On Watch: A Structural Winner in the Automotive Transition
The Empire of the Irreparable: Where Wrecks Become Wealth
Winning businesses, through design or chance, inevitably position themselves at the convergence of transformative trends. Copart (NASDAQ: CPRT) fits this template perfectly, sitting at the intersection of two powerful forces: the shift to more complex vehicles and the rising cost of repairs.
At the 2025 Berkshire Hathaway Annual Meeting, Vice Chairman of Insurance Operations Ajit Jain put it succinctly:
“We’ll see a major shift where the number of accidents will drop dramatically because of automatic driving. But on the other hand, the cost per repair every time there’s an accident will go up very significantly because of the amount of technology in the car. How those two variables interact with each other in terms of the total cost of providing insurance, I think, is still an open issue.”
This “open issue” is exactly where Copart quietly thrives. Conventional wisdom suggests that smarter vehicles will mean fewer accidents. But this view misses the growing economic tension Jain alluded to: while accident frequency may eventually decline, the severity and cost per accident are rising sharply. Modern vehicles with advanced driver assistance systems (ADAS), electric drivetrains, and sensor-laden panels are dramatically more expensive to repair when they do crash.
The math is simple but profound: when repair costs exceed a certain percentage of a vehicle’s value, insurers declare it a “total loss” and offload it to salvage, often through Copart’s auction platform. That cost threshold is being crossed more frequently, not because of more accidents, but because of more expensive ones. This creates a direct, durable link between rising vehicle complexity and Copart’s volume growth.
Copart has built three interconnected moats that competitors can't easily replicate:
Physical infrastructure : It owns (not leases) strategically located storage yards across multiple countries.
Proprietary technology : Its Virtual Bidding – Third Generation (VB3) auction platform connects global buyers and sellers in real time.
Network effects : A deep bench of buyers attracts better seller inventory, which in turn draws more buyers.
These are structural barriers that become more valuable as the network scales.
What’s particularly compelling is how Copart benefits from the EV and autonomous transition regardless of how quickly it plays out. While manufacturers and insurers grapple with uncertain adoption curves and shifting liability models, Copart monetizes each increment in complexity. Whether accident rates fall or plateau, it’s the economic impracticality of repair, not just accident frequency, that drives salvage volumes. And this trend is still gathering pace.
The market may be underestimating the magnitude and durability of these tailwinds. At today's price of approximately $62, we see a clear path to $95, representing ~9% CAGR driven by:
Continued expansion of the total-loss pool
International growth opportunities
Operational leverage from a fixed-cost infrastructure model
When evaluating businesses, always seek out those that will be meaningfully larger in 10 years, not just the next few quarters. Copart exemplifies this mindset. It isn’t chasing short-term results. Instead, it’s building an enduring competitive position in a market shaped by irreversible technological trends.
This is precisely the kind of high-quality compounder that rewards patient investors. Those who understand that sometimes, paying a premium for a structurally advantaged business is the surest path to superior long-term returns.
Company Overview: History and Business Summary
In 1982, Willis J. Johnson opened a single salvage yard in Vallejo, California. What began as a local operation transformed into a global salvage auction powerhouse through relentless execution, a founder-driven ownership culture, and a long-term orientation. By the early 1990s, Copart had expanded its regional presence and made a game-changing acquisition, North Texas Salvage Pool, the largest seller of salvage in the U.S. at the time. This laid the foundation for a nationwide footprint.
Copart went public in 1994 and quickly garnered attention for its disciplined capital allocation and consistent execution. Over time, its focus shifted from growth by acquisition to growth through strategic insurance partnerships and network expansion. In 1995, Copart acquired NER Auction Group, doubling its facility count and strengthening its East Coast presence.
A defining moment came in 2003 when Copart became the first in the industry to launch a fully digital auction model, VB2 which was later succeeded by the current VB3 platform. This positioned the company as a technological vanguard in salvage remarketing. Over the years, Copart has consistently invested in tech infrastructure, AI, and logistics enhancements—an approach emblematic of an "invention-led" culture.
The company embarked on international expansion in 2007, beginning with the UK and gradually extending into the EU, Brazil, Middle East, and North America. Strategic bolt-on acquisitions like CrashedToys, Purple Wave, NPA, and AVK broadened its portfolio across powersports, heavy equipment, and direct-to-public segments. Today, Copart operates under a multi-brand platform across 11 countries with over 270 locations spanning 20,000+ acres.
