Copart — Key Risks

A Government Investigation Into Money Laundering Is Already Underway

The U.S. Department of Justice is actively investigating whether Copart violated money laundering laws related to how it screens buyers on its auction platform. This is not a hypothetical risk — it is an ongoing probe that could result in criminal or civil penalties, fines, restrictions on operations, and lasting reputational damage with insurance company partners and vehicle sellers.

Vehicle Supply Is Concentrated and Contractually Fragile

A small group of vehicle sellers collectively accounts for a large share of Copart's revenue, and sellers can — and have — terminated agreements in specific markets. No single seller exceeds 10% of consolidated revenue, but the collective dependence means losing even a handful of key relationships could meaningfully hurt results.

The Business Model Depends on Accidents, Weather, and Total Loss Decisions It Cannot Control

Copart's supply of salvage vehicles is driven by accident rates and insurer decisions to "total" a vehicle rather than repair it. Mild weather means fewer accidents; rising used car prices make insurers less likely to declare totals; and advancing safety technology (like automatic braking) could structurally reduce accident rates over time. Any of these trends shrinking supply would directly compress revenue.

Extreme Weather Creates Costly Operational Disruptions

While storms generate more salvage vehicles, they also overwhelm storage facilities. Hurricanes Helene and Milton caused facility capacity constraints and "substantial additional costs" during fiscal 2025. Copart cannot always accept new vehicles when demand spikes most, which strains relationships with insurance sellers at exactly the wrong moment.

International Expansion Carries Real Execution Risk

Copart now operates across the U.K., Canada, Germany, Brazil, the Middle East, and elsewhere. Each market brings its own regulatory environment, language, business culture, and insurer relationships. In some markets — Germany is specifically called out — insurers have historically played little role in vehicle disposition, making Copart's core model harder to transplant. A failed integration can mean years of below-average margins or operating losses.

Foreign Buyers Drive Demand, and Import Rules Could Shut Them Out

A meaningful portion of Copart's buyers are located outside the U.S. and import the vehicles they win at auction. Changes in tariffs, import restrictions, or foreign customs rulings can reduce these buyers' ability or willingness to bid, directly lowering average selling prices. Mexico's 2008 import restrictions on U.S. vehicles are cited as a concrete prior example of this risk.

Growth Strategy Depends on Continuously Acquiring Land, and That Is Getting Harder

Copart's expansion has been built on opening new storage facilities. Zoning restrictions, community opposition, and competition for land in dense markets can block or delay facility approvals. Without new capacity, the company cannot absorb more vehicles, limiting both revenue growth and its ability to win new seller contracts.