In a BBC documentary, Warren Buffett’s daughter, Susie Buffett, said he bought cars that he could get at reduced prices — like those that had been damaged by hail. The cars were fixed, didn’t look hail-damaged, and became a regular part of the Buffett lifestyle.[1]
Why doesn’t Warren Buffett buy new cars?
Warren Buffett doesn’t seem to like the depreciation of a new car after you drive it off the lot. His frugal and minimalist mental model and lifestyle are part of the keys to his success as he looks for value in not just business and investing but all areas of his life. Buffett always gets a good deal on cars when he buys them looking for a discount on cosmetic issues with the car that would cause it to be sold at a reduced price.
Here are Buffett’s thoughts on buying cars:
- He doesn’t want to pay the full sticker price and will look for a value on vehicles that are technically new but will be a lower price based on other factors like “hail damaged” etc.
- Buffett knows new cars have the embedded cost of production in them which is what causes them to drop in value when they leave the car dealership immediately. Buffett wants to avoid this depreciation by getting a virtually new car under the full list price.
- Buffett doesn’t want to waste a day car shopping or buying a car so he usually has his daughter do it for him. Buffett values his time a great deal and doesn’t want to spend it car shopping. She is also the one that generally has to make him upgrade his old car that he has no interest in selling because he doesn’t think he needs a newer car.
- Buffett will buy a car and keep it for 7 or more years, so he is technically driving a used car most of the time. He only upgrades when his family urges him to. His favorite holding time for a car is forever.
- Buffett sees the safety of a car as his top priority as he wants to protect his most valuable asset, himself from injury.
- Buffett seems to like Cadillacs for their style, luxury, and safety.
- Buffett also doesn’t want to spend the time, energy, and trouble learning how a new make and model of car works and has to read the car manual. He prefers sameness and simplicity over owning things and having to learn about them and take care of them.
- He sees a car as a utility item, not a status symbol. All he cares about is comfort and safety from point A to point B. He doesn’t think that happiness is increased by owning things and may even decrease the quality of life when you must take care of more possessions.
Warren Buffett on what he looks for in a car
“Actually I picked out the car I have based on the fact that it had airbags on both sides. So that was a factor and maybe the first car of its type ever made with airbags. But I think my car actually, it’s both heavy and has airbags, and that those are two primary factors in safety I don’t think a safer car is necessarily being made. It might be safer to drive around in a big heavy-duty truck or something, but I’m not ready for that. Incidentally, on a car, I look at that like anything else. If it would take me probably a half a day to go through the you know the exercise of buying a car and reading the owner’s manual and all that and that’s just a half a day I don’t want to give up in my life for no benefit. You know if I could write a check in 30 seconds and be in the same position I’m in now with a newer car I’d be glad to do it this afternoon. But I don’t like to trade away when there’s really no benefit to me at all. I’m totally happy with the car. I just don’t want to trade away the amount of time I’d have to spend fooling around to get familiar with the and get title to and do all the things. The rest of the things, pick one out, so a new car, but if there’s a safer car made, you know I’ll be driving in it.” – Warren Buffett
“Well, in personal consumption Warren is more frugal. Warren lives in the same house he bought
for a very modest price in 1950.” – Charlie Munger
“I have everything in life I want it’s a very simple thing. If there’s anything that money could buy there are things money can’t buy, but if there’s anything money could buy that I wanted, I do it this afternoon. I wouldn’t have any problem with that at all. I do not think that standard of living equates with cost of living beyond a certain point. I mean, up to a certain point there’s no question that it does in terms of having good housing, good health, good health service, good food, everything, the transportation. But there’s a point I think if anything you start getting inverse correlation. My life would not be happier and that it would be worse if I had six or eight houses or you know a whole bunch of different things. I could have it; it just doesn’t correlate. So I have everything I have. I mean you can’t have more than that, and that doesn’t really make any difference up to a point. I mean you can start thinking a lot differently when you got to x what happened, but when you get the 10x or 100x, 1000x, it just doesn’t make any possible difference.” – Warren Buffett[2]
What kind of car does Warren Buffett drive?
As of January 2023, the vehicle that Warren Buffett was driving was a modest 2014 Cadillac XTS. Although this car is far from the luxury vehicles that one would typically associate with billionaires, it reflects Buffett’s humble nature and tendency to prioritize simplicity, value, and time over extravagance.[3]