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Warren Buffett Wants To Give You A Car Loan
With the auto loan securitization machine humming right along (pace of new issuance is up 30% compared to this time last year at nearly $24 billion YTD) and with the attendant $1 trillion pile of auto loan debt growing by the day as lenders scramble to turn ineligible borrowers into eligible borrowers by extending loan terms and ignoring small details like whether or not the buyer is employed, just about everyone is looking to get a piece of the pie including Warren Buffett’s Berkshire Hathaway.
Via WSJ:
Billionaire Warren Buffett has closed a deal to buy the nation’s largest privately-held dealership chain, renaming it Berkshire Hathaway Automotive and paving the way for a major new player in the car-retailing business.
Berkshire Hathaway Inc. announced in October it would buy the Van Tuyl Group, America’s fifth-largest retailer with 81 stores in 10 states, and use it as a launch point to acquire more dealerships. The deal was targeted to close at the end of the first quarter this year.
Van Tuyl Group, a closely held business that was founded in Kansas City nearly 60 years ago, had previously sold about 240,000 cars a year through its dealerships.
The move comes as the car-retailing sector undergoes significant changes. With U.S. auto sales booming, smaller, family-run dealerships are getting snapped up by larger chains looking to provide better efficiencies.
Yes, “better efficiencies” which, if the underwriting practices that prevailed just before the housing bubble collapsed are any guide, likely means figuring out how to make more loans, faster because when an unprecedented global yield hunt leads to new auto ABS deals being upsized by 35% (as one Santander Consumer offering was in January), “inefficiency” (read: prudence) simply isn’t something that can be tolerated.
As Fortune noted when the deal was first announced last October, Buffett will be competing with the likes of AutoNation, whose CEO Mike Jackson recently suggested on live television that worries about subprime auto were likely exaggerated. In any event, Berkshire appears to be entering the market at a rather precarious time for as we have noted on a number of occasions (and as Goldman recently confirmed), growth in US auto sales is (or, after February’s data, “was”) entirely dependent on loans to subprime borrowers, a trend which, thanks to rising delinquencies and government scrutiny, is about to come to a screeching halt:
We were shocked — shocked — when February auto sales turned out to be a BNSF-style trainwreck (even AutoNation CEO Mike Jackson’s “trucks, trucks, trucks” couldn’t save the day as Ford F-Series sales fell 1.2%). Of course to let the media tell it, February’s disastrous numbers were due to weather (snow in the winter) but we had our doubts and so were not surprised when a new note from Goldman confirmed, by way of an avalanche of data and charts, precisely what we’ve been saying all along which is that the risks inherent in subprime lending are materializing and that at the margin, growth has all been created by lowering credit standards and extending terms to a whole load of 'new' auto buyers...
In the end, Goldman comes to exactly the same conclusion as we did months ago, namely that despite the financial media’s parroting about snow in the winter, the simple fact is that as soaring delinquencies and government probes conspire to cut the least-creditworthy Americans off from debt servitude, bad things will happen in US car sales.
For his part, Buffett says he understands that the business is cyclical, but notes this really isn’t an issue because Berkshire’s investment horizon is, well, forever:
“This is the beginning of a journey that will have no end.”
The only question now is how many retail investors will take this as an opportunity to execute CNBC’s car-stock arbitrage by taking out a 7-year car loan from Berkshire Hathaway Automotive in order to finance the purchase of a few Berkshire Hathaway B shares from their Etrade account.
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Not at all. Mr. B can smell a bailout from a mile away.
my thoughts exactly. I would have thought buffett would be smart enough to stay as far away from this kind of clown show as possible, but he must smell a bailout coming for them. This is the best indicator ive seen that subprime auto lending is about to go tits up. Kinda like how he bought up a bunch of financials during the financial crisis, knowing he would be getting a nice suckle off uncle sam's titty when we bailed out the banks out and he made a killing
Maybe he should put in a bid for the Univeristy of Phoenix or DeVry.
