Late last week we were pleasantly surprised that Warren Buffet is now a dealer, and in the auto business. This deal to purchase Van Tuyl was surely in the "works" for some time, and will close in the first quarter of 2015.
Interesting that we publish our latest ebook Behind Closed Doors, and literally a day later its made public that Berkshire Hathaway is acquiring Van Tuyl.
This morning we have The Colonel, lets get his thoughts.
Q: Colonel Good Morning, lookin' good as usual, what do you think of this deal?
A: Its GREAT, cool to have Warren Buffet in the auto business. Most probably only Warren Buffet was in a position to acquire Van Tuyl with terms that suited numerous variables.
Q: You always mention that you need a ton of money to operate a dealership.
A: Absolutely, and even more today with dealers groups in a position to access public funds. Manufacturers love the idea of well funded dealers that cater to their imaging wishes.
Q: Berkshire Hathaway in the future can acquire additional groups.
A: Its a starting point...yes its easy to acquire additional groups in a building block fashion.
Q: Warren Buffet has interests in Canada with Heinz, Tim Horton/Burger King, perhaps....
A: Hold that thought...you never know what the future holds.
Q: Manufacturers have a stable of dealers, and dealers have a stable of franchises (manufacturers).
A: Interesting dynamics that will continue to evolve through the years.
Q: Will some manufacturers set their own clauses towards the Bershire Hathaway/Van Tuyl deal.
A: Obvious they will, its a unique opportunity, you can imagine that if anything hits a roadblock the optics are in favor of Berkshire Hathaway. Do you guys remember when Wayne Huizenga was assembling Auto Nation, it was interesting.
Q: Manufacturers are very good at developing programs to move iron, why nor to develop dealers.
A: Decades ago the Detroit 3 had programs to enable individuals to open dealerships, where they partners with the individual.
Q: Are you serious they had such programs? That would work wonders in Canada today to assist young people that have an entrepreneurial desire.
A: You guys are quick...although its easier for manufacturers to chase after big money, imaged real estate, and so on.
Q: In Canada manufacturers could make a compelling contribution towards young people.
A: Sure they could, go back to their roots where a dealer principle is part of the community, and so on...I could keep on going here...better to be brief.
Q: Perhaps Warren Buffet might do something like that in Canada?
A: That would certainly rattle a few cages...