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UPDATE 1-Lithia Motors cuts dividend, blames economy

Mon Aug 18, 2008 8:15pm EDT

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NEW YORK, Aug 18 (Reuters) - Car dealership chain Lithia Motors Inc (LAD.N) cut its quarterly dividend to 5 cents per share from a previous 14 cents a share, blaming a weaker economy.

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The lower dividend will be paid Oct. 29 to shareholders on record as of Oct. 15, the company said on Monday.

The move comes after Lithia earlier this month posted a huge quarterly net loss for the second quarter, after taking impairment charges related to restructuring efforts amid a downturn in U.S. auto sales.

U.S. carmakers and dealers have been struggling to cope with a shift away from large trucks and SUVs in the face of rising gas prices and a slumping U.S. economy.

About 32.5 percent of Lithia's new car sales were Chrysler [CBS.UL] brands and 18.1 percent General Motors Corp GM.N brands. (Reporting by Ritsuko Ando; Editing by Gary Hill)

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