Buffett to create Berkshire Hathaway automobile unit

NEW YORK >> Warren Buffett’s Berkshire Hathaway Inc. has agreed to buy Van Tuyl Group, the largest privately owned U.S. auto dealership group.

The business, with more than 100 franchises, will be renamed Berkshire Hathaway Automotive and continue to be run by Larry Van Tuyl, Omaha, Nebraskabased Berkshire said recently in a statement that didn’t disclose terms. The target company has more than $8 billion of revenue.

“I fully expect we’ll buy a lot more dealerships over time,” Buffett told CNBC in an interview. “We’ve gone a long time without getting into automobiles, but Larry’s got an operation thatwe think could be scaled up a lot from where it is.”

Buffett, 84, built Berkshire into the fifth-biggest company in the world by market value through stock picks and acquisitions. Its dozens of subsidiaries range from auto insurer Geico to icecream chain Dairy Queen.

While many of those units have retained their names after being acquired by Berkshire, some have taken on the parent company’s brand. The utility business changed to Berkshire Hathaway Energy this year, and Buffett’s company recently introduced the Berkshire Hathaway Home Services brand for its residential real estate franchise network.

Van Tuyl presently operates in states including Texas, Missouri, Arizona, Florida and California.

The auto industry showed its health in September results, as the annualized U.S. sales rate, adjusted for seasonal trends, exceeded 16 million for the seventh straight month. SUV and crossover utility vehicle sales rose 17 percent in September, outpacing the industry’s 9.4 percent gain, according to researcher Autodata Corp.

The deal is expected to be completed in the first quarter of next year, according to the statement. Stephens Inc. was Van Tuyl’s banker and DLA Piper is providing legal advice to the dealership group. Munger, Tolles & Olson is Berkshire’s law firmon the deal.