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Chinese Car Sales Slow

Will that encourage Chinese automakers to shift focus to the U.S.?

by on Oct.15, 2014

A Chinese ad for the stretched Volvo S60L represents a possible change in how makers are dealing with slowing Chinese auto sales.

China’s once red-hot automotive market appears to be cooling down along with the rest of the Asian nation’s economy – and that could create some serious headaches for manufacturers who have committed billions of dollars in investments for new products and the plants needed to build them.

The slowdown raises the possibility that after long focusing on the booming domestic market, automakers might now need to shift focus to exporting cars to Europe and the U.S. to keep their factories running at full speed. Some observers are speculating that might be one of the reasons why investment guru Warren Buffett has purchased one of the largest auto dealer networks in the U.S.

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The slowdown in China nonetheless needs to be put into perspective. While the pace of growth has slowed substantially from the days when sales soared by as much as 100% annually, China’s car market is still the world’s largest and is growing at roughly the same rate as the U.S. automotive recovery. (more…)

Buffett Buys Major Dealer Chain

Mega-investor hopes to force consolidation of auto retail market.

by on Oct.03, 2014

Warren Buffett's purchase of the Van Tuyl Group may signal a consolidation of dealerships across the U.S.

Billionaire investor Warren Buffett has purchased the fifth-largest auto dealer network in the U.S. and plans to push for a consolidation of the retail auto business – a move many automakers are likely to support as it could help curb the profit-cutting incentives that have long been an industry norm.

Buffett’s Berkshire Hathaway investment arm will take over the Van Tuyl Group, which operates showrooms across the U.S. – selling about 240,000 vehicles annually. While a price tag wasn’t disclosed, the company’s operations are believed to generate about $8 billion in annual sales.

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But Buffett’s new Berkshire Hathaway Automotive unit is expected to push beyond retailing to also offer financing and other services. And it is indicating it will also look to snap up other family-owned automotive dealerships. (more…)

Buffett, Soros Sell GM Shares – But JPMorgan Bank Calls Maker’s Stock “Very Inexpensive”

by on May.16, 2014

GM's stock price has bouced a bit but largely been stuck in neutral over the past three months as the maker copes with its recall crisis.

Investors generally don’t like turmoil or uncertainty – something in abundant supply at General Motors these days, which may explain why the makers share price has been performing so poorly.

Yet even after expressing high hopes for the maker’s new CEO Mary Barra, mega-investor Warren Buffett has sold off a quarter of the GM shares held by his investment firm, Berkshire Hathaway. And he’s not alone. Other major investors, including George Soros’ Soros Fund Management, and David Einhorn’s Greenlight Capital, have abandoned the maker in recent months, selling part or all of their holdings.

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Yet even while cautioning that GM will be taking an earnings hit for its latest series of recalls – six separate service actions covering nearly 3 million vehicles announced this week alone – influential JPMorgan’s auto analyst may have sent the sort of positive signal other investors are looking for.

“We note the recalls are very proactive in nature,” Brinkman wrote in a report to investors. “We see GM stock as very inexpensive.”

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Buffett Boosts GM Holdings by 60%

Legendary investor rushes in as Treasury continues stock sell-off.

by on Aug.16, 2013

Warren Buffett just increased his GM stock holdings by 60% to 40 million shares.

Even as – and perhaps because of – the U.S. Treasury continues selling down its remaining stake in General Motors, billionaire investment guru Warren Buffett is rapidly increasing his own holdings in General Motors.

According to a federal filing, Buffett’s investment arm Berkshire Hathaway has increased its holdings in the giant Detroit maker by 60%. He now has 40 million shares, or 2.9% of GM’s outstanding stock.

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That news came just days after Treasury officials advised Congress they has sold off around 25 million more shares in GM for a total sale of $876.9 million. The federal government now holds just 136 million shares, a little more than a quarter of the 500-million-share stake it gained after the maker’s 2009 bankruptcy, in return for a $49.5 billion bailout. (more…)

China’s Car Boom Could Go Bust

Reining in sales in the name of clean air.

by on Mar.01, 2013

Ford CEO Alan Mulally during a recent trip to China. Ford's sales are booming but could slip if regulators curtail the Chinese market.

After a few stutters last year, China’s massive automotive market seemed to get back on track in January, sales surging 46% compared to year-earlier levels. Yet there’s growing concern that the good times won’t continue for long.

There are a number of reasons to be worried, including a still frail global economy, nagging regional issues that include an ongoing territorial dispute with Japan and declining foreign investment. Yet the biggest concern, it seems, may be China’s endemic and worsening problems with air pollution.

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That has already led Chinese regulators to call for a rapid switch to battery-powered vehicles. But with market demand lagging Beijing’s call, a growing number of observers fear the central government may soon put in place steps to curb automotive ownership.

A growing number of major cities, including capital Beijing and economic center Shanghai, have already put restrictions in place, such as monthly limits on new vehicle registrations – though such measures have generally been aimed at curbing traffic problems, rather than emissions issues.

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GM’s Stock Surges on Buffett Buy

“Oracle of Omaha” snags 10 million shares.

by on May.16, 2012

But will Warren Buffett now upgrade his old Cadillac DTS, too?

