Competition

Competition — Who Can Hurt Copart, Who Copart Can Beat

Competitive Bottom Line

Copart's moat is real, and it is hardware, not software. The 21-percentage-point operating-margin gap to its closest comparable rival — RB Global (which owns IAA, the only other US salvage auction operator at scale) — is what the moat looks like on a P&L. The one competitor that matters is IAA: a head-to-head salvage rival now backed by a larger, deeper-pocketed parent (RB Global, $28.7B EV) with a stated growth strategy of taking insurer market share. Everyone else on the named-peer list — Carvana, Openlane, ACV Auctions, LKQ — competes in adjacent layers of the value chain, not on Copart's core salvage flow.

The risk the market may be underestimating is RB Global's post-IAA integration finally executing: revenue at RBA has grown at a 27% five-year CAGR, more than 1.5x Copart's pace, while Copart's nine-month FY2026 revenue is flat. The risk the market may be overestimating is disintermediation from LKQ; the largest US dismantler can theoretically buy salvage cars directly from insurers, but no tier-one carrier has publicly piloted such a program at scale. Track those two signals; everything else is noise.

The Right Peer Set

Copart's FY2025 10-K (Item 1 — "Competition") names six US competitors: RB Global (including IAA), Carvana, Openlane, Manheim, ACV Auctions, and LKQ. All but Manheim are public. Manheim is the largest US wholesale auction operator but is privately held inside Cox Automotive — there are no standalone disclosures, so it is listed below for completeness but cannot be measured. The five public peers below are not interchangeable; they sit in three distinct layers of the same value chain:

• Salvage auction operators — Copart and IAA (now inside RB Global). This is the head-to-head competition; the same insurance carriers, the same totaled-car inventory, the same buyer pool.
• Non-salvage wholesale auction platforms — Openlane, ACV Auctions, and Carvana's ADESA arm. Different supply (dealer trade-ins, off-lease, fleet returns), some buyer overlap (dismantlers, exporters).
• Downstream dismantlers — LKQ. Both a Copart customer (buys salvage cars to strip for parts) and a potential disintermediator (could buy direct from insurers).

Read the chart by corner. Copart sits alone in the upper-right (36% margins, 27% FCF margins) — no peer occupies that quadrant. The next-closest is RB Global, whose 15.5% blended operating margin is dragged down by the lower-margin Ritchie Bros heavy-equipment business; IAA standalone is materially higher (the IAA salvage segment, when reported pre-merger, generated mid-20s-percent margins). Carvana lives on a different axis entirely — a low-margin retailer at 8% of revenue scale, with five-year revenue growth (29.5%) almost twice Copart's. Openlane and LKQ are sub-10% margin operators with single-digit growth. ACV Auctions is still losing money at the operating line, seven years into being a public company.

Where The Company Wins

1. The widest margin gap of any vehicle-marketplace public peer. Copart's 36.5% FY2025 operating margin is the highest in the named peer set by a wide margin. The next-closest pure marketplace comparison — RB Global, which owns IAA — generates 15.5% blended, and even isolating to the salvage segment, IAA's standalone profitability has historically run 5-8pp below Copart's. ACV Auctions remains operating-loss-negative seven years into being public. Carvana, Openlane and LKQ are all sub-12%. The gap to RBA, the only peer with a directly competitive salvage business, has held for over a decade — even after Ritchie Bros paid $7.3B to acquire IAA in 2023 explicitly to scale-up against Copart.

Source: Copart FY2025 10-K business.txt; each peer's FY2025 10-K via Fiscal.ai standardized income statements.

2. Global buyer demand engine that the competition cannot match in one quarter. In FY2025, 38.8% of US units sold went to international buyers (by IP address), and another 31.0% to out-of-state US buyers. That 69.8% out-of-state share is what allows Copart to clear inventory at premium prices regardless of any single local market — and it took 30+ years of registering ~1 million buyers across 185 countries to build. RB Global's 10-K describes a "global buyer base and demand engine" through IAA, but does not disclose a comparable single-figure share; the implied international reach is materially narrower based on volume and segment disclosures. The asymmetry shows up in segment performance: Copart's International service revenue grew 18.9% YoY in FY2025 (volume plus revenue per car, per the FY2025 10-K MD&A) even as USD strengthened.

Source: Copart FY2025 10-K business.txt (international IP share, 1M-member figure); RB Global FY2025 10-K business.txt (IAA buyer base described qualitatively).

3. Fortress balance sheet that turns catastrophes into share-gain events. Copart enters every hurricane quarter with $4.8B of cash, zero debt, and the ability to lease subhaul capacity at any price. RB Global carries $1.4B of net debt from the IAA acquisition; LKQ carries $3.3B. In a CAT event the operator with capacity-on-demand wins the next contract — and CAT volume has accounted for 5-10% of Copart's annual units in recent years. The FY2025 hurricane season (Helene + Milton) added $56M of incremental cost; Copart absorbed it and grew operating income 7.9% YoY anyway. A leveraged competitor working through a covenant test cannot make the same trade.

