Warren Buffett's entry into automotive retailing may mean more overall competition for acquisitions, but public dealership groups expect no interruptions to their growth plans.
The deal by Buffett's Berkshire Hathaway Inc. to purchase Van Tuyl Group, the industry's largest private dealership group, is likely to bring more outside investor interest to automotive retailing. Buffett himself said he wants to buy more dealerships. But with more than 17,000 U.S. stores and widely fragmented ownership, there should be enough to go around.
Buffett's interest creates "a lot of buzz" in the dealership acquisitions market, but "I don't think Warren is going to buy all 17,000 dealerships," said Craig Monaghan, CEO of Asbury Automotive Group Inc., the nation's seventh-largest dealership group. "There will be some left that we can buy."
Asbury recently signed contracts to buy two large dealerships that will add $250 million in revenue to the company. And Monaghan swiftly set a new goal to buy stores adding another $500 million in annual revenue during the next 18 months.