Competitive Landscape and Business Model
Copart is the undisputed leader in the global online salvage auction industry, with a dominant 40%+ market share in the U.S. and an expanding global footprint. Its primary competitor is IAA Holdings (now owned by RB Global). However, Copart’s moat is fortified by a flywheel built on three reinforcing elements:
Extensive Land Ownership: Over 90% of its 20,000+ acres are owned, creating capacity advantages and insulation from lease inflation.
Network Effects: A two-sided marketplace with over 1 million registered buyers across 185+ countries draws consistent seller demand, which in turn drives superior liquidity.
Technology Leadership: Its VB3 platform powers high-volume, real-time auctions augmented by 360-degree imaging, AI valuation tools (IntelliSeller), and logistics solutions.
Copart’s vertical integration model enhances control over key cost centres: it owns the yards, operates its own logistics, and maintains direct relationships with insurers. This gives it pricing leverage and operational resiliency.
Notably, Copart operates a dual-model system:
Consignment Model (U.S., Canada, ME, Brazil): Capital-light, fee-based revenue stream.
Principal Model (UK, Germany, Spain): Higher ASP, inventory risk. The company is selectively shifting these to consignment to improve capital efficiency.
Revenue Streams and Cost Structure
Copart derives revenue from three core buckets:
Service Revenue (~80%+): Buyer fees, seller fees, transport, title processing, storage, and bidding fees.
Vehicle Sales Revenue: Generated in principal markets (UK, Germany, Spain).
Ancillary Revenue: Memberships, data licensing (potential growth lever), and other value-added services.
Cost drivers include:
Towing and vehicle transportation
Yard maintenance and security
Technology platform upkeep and R&D
Regulatory and insurance costs
Labor and operations
The owned-land strategy significantly reduces long-term operating leverage risk. Combined with AI-powered process automation and low capital intensity in consignment markets, Copart boasts industry-leading margins and returns on invested capital.
Industry Overview and Structural Tailwinds
The global online salvage auction market, valued at ~$10.6 billion in 2024, is expected to grow at 17–18% CAGR, potentially reaching over $27 to 50 billion by 2030 to 2034.
Growth is underpinned by:
Rising Total Loss Frequency: ADAS systems, sensor-heavy EVs, and rising parts/labor costs are making even minor crashes economically irreparable. The result? More vehicles are “totaled.”
Aging Vehicle Fleet: Older cars = lower ACVs = more total losses at lower damage thresholds.
Used Parts Economics: Elevated new car prices and supply chain bottlenecks drive demand for salvaged components.
Circular Economy: Vehicle reuse, recycling, and emissions-conscious consumers align with Copart’s mission.
EV and AV Complexity: As battery packs, carbon fiber frames, and sensors proliferate, repair economics deteriorate; enlarging Copart’s salvage funnel.
AI & Global Liquidity: AI-driven valuation, imaging, and predictive analytics are becoming table stakes. Copart’s first-mover advantage here compounds its moat.
Regionally, North America leads with ~40% share, but Asia-Pacific and Europe are expected to accelerate. Germany, the UK, India, and China are key expansion targets.
The Central Investment Thesis: Copart and the Total-Loss Flywheel
The beauty of Copart’s model is its simplicity masked by complexity. It owns the pipes, the platform, the data, and the distribution. It benefits from every trend that makes repairing a car harder and none that make ownership easier. In an industry facing rising entropy from electrification and autonomy, Copart is a rare constant.
As vehicles become more complex, insurers are totaling more of them. This is not a cyclical bump. It’s a structural shift and Copart owns the platform that converts totaled cars into liquidity at global scale.
In FY2024, 22.2% of insured vehicles involved in accidents were deemed total losses, a record high. In Q4 alone, that number hit 23.8% [Q2 2025 Earnings Conference Call]. This is not just about accidents. It’s about economics. CEO Jeff Liaw put it plainly: “Repairing cars becomes less attractive… totaling vehicles becomes more attractive given the liquidity of our auctions.” This is the engine of Copart’s volume flywheel.
