New York Auto Show: Warren Buffett Says Tesla Not a Threat to Dealer System

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Warren Buffett

The Berkshire Hathaway chairman told an audience that Tesla was challenging a system that had been around "for a very long time. When a system becomes that firmly established I just don't see that changing."

Saying he saw no threat from Tesla Motors' challenge to the dealer franchise business model, Berkshire Hathaway chairman Warren Buffett said that "the system works well for the consumer, dealer and manufacturer."

Speaking at a conference before the opening of the New York International Auto Show this week, Buffett — who made news earlier this month when Berkshire Hathaway acquired the Van Tuyl Group, the largest privately owned chain of car dealerships in the U.S. — told an audience heavy with auto dealers that Tesla was challenging a system that had been around "for a very long time. When a system becomes that firmly established I just don't see that changing."

The conference is co-sponsored by the National Automotive Dealers Association. The trade group opposes the sales model put forth by Tesla, which sells its cars directly to consumers but is prohibited from doing so in many states due to dealer-franchise laws. Earlier this month, New Jersey Governor Chris Christie handed Tesla CEO Elon Musk a major victory when he signed into a law a bill that allows Tesla to sell its car in New Jersey without using dealerships. 

Buffett's comments came on the heels of data presented earlier in the conference that pointed to profound consumer displeasure with the traditional car-buying experience. According to a survey sponsored by Autotrader, only 17 out 4,002 consumers said they liked the current car-buying experience, while 72 percent said they would visit dealers more often if the buying process were improved. 

Asked about the implications of self-driving cars on his new automotive venture — as well as insurer Geico, which Berkshire Hathaway also owns — Buffett said, "It will be reality at some point, but it's a long way off."

Buffett added that, "If it's a safer way of driving, it's good for society but bad for your insurance business. If you can cut accidents by 30 or 40 percent we wouldn't be holding a party at our insurance company." 

Buffett compared a human driver faced with the decision of hitting another car or a 3-year-old who suddenly ran into traffic and a "computer that makes that decision in a nanosecond."

Asked if he would insure the company that designed and manufactured the computer, Buffett quipped, "At a price."

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