Source: Each peer's FY2025 balance sheet, peer_valuations.json.

4. Reinvestment intensity that actively deepens the moat. Copart spent $569M of capex against $4.6B of revenue (12.2%) in FY2025 — almost entirely on storage acreage, paving, fencing, and security. No other peer is reinvesting at that rate: RBA at 4.1% of revenue, Openlane at 2.9%, ACV at 1.2%, LKQ at 1.6%, Carvana at 0.7%. Capex-to-revenue is a moat-deepening signal in salvage because permitted vehicle-storage acreage near population centers is the binding capacity constraint. While competitors lean into "asset-light" digital pitches, Copart is buying the asphalt — the same asphalt Copart has been buying for 40 years to build the duopoly position it has today.

Source: peer cash flow JSONs (CPRT: 568.99M; RBA: 259M; CVNA: 147M; KAR: 55.4M; LKQ: 216M; ACVA: 9.1M).

Where Competitors Are Better

1. RB Global is growing faster — at least on the top line. RBA's five-year revenue CAGR is 27.2%, well above Copart's 16.1%. Much of that is inorganic (the IAA acquisition in 2023 nearly doubled RBA's revenue base overnight), but RBA's organic salvage growth has continued in 2024-2025. Through nine months of FY2026, Copart's revenue is essentially flat (-0.2%); whether that is a CAT-cost echo + FX or a share-shift event toward IAA is the most important short-term question in this report. RBA's next salvage-segment disclosure paired with Copart's US service revenue line is the cleanest read on whether the duopoly is re-balancing.

Source: Each peer's annual income statements (Fiscal.ai), oldest available period back to FY2020.

2. Carvana has the platform consumers see. Copart is invisible to retail buyers; Carvana is the consumer-facing brand for online used-car purchases, with $20.3B in FY2025 revenue and a vending-machine retail moat among 25-44-year-old buyers. Carvana's acquisition of ADESA US (from KAR) in 2022 added a wholesale auction backbone — meaning Carvana now combines retail demand, dealer-to-dealer wholesale, and (modestly) some non-salvage remarketing reach in a way Copart structurally cannot. This does not threaten the insurance-carrier supply side of Copart's moat, but it constrains Copart's optionality if it ever wanted to move into adjacent non-salvage remarketing.

Source: Carvana FY2025 10-K business.txt; competitors/CVNA/snapshot.json showing $20.3B revenue.

3. ACV Auctions has the dealer-to-dealer data moat Copart never built. ACV's Vehicle Condition Inspection (VCI) network — 800+ field inspectors using a proprietary mobile-tooling stack — produces a per-vehicle data spec that buyers trust more than any Copart equivalent in the wholesale (non-salvage) channel. ACV is still operating-loss-negative, but is growing revenue 29% per year and is now named explicitly by Copart's 10-K as a principal competitor. If ACV's loss-to-profit transition holds in the next 24-36 months, it could become a multi-billion-dollar non-salvage platform — which gives carriers a credible second option if they ever decide to move non-salvage flows away from Manheim or Openlane.

Source: ACV Auctions FY2025 10-K business.txt (competition section, VCI description); revenue history from competitors/ACVA/income.json.

4. LKQ has direct access to the carrier supply chain. Copart's own 10-K explicitly flags this: "LKQ … may purchase salvage vehicles directly from insurance companies, thereby bypassing vehicle remarketing companies like Copart entirely." LKQ generates $13.7B of revenue selling recycled and aftermarket parts — it is the largest US dismantler-buyer of salvage vehicles. If a tier-one carrier signs a direct-buy agreement with LKQ at scale, Copart loses unit volume on the salvage side without any auction-pricing benefit. LKQ has nominal operating margin (7.3%) but a relationship structure with insurance carriers (claim-adjuster integrations) that Copart cannot easily replicate.

Source: Copart FY2025 10-K business.txt: "LKQ … may purchase salvage vehicles directly from insurance companies, thereby bypassing vehicle remarketing companies like Copart entirely."

Threat Map

The single threat-cluster worth taking seriously in the next two years is IAA execution under RB Global. Everything else is either too distant (AVs, carrier in-housing) or too economically constrained today (LKQ direct-buy, Manheim entry, ACV salvage creep) to materially shift the duopoly. But that one threat is meaningful: RB Global has more financial firepower than IAA had standalone, and a stated strategy of growing its enterprise-partner base. The flat FY2026 YTD revenue at Copart, paired with a 27% five-year top-line CAGR at RBA, is exactly the data point a bear case would build on.

Moat Watchpoints

These are the five measurable signals that would tell you the competitive position is improving or weakening before it shows up in headline revenue: