Warren Buffett wants to become a car salesman

steverstever Guest Posts: 52,457
edited October 2014 in General
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)

Comments

  • MichaellMichaell ColoradoModerator Posts: 183,398
    Wonder if he'll hire Steve Martin to be a spokesman?

    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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  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaMember Posts: 64,482
    Yeah, dealers drive profits with expensive indifferent service and heavily marked-up parts prices, and consumers are getting sick of it. Does anyone think the aftermarket is starving right now?

    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.

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