Berkshire Hathaway Automotive

As I was listening to CNBC today on my way to the gym, I was pleasantly surprised to hear that Warren Buffet purchased the Van Tuyl Automotive Group.  The new company will be called Berkshire Hathaway Automotive.

Van Tuyl is the largest privately held dealer group in the United States with 78 franchise stores and approximately 9 billion in sales. This purchase is a warning shot over the bow to franchise dealers; automotive dealership consolidation will accelerate.

In the past few years well run automotive groups have been gobbling up smaller operators and smaller groups.  For example, Lithia just completed their purchase of the DCH Auto Group. Some retail transactions were closed because the dealer principal was ready to retire or wanted to cash in on the strength of the retail market. Other sales are pressured by OEM to push out operators with poor performance metrics.

Van Tuyl is one of the best run groups in the country and has one of the most sophisticated digital marketing teams in the industry, lead by Cassie Broemmer.  The introduction of Warren Buffet into automotive retail will be felt on many levels:

  • The price to purchase a franchise dealership will likely go up 10-15%
  • Buffet Automotive will be acquiring more stores to become a dominant player in the industry; he hinted as much on CNBC today.
  • Buffet’s team will push automotive suppliers and vendors to achieve greater integration and ROI for his stores
  • Buffet’s team will shake-up the consumer sales process bring great ideas from other industries he manages.

Warren Buffet is a fierce competitor with a long term game plan. The automotive industry has just received a wakeup call. Dealers should not underestimate the marketing prowess that is associated with Warren Buffet, as well as the visionary leadership of Larry Van Tuyl and Jeff Rachor.

A New Era Of Operating Efficiency

Retail auto dealers must renew their efforts to optimize their operations from top to bottom if they plan to grow with competitors like Berkshire Hathaway Automotive, Lithia, Group 1, AutoNation, AMSI, Asbury, and Penske. Dealers reading this article, there is no better time to make a commitment to get back into the numbers with new energy.

One of the areas that dealers are struggling to manage is their digital marketing investments. Online marketing is a large percentage of a dealer’s marketing budget. Online marketing efficiency has to become a focus of dealership executives. Right now many are just spending money with the hope of a strong ROI.

I’m pleased that PCG Consulting is in a position to help dealers achieve optimized online marketing performance. Our latest updates to our ROI-BOT software is providing insights to marketing and operations that dealers never had before. Having all their marketing and operations data into one Executive Dashboard allows proactive marketing management strategies to drive higher profits.

Automotive franchise dealers need more sophisticated tools to optimize their business.  We have one of those pieces with ROI-BOT software but dealers will need additional tools to remain competitive. A single point store does not have the luxury of hiring a team of MBAs to sift through hundreds of data points to find new areas of profitability like Berkshire Hathaway Automotive. 

Warren Buffet’s entry into retail will bring a massive attention to the numbers and margins associated with financing, service, warranties, and of course the sales process. Berkshire Hathaway Automotive will be on a buying spree in the coming year. They will stir up an industry that is ripe of innovation. Is your dealership ready for change?

About the Author

PCG Digital Marketing is an award winning digital agency headquartered in Eatontown, NJ. We help our clients get found online through innovative search, social and online advertising campaigns.