Warren Buffett to Acquire the Van Tuyl Automotive Group

Warren Buffet, the well-known billionaire has decided to make a major splash in the automotive industry. Buffett appeared on CNBC’s “Squawk Box” and announced that he’s buying the Van Tuyl Automotive Group. The acquisition is going to be completed via Buffet’s own Berkshire Hathaway. Upon approval from auto manufacturers and regulators, the deal will be finalized in the first quarter of 2015. The new organization will be called Berkshire Hathaway Automotive. As Buffet noted this move will expand the scope of the organization. He explained that Berkshire is now, “planes, trains and automobiles.” He was referring to the fact that Berkshire already owns BNSF Railway and private plane company, NetJets.

Larry Van Tuyl will become the chairman of Berkshire Hathaway Automotive with Jeff Rachor of the Van Tuyl Group moving into the CEO position. Buffet expects this group to keep growing as he said, “We will hear, I predict, from hundreds of dealerships in the next year.” The Van Tuyl Group currently operated 78 stores in 10 different states.

Buffet also spoke this morning about the large dealer group AutoNation. Bill Gates is a 15% shareholder in that group and Buffett appeared to have the utmost respect for that organization. However, don’t expect to see any buy-outs or mergers. “I don’t think we’ll be buying [AutoNation],” Buffet said. “I know he won’t buy us out. We’ll probably be both buying more dealerships.”

The two organizations will soon be in direct competition. According to Fortune, AutoNation is the largest dealer group in the U.S. They currently have a reported 260 dealerships and earned to $17.6 billion in revenue in 2013. The Van Tuyl Group came in at number five on that list with their 78 dealerships and nearly $8 billion in revenue. How big of a deal is this for the dealership landscape in the U.S.? Will you be impacted? Do you think Berkshire Hathaway Automotive can catch AutoNation? We will keep you updated on this story as details become available.