Analysts and investors alike will be watching the ticker closely today to see how the market responds to word that the “Oracle of Omaha” has grabbed 10 million shares of General Motors stock.

According to a filing with the Securities and Exchange Commission, Buffett’s investment firm Berkshire Hathaway will spend $256.6 million for the stock, a nearly 20% premium over their value of $214.2 million when trading on the New York Stock Exchange wrapped up on Tuesday.

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But that’s still well behind the $330 million Buffett would have invested during GM’s November 2010 IPO. And the question is whether this move signals the possible turnaround in GM shares which have been lagging like most automotive stocks in recent months.

The maker has staged a modest recovery from its $19-a-share 52-week-low, and GM stock surged by $1 as soon as the market opened Wednesday morning before settling back slightly.

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No Exit? Mulally Not Ready to Leave

But is lack of timetable actually hurting maker?

by on May.11, 2012

CEO Alan Mulally and Chairman Bill Ford at Ford's 2012 shareholders meeting.

It is the question that won’t seem to go away – even if Alan Mulally insists he isn’t planning to leave anytime soon.

During the maker’s annual shareholders meeting and during a subsequent Q&A session with reporters the topic of Ford Motor Co.’s succession plan was again the hot topic.  And, once again, the CEO insisted he is not counting the days until retirement.

While that may be good news for many folks who believe Mulally is the best man to keep the company on track, might his reluctance to set a timetable and name a successor be working against Ford, particularly in its bid to drive up its stock price?

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“We have a robust succession plan for every member of the team,” said the 66-year-old Mulally, echoing comments he has made, seemingly ad nauseum, over the last several years.

Ford Chairman Bill Ford Jr. tried to deflect the latest round of questioning with a little humor.  As to when the company would be willing to let Mulally stay on, he responded, “Well, we said 2025, maybe 2030.”

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Big Trouble at BYD

Chinese battery-car maker preparing major layoffs, looking for ways to reverse plunging demand.

by on Sep.06, 2011

BYD's dreams have lately turned into nightmares.

The name, BYD, is short for Build Your Dreams, but these days, it’s more like a nightmare for the once-promising Chinese battery-car maker.

With sales this year off by 23%, the maker is planning to lay off as many as 2,600 workers – somewhat ironically, most of them initially coming from its sales and marketing department.  Looking for a way to revive its faltering momentum, the company is exploring the possibility of moving the manufacturer up-market, it says.

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The maker’s problems could cause further delays in its planned entrance into the U.S. market.  Already pushed back by several years, BYD had been hoping to set up a network of stores that would not only handle the maker’s battery-cars and plug-in hybrids but also sell a mix of green technologies ranging from solar chargers to LED light bulbs.

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Is BYD Ready To Go Bust?

Ambitious Chinese maker’s fortunes take a serious turn for the worse.

by on Oct.27, 2010

Late for an American debut, the BYD E6.

Its name is short for “Build Your Dreams,” but could the “B” in BYD soon stand for “bust”?

It’s starting to look like that for the Chinese firm that started out as a cellphone battery supplier but has morphed into one of that country’s more ambitious, home-grown automakers.

The Shenzhen-based firm, which is backed by American mega-investor Warren Buffett, has suffered a series of setbacks in recent months, ranging from recalls to confrontations with Chinese authorities.  But the latest problem could be one that BYD has trouble rectifying.

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The maker reported a 99% drop in third-quarter earnings, this week, triggering an equally sharp downturn in its stock price, which is nearing its 52-week low.  Whether the company’s charismatic founder and chairman, Wang Changfu, can turn things around remains to be seen, but there are few signs of any immediate turnaround.

It wasn’t supposed to go that way.  BYD’s little F3 has been the best-selling car in China this year, but is feeling the pinch of regulatory changes.

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Detroit Must “Reinvent Itself,” Says Buffett

by on Mar.09, 2009

Warren Buffett: "The (auto) industry must reinvent itself."

Buffett: "The (auto) industry must reinvent itself."

The economy has “fallen off a cliff,” contends the so-called Wizard of Omaha, mega-investor Warren Buffett.

The founder of Berkshire Hathaway, traditionally one of the nation’s most successful investment firms, Buffett said he expects to see unemployment continue to surge – and he said the nation’s leaders need to get behind President Barack Obama’s efforts to repair the economy because fear is what is driving the American consumer.

“What is required is a commander in chief that’s looked at like a commander in chief in a time of war,” Buffett said, during an interview on the cable network, CNBC.

The interview turned to two key industries that are both feeling the heat of the downturn – and which must show signs of recovery, experts say, before the economy can turn around: housing and automotive.

Turning to the car business, Buffett, one of America’s shrewdest and admired business tycoons, said, “The industry must reinvent itself if it is to survive. Expectations must be lowered by all participants.”

Incidentally, Buffett insisted he didn’t regret an editorial he penned, last autumn, urging Americans to invest in the stock market – despite the fact that the Dow Jones Industrial Average has fallen more than 2000 points from its close, the day the article ran, of 8,852.22.  Equities will still prove a good investment, he said, during the CNBC interview, adding, “Overall, equities are going to do far better than U.S. government bonds at these prices,” he said.

Click here for a replay of his comments on the auto and housing industries.