Texas law considers Berkshire to be a vehicle manufacturer because it also owns the Indiana-based $4 billion a year RV manufacturer Forest River Inc. As a result, Berkshire legally isn’t allowed to sell cars in Texas. Engine maker Cummins,which has nine dealerships in the state, is also affected. (It’s not certain how much impact Berkshire’s investment in Chinese automaker BYD — now at a reported 10% — has on its classification as a vehicle manufacturer).
The franchise laws were created to protect car dealers from having to compete with their manufacturers.
After Berkshire Automotive discovered the problem a couple of months ago, its chairman, Warren Buffett, flew to Austin, TX in April to meet with Texas Governor Greg Abbott, Patrick and Senator Kelly Hancock (R). The next day, senate leaders fast-tracked SB 2279, legislation creating a special exemption for Berkshire, out of committee.
But the bill never reached the senate floor for debate due to a loud outcry from consumer rights organizations, environmental groups and Republican Tea Party members. They resented Buffett, whom they consider to be an out-of-state businessman, getting special treatment. They also saw an opportunity to break the power grip the Texas Automobile Dealers Association by pushing for the elimination of the franchise laws they say limit competition.