Salient to Investors:
- Warren Buffett has said he likes industries that come with barriers to entry. Many publicly traded dealers own 60 to 100 stores, so would be attractive acquisitions to Buffett’s automotive division, with the type of recurring revenue streams from service and parts that Buffett likes.
- Morningstar said the 10 largest US auto dealerships account for less than 10% of new vehicle sales.
- Meyer Shields at Keefe Bruyette & Woods said dealers selling auto insurance to car buyers would be a key policy shopping juncture.
- Greggory Warren at Morningstar said Buffett may be attracted by the dealer sector being the best part of the automotive supply chain from a competitive advantage perspective, with all the publicly traded firms having developed narrow economic moats around their operations.
- David Whitson at Morningstar said more stores bring economy of scale and pricing of inventory.
Read the full article at http://www.businessweek.com/articles/2014-10-02/what-turned-warren-buffett-into-a-car-dealership-guy-economics#r=rss
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