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Buffett’s Berkshire Hathaway buys auto dealer

By WTOP Staff

JOSH FUNK
AP Business Writer

OMAHA, Neb. (AP) — Warren Buffett is getting into the automobile sales business.

The billionaire’s Berkshire Hathaway, owner of businesses ranging from the BNSF railroad to Dairy Queen, Geico insurance and power providers, is buying the privately owned auto dealership company Van Tuyl Group. Financial terms were not disclosed.

Van Tuyl Group says it is the biggest privately owned auto dealership group in the U.S. It has 78 independently operated dealerships and more than 100 franchises in 10 states. The company will be renamed Berkshire Hathaway Automotive and be based in Dallas.

Buffett, in an interview on CNBC on Thursday, said that there are huge opportunities for market consolidation in the fragmented auto dealership business.

“This is just the beginning for Berkshire Hathaway Automotive,” Buffett said.

This deal is one of a handful of times Buffett has applied his conglomerate’s name to one of the businesses it owns. In 2012, Berkshire Hathaway Home Services was created, and the national real estate franchise network continues adding agents at a brisk pace.

A couple of insurance companies carry the name, including Berkshire Hathaway Specialty Insurance. And earlier this year, the company’s utility division was renamed Berkshire Hathaway Energy.

Originally, Berkshire Hathaway was the name of the struggling New England textile company that Buffett took control of in the 1960s. Buffett later closed the textile mills, but he has built Berkshire Hathaway into a conglomerate known for its financial strength.

Van Tuyl Group’s current CEO, Larry Van Tuyl, will become chairman of the auto unit. Cecil Van Tuyl, Larry’s father, started with a Kansas City Chevrolet dealership in 1955. He was joined in the family business by Larry in 1971, according to the company’s website.

Jeff Rachor will become CEO once Larry Van Tuyl transitions to the chairman position.

Buffett said that Van Tuyl’s job will be to scout out dealerships for potential acquisitions and determine which ones to pursue. Buffett will provide the funding for any possible transactions.

“We’ve got the capital, so we’re off to the races,” he said.

Berkshire investor and biographer Andy Kilpatrick said this deal looks like it represents another long-term move into a new business for the company. Plus, it puts some of Berkshire’s roughly $55 billion cash to work.

“I think it’s a major operating business,” said Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett.”

Stifel analyst James Albertine said the deal puts Berkshire in good position to take advantage of trends in the industry and acquire dealers who either need to plan for succession or need capital to invest.

“We continue to believe the opportunity to consolidate the auto dealership sector presents one of the best medium-to-long term growth opportunities across retail,” Albertine said in a research note.

The deal is expected to close in 2015’s first quarter. It still needs approval from major auto manufacturers.

Berkshire Hathaway Inc. is based in Omaha, Nebraska.

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AP Business Writers Michelle Chapman in New York and Tom Murphy in Indianapolis contributed to this story.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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