IN THE FIRST INSTALLMENT OF THIS NEW SERIES, WE LOOK AT THE FINGERPRINT THAT IMPACTFUL LEADERS ARE LEAVING IN OUR WORLD. THEIR VISION, IDEAS AND ACTIONS ARE HAVING A PROFOUND INFLUENCE THAT EXTENDS WELL BEYOND THEIR ORGANIZATIONS.
Dubbed the “Oracle of Omaha,” Warren Buffett is an investor, philanthropist, and CEO of Berkshire Hathaway Inc. He’s an American icon with a rock-star image — a self-made billionaire whose net worth exceeds US$63-billion, making him one of richest people on the planet.
Buffett is a shrewd businessman with a track record of making bold and daring investments. He has gambled on companies that others have written off, staying true to his motto: “Be fearful when others are greedy and greedy when others are fearful.” His risks have paid off, big time.
But at 85, some say they don’t understand why he entered the retail auto business — a move that set him back US$4.1-billion to buy Van Tuyl Group, one of America’s largest auto-dealership businesses, and then create Berkshire Hathaway Automotive in 2015.
Buffett’s portfolio includes planes, trains, and automobiles, but no tech holdings. He took a pass on Apple, Google, Twitter, and Facebook. Still his tactic seems to be working — scooping up companies that are underrated, but show promise for the future.
His foray into automotive retail is an endorsement of the industry—a sector that shows no sign of slowing down, which is promising for manufacturers and dealers.
In interviews, Buffett says he believes the current dealer system is solid and secure. But he is facing a few obstacles, namely changing technology and new ideas, like Tesla’s direct-to-customer sales business model.
His foray into automotive retail is an endorsement of the industry—a sector that shows no sign of slowing down, which is promising for manufacturers and dealers
With the need to improve facilities comes escalating costs for upgrading showrooms, building the base for online retail, and creating new digital footprints. Models like Berkshire Hathaway Automotive offer some protection, making it easier and cheaper to operate under a chain banner than a standalone dealership.
And don’t forget Buffett’s other assets, namely his finance and insurance holdings which include GEICO, the second largest auto insurer in the U.S., which gives him another advantage over the competition by offering customers the ability to buy a car, finance it, and insure it all in one spot — easily, quickly, and efficiently.
There’s no denying the auto retail business is driving into bold new territory with Buffett at the helm. He’s likely to shake it up for dealers and consumers, alike.
But even some dealerships are changing the ways they operate their business, and are causing some disruption of their own. Audi City Beijing sports the first digital car showroom in Asia and is Audi’s largest in the world, complete with cutting-edge technology that lets customers in crowded city centres experience cars in a whole new way.
Perhaps that’s the model which will rule the road in the future, offering test drives in an Uber-style system that brings a vehicle directly to a customer’s front door for a test spin. Only time will tell.
