, general administrative and expense cost among the public retailers in the industry. It's been a dramatic turnaround from where we were three years ago."

Lithia has put more power than ever in the hands of its local managers.

"I gave up on centralizing the local control of each store," DeBoer said. "I learned that's not effective after I exhausted all the possibilities. Now each store manager has more control, the culture is really blossoming and people are taking charge. That's why we've been able to cut overhead and our management group. The controls we used to think we needed, we don't need."

Before the credit crunch and the Great Recession hit full force in 2008, Lithia Motors averaged net earnings of nearly $40 million annually between 2004 and 2007.

Revenue grew to 36 percent between 2004 and 2007 as revenue climbed from $1.9 billion to $2.6 billion. Then the wheels came off. Although revenue only fell to $2.1 billion, other factors such as tight credit, write-downs on the company's goodwill and a fuel price shock added up to a $252.6 million loss in 2008.

Lithia hit a high-water mark of more than 110 stores in 15 states before DeBoer announced a major restructuring in June 2008, slashing personnel and reducing its dealerships by 15 percent. The travails continued well into 2009 before the company fashioned a $9.2 million profit on revenue of less than $1.8 billion. The rebound continued in 2010 as Lithia carved out a $13.7 million profit on revenue of $2.1 billion.

The company operates 86 stores in 11 states, recently selling a Colorado Volkswagen operation while picking up Subaru and Mitsubishi franchises in Fresno, Calif.

"We've been spending a lot of time focusing on understanding the differing needs of customers," said Lithia President Bryan DeBoer. "We have to be more things to more people. It affects our margins to some extent, which means we're more competitive than in the past. We're willing to flex to where we need to flex in order to maintain customers and keep market share."

Even the economic uncertainty here and abroad, Bryan DeBoer said, hasn't lessened the desire to buy a car.

"In every state we operate we had double-digit improvement in revenue," he said. "Consumers appear to be responding, there's pent-up demand and cars wear out. Fortunately, newer cars are more sustainable and greener and people are coming in."

Lithia's top-performing states during the third quarter were Oregon, Montana and Nevada, "some of the hardest-hit areas economically," Bryan DeBoer said.

The company also announced a dividend of 7 cents per share to shareholders of record as of Nov. 9.

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.