Warren Buffett wants to become a car salesman
Planes, trains and now cars. Warren is covering all the bases.
"A dealership mostly makes its money from its parts, service, financing and insurance operations, says Brian Sponheimer, a Gabelli & Co. analyst. Parts and service can provide as much as 45% of gross profit, while finance and insurance can deliver 15%, and that means just 40% comes from sales of new and used vehicles.
“Mr. Buffett probably saw what we see, in that dealers are tremendous cash-flow generators capable of enjoying the good times in auto sales and enduring the bad times when new-vehicle sales get more lean,” Sponheimer told MarketWatch."
Why Warren Buffett wants to become a car salesman (marketwatch.com)
"A dealership mostly makes its money from its parts, service, financing and insurance operations, says Brian Sponheimer, a Gabelli & Co. analyst. Parts and service can provide as much as 45% of gross profit, while finance and insurance can deliver 15%, and that means just 40% comes from sales of new and used vehicles.
“Mr. Buffett probably saw what we see, in that dealers are tremendous cash-flow generators capable of enjoying the good times in auto sales and enduring the bad times when new-vehicle sales get more lean,” Sponheimer told MarketWatch."
Why Warren Buffett wants to become a car salesman (marketwatch.com)
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Since BH owns Geico, I think Warren is looking at a vertical integration - buy or lease a car, get your insurance quote on the spot!
And, the dealers could offer coupons for drive through at Dairy Queen.
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2015 Subaru Outback 3.6R / 2024 Kia Sportage Hybrid SX Prestige
As a rule, a good business model would plan on actually giving you something extra while raising prices. So taking your money with a smile and a car wash while changing your oil for $160 is one thing, but not taking your money with a smile when you have warranty concerns is yet another.