Warren Buffett's car dealerships can't get over Texas regulatory roadblock (2024)

Warren Buffett's automobile dealerships in Texas have hit a speed bump.Attorney General Ken Paxton issued an opinion Monday that rejected alegal loophole that couldallow the company to keep selling cars in the state.

A Texas law prohibits a motor vehicle manufacturer from also owning dealerships. That's the same reason why Tesla cannot have dealerships in the state.

In Buffett's case, however, the giant conglomerate Berkshire Hathaway makes and sells different kinds of motor vehicles. Irving-based Berkshire Hathaway Automotive sells cars. Forest River, an Indiana-based company owned by Berkshire,makes recreational vehicles.

In April, Texas Department of Motor Vehicles initiated an investigation into Berkshire Hathaway to see if it was violating state law and could be subject to fines.

Raymond Palacios Jr., board chairman of the DMV, had written to the attorney general in early July. He asked if the two parts of the conglomerate — the division selling the cars and the company making RVs — would still be affiliated, if Berkshire Hathaway "wholly owns a motor vehicle manufacturer but relinquishes control of the manufacturer."

Paxton said in hisopinion Mondaythatswitching around the legal language would not change his point of view and would be unlikely to move thecourt's.He said "the common understanding of 'affiliated with' includes both ownership and control."

In the spring, state Sen. Kelly Hanco*ck, R-North Richland Hills, filed a possible legislative solution. The bill would have allowed vehicle manufacturers to own dealerships, so long as they didn't sell or service the same kind of vehicle they make, but it didn't go anywhere.

Berkshire Hathaway Automotive has been contacted for comment.

About three years ago, billionaire investor Warren Buffett surprised the auto industry bybuyingVan Tuyl Group. At the time, it was the fifth-largest auto dealership group with75 dealerships. Buffettmoved the headquarters from Phoenix to Dallas and renamed itBerkshire Hathaway Automotive Group.

Buffett Automotive Group now has over $9 billion in revenue and includes 85 independent dealerships in10 states, including Arizona,California, Florida, Georgia, Illinois, Indiana, Missouri, Nebraska, New Mexico and Texas, according to the company's website. Some of its Dallas-area dealerships include Toyota of Dallas, Texas Nissan and Westway Ford, among others.

Tesla has also sought changes to state law that would allow it to both sell and manufacture cars, but those efforts stalled out.

Buffett has numerous other Texas holdings. He also owns giant furniture store Nebraska Furniture Mart, brick and flooring manufacturer Acme Brick and freight railroad network BNSF. Berkshire Hathaway has also made a bid to buy Energy Future Holdings, the bankrupt parent company of Texas utility giant Oncor, but the deal is still subject to approval by state regulators and a bankruptcy court.