The Catalyst: EVs, ADAS, and the Repair Revolution
Now add the megatrend. Electric and ADAS-equipped vehicles are flooding the roads. Global EV sales hit 18% in 2023, and projected to reach 33% by 2027 and 73% by 2040 [BloombergNEF]. Developed markets like Europe and North America will hit 60% and 40% by 2030. These cars aren’t just electric—they’re expensive to fix.
Mitchell reports EV repair claims rose over 40% YoY in 2023, with average crash costs ~$1,300 higher than ICE equivalents. CCC data shows EVs cost 47% more to repair, and the parts—batteries, sensors, composite panels don’t bend easily. They break. The result? More total losses, faster.
Insurers are adapting. Premiums are rising. Loss thresholds are tightening. A crash that once meant a repair now often means a salvage title—and Copart wins that supply.
Potential Misread: Expecting Fewer Accidents, Ignoring Cost Severity
If the market focuses on accident frequency, it underestimates severity. CCC and other insurers confirm that total-loss frequency is rising even as vehicle safety features improve. Why? Because the cost of fixing an ADAS-equipped or EV vehicle makes repairs economically unjustifiable.
Copart’s business model thrives here: more totaled vehicles mean more volume. More volume flows through a high-margin, capital-light operating model. Gross margins hover around 45%, and EBITDA margins near 42% with incremental margins even higher. In Q2 FY2025, Copart reported 8% auction volume growth and 14% revenue growth YoY.
Structural Modeling: The 10% Base-Case CAGR
Copart’s revenue is modelled to grow at ~10% CAGR through 2030 under a base-case scenario. While that may appear conservative given the powerful EV/ADAS tailwinds, it reflects a deliberate stripping away of fading one-off benefits, covering pandemic-era used-car price inflation, post-catastrophe salvage surges, and temporary fee catch-ups. Instead, we anchor the growth outlook in durable, structural forces that reflect how Copart’s business naturally compounds over time.
One of the primary drivers is the continued rise in total-loss frequency, which reached 22.2% in FY2024 and 23.8% in Q4 alone. Based on CCC Intelligent Solutions and Mitchell data, we expect this to climb toward 28% by 2030 as vehicle complexity, ADAS systems, and EV components push repairs beyond economic viability. This alone implies a 4 % point contribution to annual growth, given the large and growing insured vehicle base.
The vehicle parc itself, especially across North America and Europe, continues to grow modestly. Historical data from Federal Highway Administration (FHWA) and European Automobile Manufacturers Association (ACEA) show a 0.5 to 1% annual increase, and we conservatively assume ~0.7% CAGR from this dynamic.
In parallel, Copart is still gaining market share, rising from mid-30% to over 40% in the U.S. over the past decade, and now expanding internationally. With new yard openings, insurer conversions, and under-penetrated geographies, we estimate this contributes another ~1% annual uplift.
Copart’s average revenue per vehicle has climbed from ~$340 to ~$580 over the past 10 years. Stripping out general inflation, that implies ~3% pricing power annually, reflecting ancillary services like transport, storage, hazardous handling for EVs, and AI-driven value-add features like IntelliSeller.
Further upside comes from new verticals. International expansion and bolt-ons like Purple Wave (heavy equipment), NPA (powersports), and Blue Car (lease returns) may not move the needle individually today, but taken together, these optionality layers reasonably add another 1% growth contribution.
Against this structural strength, we offset ~2 percentage points to account for the normalization of inflated salvage prices during COVID and short-term catastrophe-driven volume surges that are unlikely to repeat.
Put together, this blend of frequency-driven volume, modest parc growth, pricing strength, and selective adjacency expansion yields a defensible, resilient 10% annual revenue CAGR. Without the EV/ADAS effect, Copart’s growth would likely decelerate to 6 to 7%, making electrification a critical multiplier, not just a tailwind.
Valuation
By 2030, structural tailwinds from EV and ADAS adoption unlock significant upside for Copart. In our base case where EVs represent ~50% of new car sales (Mckinsey Podcast 2022, “Electric vehicles are here and large-scale adoption is … near?”), Copart is projected to generate approximately $7.5 billion in revenue and $3.1 billion in EBITDA. Applying a 30× EV/EBITDA multiple yields an enterprise value of ~$93 billion. Using ~978 million diluted shares outstanding, this implies a share price of roughly $95, representing a 9% CAGR from current levels.