I WANT HIM TO GIVE ME A HOT ASIAN HOOKER..
OR TWO
OR THREE..
They're short ya know...
"...is the Oracle stepping into the wrong business at just the wrong time?"
Well, I guess you could argue that a car wreck is better than exploding oil trains...
Yeah, don't listen what they say (Goldman), watch what they do with their money. And I believe the birds that are singing to Mr.B not only had a great understanding of the future of the oil transportation business, but are also experts in predicting the future of auto loans...
I doubt the Barnacle of Omaha "smells" a bailout. His minions and cohorts are writing the bailout agreements to be inserted into omnibus bills as we speak. Elections coming ya now,
When is US going to wake up?
Berkshire Hathaway real estate is all over the place around where I am. Warren is going to end up owning half the frickin' country. I wonder who is behind this front man.
Makes me think of Weimar which had some of the richest people ever. I think they were first in line at the fire hose.
I just saw one spring up around here too. Hmm, real estate and car loans.
Warren paid 1.5 billion (pennies on the dollar) for mortgages coming out of a New York Bankruptcy court a couple of years ago. Ocwen paid 3 billion for the servicing rights. This guy predicted how it would all play out: http://saveourfamilyandhome.com/downloads/ENDGAME%20EXIT%20STRATEGY%20-%... See page 2 to for the implications of the mortgages becoming "bankruptcy remote"
Warren is fencing stolen property in my neighborhood too.
http://saveourfamilyandhome.com/downloads/ENDGAME%20EXIT%20STRATEGY%20-%...
You said a mouthful Maggie ,, bankruptcy remote and converted from mortgages into securities , often on the come (before the mortgages went to closing) ... they aren't mortgages , they aren't enforceable and they were invalid from inception... hell they're all cancellable under TILA as the borrower was in no way apprised of the true facts of the deal he thought he was entering into...
Unca Warren be scamming everyone by reselling stolen property.....
It'd be a "bailout" if he actually risked Real Capital.
But, as it is, given that he (Wells Fargo) can conjure fiat out of thin air ("Money for nothing and Checks for free"), thanks to FRB, it simply means that he can get the car Debt payments TRANSFERRED from the 'Mark' to the Taxpayer.
Think about it: In a fiat currency + FRB system (where the currency is not backed by real assets/capital), there is never a "Loss" (of Capital) as such, but only a potential "loss of maximum Debt service". That's like Dracula bitching that he only got 2 pints of blood out of you, and someone else (the Taxpayer) had better give him a "Full Meal Deal".
How do YOU spell "Crony Capitalism"?
p.s. How often do you have to catch yourself being in the Autopilot mode (of early life programming), where you consider a Default on a bank loan as "bad", and the people who do it, as "Bad People"? It takes a real conscious effort to remind oneself of the true evil of the fiat+FRB system, doesn't it?
Dear Warren, Please die already.
Oh c'mon, he's just like us middle Americans, a country bumpkin of sorts, not a parasitic old fart that takes advantage of everyone's misery to enrich himself.
If he's slamming cokes and fries like he says, he'll die sooner than he thinks.
Im surprised he made it this far on that shitty diet.
Im surprised he made it this far on that shitty diet.
That's funny, because I have something I'd like to give him too.
A beating.
You know what other old person I'd happily whoop the shit out of? John McCain.
VC ain't got nothin' on what he deserves from the American people.
I am a gentle sort..however, if you could give Greenspan a thumping I would be much obliged.
Don't forget uncle Georgy Soros. 3 minutes with him in an empty room with an aluminum baseball bat would make my day.
The line was too long and he is a slow healer; that Harry Reid was.
Watch your front door the nas just saw you threaten a cock sucking crook and they arnt playing let us know if they show up lmao
Satc it think
for sure not. like with the oiltrains he will make money with a subsidy for just driving the cars around between the storages, the term the journey that never ends may be a hint here
better efficiency means comsumption means jobs means one step closer to god
Uncle Warren had the Ford Pinto team design his rail tankers, that's why they keep blowing up and stuff.
