Warren Buffett’s Berkshire Buys Van Tuyl Auto Dealers

Warren Buffett’s Berkshire Buys Van Tuyl Auto Dealers

Warren Buffett says his Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) has officially entered the auto industry, completing the trifecta of planes, trains and automobiles. His massive conglomerate struck a deal to buy the fifth-largest auto dealer in the country; Van Tuyl Group.

Play Quizzes 4

Buffett’s planes, trains and automobiles

The Phoenix, Ariz.-based auto dealer group joins Buffett’s Burlington Northern Santa Fe rail company and his private plane company Net Jets. The billionaire investor also holds a significant stake in China’s BYD, which is perhaps best-known for its electric buses although it does make some cars and other products as well. However, his firm does not own the entire company, like it will with Van Tuyl.

[Exclusive] ExodusPoint Is In The Green YTD Led By Rates And EM/ Macro Strategies

Invest ESG Leon CoopermanThe ExodusPoint Partners International Fund returned 0.36% for May, bringing its year-to-date return to 3.31% in a year that's been particularly challenging for most hedge funds, pushing many into the red. Macroeconomic factors continued to weigh on the market, resulting in significant intra-month volatility for May, although risk assets generally ended the month flat. Macro Read More

Today on CNBC‘s Squawk Box, Warren Buffett announced that Van Tuyl Group will be renamed Berkshire Hathaway Automotive. Larry Van Tuyl will be the subsidiary’s chairman. Jeff Rachor, another executive at Van Tuyl Group, will become the company’s CEO. In addition to the announcement on CNBC, there’s also a press release about the acquisition.

Buffett sees consolidation opportunities

The Van Tuyl family has spent the last 62 years snapping up stakes in auto dealerships. The company is the fifth-largest auto dealership owner in the U.S. and the largest privately-held dealership operator.

Van Tuyl has 78 independently owned dealerships, most of which are located in the Midwest and the Southwest. The company’s dealerships sell a broad array of car brands, including Chevrolet, Cadillac, Toyota and BMW.

Van Tuyl is a massive auto play

The auto dealership operator had about $9 billion in revenue last year, and Buffett sees opportunities to scale the business up. Buffett plans to use the acquisition to purchase other auto dealerships. He did not say how much Berkshire Hathaway paid for the acquisition, although he did say that they paid cash for it.

The billionaire said that if it stood on its own, Van Tuyl would be on the Fortune 500. Berkshire Hathaway owns 9.5 companies that would be in the Fortune 500 if they stood alone. He expects the deal to close in the first quarter of 2015, assuming it receives approvals from regulators and major automakers.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@wordpress-785388-2679526.cloudwaysapps.com.
Previous article Good News Grom The Fed For SIFI insurers
Next article The World’s 10 Biggest Energy Gluttons

No posts to display