Volume and Price

Volume and Price

Copart's revenue is the product of two engines — how many vehicles it sells and the fee it earns on each, which tracks the auction price. For years both ran forward together. In fiscal 2026 they split: U.S. insurance unit volume turned negative while average selling prices set records, and consensus now models roughly flat revenue for the year. This chapter decomposes that split, tests whether the volume decline is an industry cycle or share lost to a re-energized IAA, and asks how long price can keep carrying revenue.

The two engines, decoupled

Copart grew revenue about 73% between fiscal 2021 and fiscal 2025, and until recently the growth was broad-based: more insurance vehicles flowing in each year, sold at rising prices. Management's own framing of what drives the top line is explicit — revenue moves with total-loss frequency (the share of accident vehicles insurers salvage rather than repair) and with the average auction selling price, because most of the fee is tied to that price [1].

In fiscal 2026 the two engines pulled in opposite directions. U.S. insurance volume, which grew 4.2% for full-year fiscal 2025, turned down through the year and fell every quarter of fiscal 2026 [2]. Prices moved the other way, reaching seasonally adjusted record highs for U.S. insurance vehicles even as used-vehicle values normalized off their 2021–2022 peaks [3]. The net for the fee line was close to flat: in the second quarter, U.S. fee revenue was flat excluding prior-year catastrophe events, as lower volume was offset by higher revenue per unit [4].

The volume stall

The headline unit declines are steep, but a large part is optics: the prior year included Hurricanes Helene and Milton, so catastrophe volumes flatter the comparison. Stripping those out, the U.S. insurance decline narrows sharply — and improves through the year.

Source: Q1–Q3 FY2026 earnings calls; ex-CAT removes prior-year catastrophe volumes [5] [6] [7].

On the cleaner ex-catastrophe basis the U.S. insurance decline eased from 7.3% in the first quarter to 4.8% in the second to about 3% in the third [8] [9]. Two disclosures point away from a demand collapse and toward a timing and mix effect. First, U.S. assignments — vehicles handed to Copart to sell — declined only low single digits even as units sold fell harder, with inventory down about 8%; the gap is Copart working down its yards faster than fresh cars arrive, not sellers leaving [10]. Second, management attributes the softness to fewer claims reaching the total-loss funnel: earned car years — a measure of insured vehicles on the road — fell about 4% year-over-year while the vehicle fleet grew, evidence that consumers are paring back coverage as premiums rise [11]. CCC data cited on the same call put self-pay repairs at 25%, vehicles that bypass insurance salvage entirely [12].

Cycle or share loss

That is Copart's account, and it is internally consistent. The problem is a rival telling the opposite story with the same industry backdrop. RB Global's IAA — the only other scaled U.S. salvage platform — grew automotive unit volumes about 8% excluding catastrophe events in the December 2025 quarter, its fourth consecutive quarter outpacing the market, and it named the mechanism plainly: continued new account wins alongside organic growth, including a new multi-year agreement with one of its two largest insurance partners [13]. Its 2026 guidance frames gross transaction value growth of 5% to 8% as continuing to gain market share [14]. Both companies cite the same CCC total-loss-frequency figure of 24.2% for the December 2025 quarter (Q4 CY2025), a single-quarter print that sits above the 23.1% full-year 2025 reading taught in Industry [15]. If the driver were purely a shrinking industry claim count, the two salvage platforms would move together. They are not.

Sources: RB Global Q3 and Q4 2025 calls (IAA automotive units, ex-CAT) [16] [17]; Copart Q1–Q2 FY2026 calls (U.S. insurance units, ex-CAT) [18] [19]. RB Global reports on a calendar year; its December quarter overlaps Copart's second fiscal quarter.

Copart's rebuttal is subtle and worth stating in full. On the second-quarter call the CEO argued that a company can lose apparent share without losing a single account: "the growth rates of our existing customers can still indicate a shift in market share without any actual loss of accounts" [20]. In other words, if the specific carriers Copart serves are collectively ceding policies-in-force to carriers that happen to route salvage through IAA, Copart's volume falls even though its own client roster is intact. Management says its account retention holds, points to recent account wins with measured before-and-after auction returns, and notes it is not chasing volume on price [21].