Place your bets accordingly, sniff, sniff..,.if you get my drift...
I'm gonna start Berkshire Hathaway, unemployment agency before he has the same idea. With a little luck, it'll have so many clients soon enough, he'll buy me out at IPO.
Cash for clunkers II - the rise of the Obama hooptie.
Sell a car with your money backing the loans, how can he lose?
BUFFETT the KING of the WELFARE QUEENS.
Obama + Yellen: The Queens of Welfare Kings
He must have learned Obammy is going to bail out subprime car loans. Warren is always first in line for welfare checks. This simple minded(acting) old cocksucker needs to die
I want to give him a hand a job.
I am sure he will appreciate that.
That's Debbie Bosanek's job ,, keep you hands off of her rice bowl!
I say, just to simplify things, the rich old fuck just buys me a car.
Man who run in front of car BECOME TIRED
Man who run behind car BECOME EXHAUSTED
Dude.. That's sooo deep ya know...
IN a song, RObert Earl Keen said riding a bull is like driving down the freeway at 60mph and chunking the steering wheel out the window. :-) Just sayin...
More like a rough jeep trail than a freeway, I'd think.
i suspect the point was it became MUCH worse than a jeep trail, some seconds later :-) I've done similar things, I mostly stay home and read now, often shaking my head in disbelief that I still breath.
Cash for Clunkers 2.0 = Cash for Buffet 101
He just brought a chunk of John Deere too, maybe their financing dept needs bailing out as well.
Well, they do make military vehicles. Another revenue stream to add to the buffet...
It will be a priviledge to buy a car from Warren with a 72 month subprime loan lol
And then park it on railroad tracks.
Just before the oil tanker cars arrive.
The circle of Berkshire Hathaway.
Berkshire finances the cars that blow up Berkshire tanker cars.
Only if Becky is driving the train.
He also owns a furniture and mattress retail chain too: http://news.google.com/newspapers?nid=1914&dat=19991011&id=pCQgAAAAIBAJ&...
Furthermore, a lot of folks in his Real Estate venture are former funeral home directors/employees. Look it up and now I present this:
http://funeralhomeconsulting.org/best-practices/customer-engagement/pren...
if the oracle's image is ever tarnished, BH real estate, BH sar lots, etc. weill get thumped.
Refreshingly reassuring that these old vultures like Buffett and Soros cling on to life dearly but through their foot soldiers Nuland and McStain are overly enthusiastic to throw us under the bus or car.
Long Private Mercenary Groups as i believe our respective armed forces are seeing these fascists for what they are.
Subprime car loans hit 1/3 of all loans recently. Subprime student loans hit $1.5 Trillion and O'Bummer is bailing them out just as O'Buffett is bailing the American auto industry out. Without O'Buffett's takeover there would be no viable system to back the faulty subprime loans. O'Buffett is a last resort of a dead and defunct Casino Capitalism gone awry. Bottom line is that this is a last ditch attempt to prop up the BIG three and not watch the American auto industry go down in the next quarter. In brief, O'Buffett is characteristically stepping outside of his normal safe zone and venturing into absolute risk territory for the American Casino Capitalist system. Frankly, O'Bummer is starting to have an effect on O'Buffett IMHO.
One is hard pressed to see O'Buffett gambling with the likes of Donald Trump and his ilk.
Pondering your post, I would say that probably most student loans are indeed sub-prime. They are going to those who don't have a job and to those whose parents are probably not too well off. Plus those that take out the most in loans are probably lacking in critical thinking skills and not as employable as those who are more prudent.
not if he has prearranged to be bailed out.
Welcome to Pottersville!
And every car sold gets a Gecko under the hood seriously the gecko gets it!
Colonelsmegma'sghost needs a subprime backbone.
He wants to give me a car loan. I want to give him a kick in the balls.
Would you buy a used car from this man?
Tesla bitchez must be shitting bricks