Well written article. IAA unit volumes are growing faster than CPRT’s for 4 quarters. They are taking share, possibly due to their mix of insurers (Progressive / State Farm) (growing faster than the market. IAA ceded 10-15% of market share to CPRT over recent years due to mismanagement. Under RBA’s ownership, IAA has invested in the business, fixed most of its issues and largely ‘caught up’ to CPRT. IAA hinted that they think they can take more share given RFP pipeline. My question: what makes you think IAA won’t continue to claw back some share which would be a headwind to CPRT’s growth rate? As you said, insurers want at least two viable options to give them some leverage in negotiations.
Btw, Progressive is gaining share yes. But i dont think state farm is. Geico and pgr will eventually eat up state farm business, but that will be a slow process.
1/ CPRT recently reduced its focus on certain low-value fee units. For example, early this year, it was mentioned that units from charities and municipalities decreased by -4% in Q1.
2/ They also moved many of their low value non-insurance units to the direct buy channel. The reason for this was to allow CPRT to efficiently market lower priced vehicles by directly connecting sellers and buyers and avoiding the unnecessary costs associated with transportation and storage.
3/ We think this is also not a structural weakness but a strategic shift to higher margin segments. This will cause IAA market share to increase, but they are taking low-priced units.
Last quarter, the US average selling price (ASP) of CPRT grew +2% while IAA fell -3%.
In the most recent quarter, ASP of CPRT grew +5.7% while IAA grew +1.1%
The most important advantages of land ownership and conservative financial profile are hardest to breach.
1/ special permit land is physical and scarce.
2/ financial conservativism under founder willis johnson is still a thing. You cant say the same about RBA. This is especially vulnerable during difficult times when natural catastrophe hits and insurers want a dependable player to handle a surge in volumes. We seen in katrina.
International expansion and transition from principal to agent model. Outside the US service revenues are only 67%. Compared to US 80%+. Service revenues are the high margins biz.
Great analysis. A Question on the total percentage of older cars increasing.. in that chart do you notice that the newer cars are a smaller percentage of claims? Could it point to the fact that the newer cars are less prone to accidents due to the advanced tech? I do accept that if they do get into an accident they get totalled more easily. Just wanted your opinion on it
Yes the newer cars proportion that gets totaled has decreased over those 5 years. There can be 2 reasons:
1. accident rates have fallen (structural headwind).
2. People have gone with higher deductibles, uninsured, living with damages - these escape CPRT ecosystem (cyclical headwind).
If you believe that #2 is merely a cyclical thing, then you just have lower accident rates to worry about. But so far the trend of total loss frequency has monotonically increased because the repair cost effect is larger than accident rate effect.
An extra reason is post covid, there was a spike in used car prices due to supply chain issues. This raised pre accident values of cars which makes the threshold of totaled harder to cross. You can look up manhein used car index, the current value is 206, versus sub 160 pre covid. So the effects are still lingering.
Where did you find this? The most recent 10Q I saw said the 218mm number? Snip - Followed by an additional $899m between February and March 2026 at $37.11/share. As the price fell, they repurchased more.
Well written article. IAA unit volumes are growing faster than CPRT’s for 4 quarters. They are taking share, possibly due to their mix of insurers (Progressive / State Farm) (growing faster than the market. IAA ceded 10-15% of market share to CPRT over recent years due to mismanagement. Under RBA’s ownership, IAA has invested in the business, fixed most of its issues and largely ‘caught up’ to CPRT. IAA hinted that they think they can take more share given RFP pipeline. My question: what makes you think IAA won’t continue to claw back some share which would be a headwind to CPRT’s growth rate? As you said, insurers want at least two viable options to give them some leverage in negotiations.
Btw, Progressive is gaining share yes. But i dont think state farm is. Geico and pgr will eventually eat up state farm business, but that will be a slow process.
Thank you for reading!
Yes, on market share comment:
1/ CPRT recently reduced its focus on certain low-value fee units. For example, early this year, it was mentioned that units from charities and municipalities decreased by -4% in Q1.
2/ They also moved many of their low value non-insurance units to the direct buy channel. The reason for this was to allow CPRT to efficiently market lower priced vehicles by directly connecting sellers and buyers and avoiding the unnecessary costs associated with transportation and storage.
3/ We think this is also not a structural weakness but a strategic shift to higher margin segments. This will cause IAA market share to increase, but they are taking low-priced units.
Last quarter, the US average selling price (ASP) of CPRT grew +2% while IAA fell -3%.
In the most recent quarter, ASP of CPRT grew +5.7% while IAA grew +1.1%
The most important advantages of land ownership and conservative financial profile are hardest to breach.
1/ special permit land is physical and scarce.
2/ financial conservativism under founder willis johnson is still a thing. You cant say the same about RBA. This is especially vulnerable during difficult times when natural catastrophe hits and insurers want a dependable player to handle a surge in volumes. We seen in katrina.
Also regarding the roic calculation for inorganic growth, where do you reckon they will get this growth from?
International expansion and transition from principal to agent model. Outside the US service revenues are only 67%. Compared to US 80%+. Service revenues are the high margins biz.
Great analysis. A Question on the total percentage of older cars increasing.. in that chart do you notice that the newer cars are a smaller percentage of claims? Could it point to the fact that the newer cars are less prone to accidents due to the advanced tech? I do accept that if they do get into an accident they get totalled more easily. Just wanted your opinion on it
Yes the newer cars proportion that gets totaled has decreased over those 5 years. There can be 2 reasons:
1. accident rates have fallen (structural headwind).
2. People have gone with higher deductibles, uninsured, living with damages - these escape CPRT ecosystem (cyclical headwind).
If you believe that #2 is merely a cyclical thing, then you just have lower accident rates to worry about. But so far the trend of total loss frequency has monotonically increased because the repair cost effect is larger than accident rate effect.
An extra reason is post covid, there was a spike in used car prices due to supply chain issues. This raised pre accident values of cars which makes the threshold of totaled harder to cross. You can look up manhein used car index, the current value is 206, versus sub 160 pre covid. So the effects are still lingering.
** manheim used car index
Where did you find this? The most recent 10Q I saw said the 218mm number? Snip - Followed by an additional $899m between February and March 2026 at $37.11/share. As the price fell, they repurchased more.
I took it from S&P capital IQ. Its not official SEC, so i will remove the parts other than the reported $218m.