The evidence does not fully resolve this from the outside, and both readings carry weight without being mutually exclusive. An industry claim-count cycle is real — earned car years are down and underinsurance is rising — and the narrowing ex-catastrophe decline through fiscal 2026 fits a cyclical trough passing. But IAA's four straight quarters of above-market unit growth with explicitly named account wins is hard to square with zero share movement; Copart is most likely ceding some marginal assignment share to a rival that spent 2023–2024 digesting its own merger and is now competing again. The distinction matters because a claim-count cycle reverses and a share step-down does not, and Copart's assignment softness could as plausibly precede account attrition as reflect passing inventory timing. What would decide it: whether Copart's assignments, not just units sold, turn negative, and whether the ex-catastrophe unit decline keeps narrowing toward flat. The first would signal genuine attrition; the second, a cycle ending. That cyclical-versus-structural fork is where Scenarios and Watch reconciles the strands.

The price offset

While volume stalled, price did the work. U.S. insurance average selling prices rose 8.4% in the first quarter of fiscal 2026, 6% in the second (9% excluding catastrophe effects), and 4.1% in the third — the last a seasonally adjusted record for a Copart third quarter [22] [23] [24].

Source: Q1–Q3 FY2026 earnings calls; reported basis [25] [26] [27].

What makes this notable is that it runs against the used-vehicle market. Copart's prices are climbing while the broader used-car benchmark has normalized down; the clearest illustration came earlier in the cycle, when the Manheim index fell nearly 14% year-over-year yet Copart's insurance prices held to within 2% [28]. The mechanism is the buyer network established in The Moat: international buyers now represent more than a third of U.S. auction volume and nearly half of auction proceeds, and their demand — repricing damaged U.S. cars for markets where they are worth restoring — decouples Copart's clearing prices from the domestic used-car index [29].

The offset is real but not unconditional. It leans on foreign demand, which carries currency and geopolitical exposure: management noted that participation from certain Middle Eastern markets fell year-over-year amid regional conflict, with the gap filled by Central Europe, West Africa, and the Caribbean [30]. And the price-versus-volume trade is not automatically accretive — when a total loss is declared at a higher used-car value, the salvage price rises, but that same high value can also make an insurer repair rather than total the car, which suppresses volume. Price strength and volume weakness are partly two faces of one variable.

The structural backstop

Underneath the cyclical noise sits the reason volume has compounded for four decades: the long-term rise in total-loss frequency. The mechanism that drives it — rising repair complexity pushing insurers to total rather than fix — is taught in full in Industry; what matters here is that the trend held through the fiscal 2026 stall.

Sources: total-loss frequency 15.6% (2015) to 23.1% (2025) per CCC, cited on the Q2 FY2026 call [31]; average vehicle age 11.1 years (2012) to 12.8 years (2025) per the FY2025 Form 10-K [32].

Total-loss frequency climbed from 15.6% in 2015 to 23.1% in 2025, an increase of nearly 5 percentage points in the last four years alone, and reached 23.6% for the first quarter of 2026 [33] [34]. The 10-K grounds this in repair economics: the average age of cars on U.S. roads rose from 11.1 years in 2012 to 12.8 years in 2025, the aging that Industry links to higher total-loss rates [35]. This is what makes the current stall look cyclical rather than terminal: total-loss frequency kept rising through fiscal 2026 even as unit volume fell, so when the claim-count cycle turns, the secular support is still in place. That rate cannot compound indefinitely: at roughly a fifth of the way to a ceiling below 100%, each incremental point is harder to win, and a sharp jump in used-car values (as in 2021–2022) can push it the other way by making repair the economic choice [36].

What it nets to

For the first time in years, revenue is not visibly compounding. Consensus models fiscal 2026 revenue of roughly $4.6 billion — essentially flat against fiscal 2025 — with earnings per share of about $1.58, also flat, before a return to mid-single-digit revenue and high-single-digit EPS growth in fiscal 2027 as the volume comparison eases and price carries through.

Source: consensus analyst estimates, as reported.

That path is a bet that the volume decline is mostly cyclical and mostly over. The evidence tilts that way — the ex-catastrophe decline is narrowing, assignments are holding, and the structural total-loss tailwind is intact — but it is not a clean win, because IAA is demonstrably taking some share and price is doing a job that volume used to. Three things would confirm or break the read, each checkable in a filing:

• U.S. insurance units, ex-catastrophe: a return toward flat or positive confirms the cyclical trough; a re-acceleration of the decline signals share loss. Reported quarterly on the earnings call [37].
• U.S. assignment volume: still down only low-single-digit; a move to a mid-single-digit decline would mean sellers, not just cars, are leaving [38].
• ASP growth versus the used-car index: the price premium that offsets volume; a narrowing gap would remove the crutch as the used-car market normalizes [39].