Copart’s acquisition of ACV could help ‘make a splash’ in commercial consignment, too

Copart’s $1.9 billion all-cash acquisition of ACV Auctions, which closed last week, is big opportunity for the former to expand further into the whole-car remarketing space, particularly among franchise dealers.

“I think this opens up the world and our ability to do a lot more vehicles in that space,” Copart CEO Jay Adair said last month shortly after the deal was announced.

Having ACV in the fold also opens the potential in the commercial consignment space, where Copart may “make a splash,” according to one analyst.

In a research note this week, John Healy of Northcoast Research said the “biggest opportunity” for Copart in bringing in ACV “will be to rekindle the growth rate of the company.”

Healy adds, “While ACV has built a nice business in the dealer consignment business, we think they have largely only achieved success in roughly half of the whole car auction market.

“That other part of the market, viewed as commercial, is comprised of a variety of consignors but we believe areas like rental and repo (which may represent approximately half of that market) seem to us to be a place where Copart could potentially make a splash.”

ACV has made some traction in the commercial consignment space. As Healy notes, ACV has worked the last 18 months and change on “achieving status and integration with AutoIMS,” which acts as a conduit between commercial consignors and wholesale platforms.

“We think the ability to use the ACV tools as recently established, but potentially marrying these tools with Copart real estate could be a nice jump-start for gains in commercial units,” Healy said.

“While we think there are nice cross-synergies to accelerate growth in commercial, we do think the international buyer base of Copart could provide a differentiated selling proposition to some dealer consignors.

“From our seat, we think there is a case to be made that some low-dollar value cars that perhaps are taken to other auctions could find a nice home on the Copart platform,” he said.

Additionally, with a vehicle population approaching an average age of 13, Copart’s salvage offering could be the most effective route some of the vehicles.

“We believe international markets and a differentiated buyer base could be an LT selling proposition for Copart to potentially capture these lower dollar units. Collectively, we see lots of paths of potential success for Copart with the asset,” Healy said.

ACV is an asset that Northcoast finds “very valuable” for Copart to have in its arsenal.

“Paying $1.9 billion may seem to some as a big splurge but in our view, ACV was a scarce asset within the remarketing industry with qualities such as scale, a strong brand, a valuable platform of inspectors, and unique assets such as relationships with Amazon and the yet-to-be-harnessed potential of its VIPER technology,” Healy writes.

The full research note can be found here.

Healy will be among the speakers at Used Car Week next month, participating on The New Wholesale Business Model, panel.

That session also includes ACV CEO George Chamoun and Copart vice president of sales Yoker Vidal, along with Auction Management Solutions president Tom Stewart, Carvana vice president of strategic partnerships Jeff Miller, AutoNation Auto Auction Orlando general manager Robbie Jaramillo and CarMax Auctions regional vice president of auction services Bryan Windsor.

To see the full Used Car Week agenda, visit: Agenda – Used Car Week