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GM Cadillac XTS Lures an Older, Wiser Buyer: Warren Buffett

Tickers in this article: BRK.A GM

OMAHA, Neb. (TheStreet) -- Given that Berkshire Hathaway owns 30 million shares of GM , which is nearly 2% of the company, CEO Warren Buffett might be expected to buy a GM car.

But Buffett's recent purchase of a Cadillac XTS was not just a case of an investor showing loyalty to his investment decision-making. Rather, the purchase demonstrated the value of listening to employees and the importance of the automotive sales force.

It also continues the narrative that GM may face ignition switch problems, air bag defects, compensation claims, regulatory issues and increased Congressional scrutiny, but consumers have apparently shut that out and continue to buy new GM vehicles.

On the negative side, given that Buffett is 83, the story reinforced the reality of Cadillac's older demographic. But overall, it can't hurt when the world's most famous value investor invests in your car. 

GM publicly released the Buffett story late Tuesday, in the midst of more negative publicity as The New York Times reported that it hid information from regulators and CEO Mary Barra prepared for one more Congressional grilling on Thursday. The Buffett story continues the narrative that GM's sordid safety practices occurred in the past, but aren't particularly troubling to buyers of new GM cars.

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In early morning trading Wednesday, GM shares were up 16 cents to $37.74. Year to date, shares are down about 8%.

According to the automaker, Madison Willers, a saleswoman at Huber Cadillac in Omaha, Neb., recently greeted a woman who said she was shipping for a friend. Unbeknownst to Willers, the mystery shopper was Susie Buffett, Warren Buffett's daughter.

Susie Buffett's intent was to purchase a new CTS sports sedan. But Willers convinced her to buy an XTS luxury sedan instead. "My job is to show and tell, and to provide our customers with the Cadillac that best meets their needs," Willers said, in a prepared statement.

Unknowingly, Willers was going over her boss's head. It turned out that GM CEO Mary Barra had recommended the XTS to Buffett.

But Buffett smoothed things over in a May 21 letter to Barra, in which he praised Willers, saying "Madison could not have been more helpful.

 "My daughter said her dad's 'car guy friend' (that's you) said he should buy a CTS, but Madison said the XTS would be more appropriate," Buffett wrote to Barra.

"I think this reflects an evaluation on her part on her part that from Susie's description I must be hopelessly over-the-hill (a unanimous view among my family," he said.

Of course, the purchase shows confidence in GM. It also refutes the suggestion last week that Buffett, who was photographed sitting in a Subaru Outback, had gone over to the other side. That story was big in the social media world of blogs, tweets, and Facebook posts, and was viewed by some as an indication that the wise Buffett was going with the utilitarian vehicle.