As a footnote, 2030 is chosen as the terminal year not arbitrarily—but because it is the visibility horizon for EV adoption, insurer recalibration, and Copart’s current expansion plan. By 2030, EV penetration will reshape the insured fleet mix, and total-loss economics will settle into a steady-state. Most industry, management, and investor models also use this endpoint for capital allocation.
Copart is not simply a salvage company. It is a beneficiary of one of the most overlooked consequences of the automotive transition: economic obsolescence by repair cost. As more EVs and ADAS vehicles hit the road, more will be totaled, not fewer.
Risks and Counterarguments
Key risks to Copart’s thesis include: improvements in vehicle safety and AV adoption. If driving becomes substantially safer, accident and total-loss frequency could fall. Indeed, Copart’s own materials list “fewer accidents” from advanced safety as a risk. In the extreme, mass adoption of fully autonomous vehicles might sharply cut crash rates. However, even if accident frequency declines, repair costs per accident may increase further, softening the impact on total losses. Copart management has noted that insurers already expect fewer accidents but face “counteracting challenges” from high repair bills.
Another risk is the macro economy. A severe recession could hurt used-vehicle demand (lower bids) and reduce miles driven (fewer accidents), plus reduce insurance policy uptake (Copart noted a modest increase in uninsured cars). Tariff increases (e.g. on auto parts from Mexico/Canada) might raise car values and repair parts costs simultaneously, potentially offsetting one another. Regulatory changes (such as caps on salvage title policies or environmental rules on scrapping) could also affect volumes.
Competitive risk is modest given Copart’s scale, but new entrants could offer alternative salvage marketplaces. Copart also relies heavily on a few large insurer clients (60% of revenue comes from top customers); loss of a major contract could pressure volumes.
Some may point to data like the Mitchell report showing EVs and ICE vehicles had similar total-loss rates in Q1 2024 (9.93% vs. 9.51%) and argue that EVs aren’t being totaled more often. But that parity is counterintuitive—given that EVs are significantly more expensive to repair. In theory, higher repair costs should already be driving higher total-loss rates for EVs. The fact that rates are still close suggests insurers have not yet fully adjusted their thresholds for EVs. As EV adoption rises and actuarial models catch up to the true economics of EV repairs, total-loss rates are likely to rise—and with them, Copart’s salvage volumes. Even if rates stay flat, the sheer increase in EV fleet share will expand the absolute number of total-loss cases. Furthermore, the thesis emphasizes future trends (continued EV value declines, ADAS complexity) which may raise total-loss rates beyond ICE’s. Finally, Copart’s stock price already factors in high salvage volumes; any deceleration in total-loss growth would be a risk if it materializes.
Conclusion and Recommendation
Copart is uniquely positioned to capitalize on the shifting economics of auto repair and salvage. The growing complexity and cost of EVs and ADAS-equipped vehicles means a structural reversal of the historical decline in accident frequency. As Copart’s management notes, “insurance companies are more likely to total vehicles in today’s market.” This dynamic is already translating into record salvage volumes, auction activity, and revenue growth.
Financially, Copart combines robust fundamentals including high margins, strong free cash flow, and a net cash balance sheet with long-term growth drivers like electrification, climate-driven loss events, and expanding salvage acceptance globally. Operational execution remains strong under its insider-led management team, and its dominant market share and platform economics give it a defensible moat.
That said, valuation is not cheap. At ~40× earnings, the stock reflects some of the optimism already. For investors with a lower risk appetite or who prefer a greater margin of safety, it may be prudent to wait for a better entry point, perhaps driven by broader market volatility or short-term noise. But even from today’s levels, the math still works: a clear path to a terminal value of ~$95/share by 2030 implies a ~9% CAGR, underpinned by durable volume and pricing tailwinds.
The destination is higher. For those who can tolerate short-term valuation compression or dollar-cost average over time, Copart remains a structurally advantaged, long-term compounder with asymmetric exposure to one of the most overlooked consequences of the EV transition: more vehicles are becoming economically unviable to repair, driving higher total-loss rates and fueling Copart’s growth engine.
I’m sharing information here to educate and inform—not financial or investment advice. Like any other personal financial matter, your own due diligence is paramount.