It seems that no matter what Warren Buffett happens to say or do, it will always find its way into the news. Last week, the billionaire investor was photographed sitting behind the wheel of a brand-new Subaru Outback. When this happened, a blogger at Auto Evolution decided to turn this into a story. The story went viral and mentioned how the Outback fit in directly with the frugal lifestyle of the Oracle of Omaha. CNBC then took to Twitter and shared the news with 1.5 million followers. Subaru then jumped on the bandwagon, posting the story and a grainy photo on their Facebook page.
Warren Buffett – who is now well-known for his modest tastes – was quite flabbergasted by all of the attention that he was receiving. He was even more shocked because the information was wrong. “I’ve never driven a Subaru in my life,” he mentioned in an interview. The day the photo was taken – July 8 – Warren Buffett happened to be sitting in an Outback in the passenger seat. The vehicle was provided as a courtesy by the organizers of the Allen & Co. conference in Sun Valley, Idaho last week. This happened while his daughter walked inside to pick up their credentials and room keys. “I stayed in the car and somebody snapped that picture,” he said.
Everyone knows that Buffett prefers to drive American automobiles anyway. “Once, in the 1960s, when the (Volkswagen) Beetle came out, I had one for a year or so,” said the billionaire. During high school, he was the half owner of a Rolls-Royce. For the most part, Buffett prefers cars made by Ford or General Motors. “The truth is, I only drive about 3500 miles a year so I will buy a new car very infrequently.”
As a matter of fact, the 2006 Cadillac DTS that Buffett drove only had 19,000 miles on it when he finally decided that it was time for a replacement. In fact, it was barely broken in.
To no one’s surprise, Chief Executive Mary Barra of General Motors was responsible for the sales pitch to Buffett. She had flown out to meet one of the largest General Motors shareholders in mid-May in Omaha amidst a serious safety crisis that threatened to stall the comeback of the automaker. This happened around the time that Berkshire Hathaway announced that they had cut their stake in General Motors by about 25% during the first quarter to 30 million shares.
After driving through Omaha in Buffett’s eight year old DTS, Buffett asked her what made the new generations of Cadillacs a better vehicle. “She really let me have it,” said Buffett. “She told me about 50 things that were better” than the set of wheels that he was currently driving. “By the time we got to lunch – and it’s only five or six minutes – she sold me.”
However, Buffett was worried – even though he’s worth $65.8 billion and the third richest man in the world – that he was not going to get a good price on his purchase. He decided to send his daughter Susie to Huber Cadillac in Omaha on his behalf in order to make the purchase. She then met with a young saleswoman named Madison Willers, who Buffett tells us “couldn’t have been more helpful.”
Barra made the recommendation that Buffett purchase the ever popular and widely acclaimed Cadillac CTS sport sedan. Willers, on the other hand, convinced Susie that her low-key father might prefer a different option. Later, in a letter to Barra, Buffett says: “My daughter said that her dad’s ‘car guy friend’ (that’s you) said he should buy a CTS, but Madison said the XTS would be more appropriate. I think this reflects an evaluation on her part that from Susie’s description I must be hopelessly over the hill (a unanimous view among my family).” Buffett then praised Brett Huber, owner of the dealership, and described him as “extremely accommodating.”
Barra then wrote a handwritten response: “Dear Warren, thank you very much for buying a GM vehicle. The XTS is a great choice! If you ever have a question or concern, please let me know. It was great to hear that Madison and Brett demonstrated our company value – the customer is our compass. I will look forward to riding in your XTS the next time I visit. Thanks again, Mary Barra.”
Did Buffett get a great trade-in price on his previously owned DTS? Not at all. Instead, he chose to donate the vehicle to Girls Inc., a charity for girls.
What about General Motors and Barra? Buffett thinks she’s “terrific” and mentioned that he even offered her some advice, based on his own experience, when steering Salomon Brothers through the difficult bond trading scandal during the early 1990s. “When you have a problem, get it right, get it fast, get it out and get it over. That’s what I told her.”
Buffett knows that the current crisis that General Motors faces will pass. “In the end, it will be what they do over the next 10 years that counts. They’ve got to deal with the past. It’s not easy, but she’s the person to do it.”