Warren Buffett gets into auto dealers in big way

Warren Buffett is getting into the auto business.

The billionaire investor announced on CNBC on Thursday that he's buying Van Tuyl Group, the nation's largest privately held car dealership chain.

Buffett said on "Squawk Box" it took awhile but Berkshire Hathaway is now "planes, trains and automobiles." Berkshire owns BNSF Railway and private plane company NetJets.

He expects to use this agreement as a vehicle to buy other dealerships. "We will hear, I predict, from hundreds of dealerships in the next year."

Read MoreBuffett: I bought stocks in Wednesday's big selloff

Warren Buffett
Adam Jeffery | CNBC
Warren Buffett

The new company will be renamed Berkshire Hathaway Automotive, but will still be run by Larry Van Tuyl, who will become chairman. Van Tuyl's Jeff Rachor will assume the role of CEO.

There's a huge opportunity for consolidation in auto dealerships, Van Tuyl told CNBC, while sitting next to Buffett.

The Van Tuyl family founded the group six decades ago, and it's now No. 5 overall in U.S. auto dealerships with about $9 billion in revenue and 78 independently operated locations in 10 states.

The operation has the ability to be scaled up, Buffett said.

The transaction is subject to getting approvals from the major auto manufacturers and regulators. It's expected to be completed in the first quarter of next year.

The new Berkshire Hathaway Automotive would compete with big players like AutoNation whose CEO Mike Jackson emailed CNBC to say congratulations to Buffett on the deal.

Jackson, who appeared on "Squawk Box" Thursday before the Van Tuyl announcement, wrote after hearing about the deal: "Welcome to the retail auto business."

"As you know, Bill Gates [Buffett's friend] is a 15 percent shareholder in AutoNation," Jackson continued, "and I'm sure the two discussed the business."

Jackson refused to say whether he'd welcome a deal with Buffett should the billionaire investor came knocking.

Reacting to Jackson's comments, Buffett said that he thinks Jackson is a smart businessman and has built a great company. "I watch him every time he's on ... and Bill [Gates] has made a lot of money on it."

"I don't think we'll be buying [AutoNation]. I know he won't buy us out. We'll probably be both buying more dealerships," Buffett said.

In his CNBC appearance, Buffett spoke about a wide range of topics, including why he bought stocks during Wednesday's selloff and assertions that the Burger King deal to buy Canada's Tim Hortons that he's helping finance is not an inversion deal motivated by saving tax money.

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