Why Warren Buffett is wrong on car-dealer model, from CNBC.
Warren Buffett recently said he thinks the car-dealership franchise model isn’t going to change. I wouldn’t be so sure.
At the NADA/J.D. Power Automotive Forum in New York recently, Buffett said, “When a distribution system [car dealers] becomes that firmly established, there’s a reason for it.”
But, of course, everything changes. We have seen entire established industries collapse given the technologies that are available to us today.
And few segments are as inefficient and in need of an overhaul as the car dealership, a made-to-stock retail business model for an unusually expensive product. Yet, the industry endures, even prospers. Just last month, Warren Buffett’s Berkshire Hathaway acquired the Van Tuyl Group, the largest privately held dealership group in the country.