8 ms·

A Junkyard Billionaire

61 points by yarapavan 7y ago

yarapavan 7y ago
Context: Copart specializes in online auctions of cars that are too damaged for insurance companies to justify paying the price of repairing them; buyers include scrap yards and companies like LKQ Corp., which dismantles old cars and reconditions their parts to be sold in collision-repair shops. The insurance companies get what’s recovered in the auction, minus fees due to Copart that in some cases will increase proportionally with the value of a vehicle. “There was a lot of concern that safety technology would reduce accidents and so there’d be less cars for auction -- good for society, bad for Copart,” said Craig Kennison, a senior research analyst at Baird. But that didn’t account for the spread of smartphones, he added. “Cars may be safer, but drivers are more distracted.” Another article from Bloomberg, with more info - https://www.bloomberg.com/opinion/articles/2019-11-08/junk-car-dealer-copart-is-pricier-than-apple-and-microsoft-k2qkdw2k https://www.bloomberg.com/opinion/articles/2019-11-08/junk-c...
- cperciva 7y ago
  A lot of that safety technology -- crumple zones, reinforced passenger cages, airbags, rear view cameras -- make things safer for people but contribute to increasing the dollar value of vehicle damage. I'd say that the concern was overstated, quite aside from a supposed increase in smartphone-induced accidents.
  - Scoundreller 7y ago
    And those proximity sensors are expensive. ... but the remaining working ones retain their value really well in the parts market making the carcass more valuable.
neonate 7y ago
https://outline.com/zXFL9s https://outline.com/zXFL9s
ng12 7y ago
I don't get why the article is treating this as an exciting new business. It's as old as automobiles are -- every town has a junkyard or two that buys junked cars for a pittance. If you've had the displeasure of trying to keep a 15 year old junker running on a limited budget you may have even gone to one of these yards to source some parts. What's the innovation here? He has an online platform? He may be really good at running his junkyards but the article does a terrible job accounting for his success.
- rb808 7y ago
  Just as old as breaking down stolen cars too.
- jjeaff 7y ago
  Individuals are not using copart to find parts in any significant number. Copart is the defacto standard for most every mechanics shop and body shop in the country. When a car is being repaired, they can generally lookup available parts and prices using whatever software they use for generating quotes. They can choose from new oem parts, aftermarket parts, or salvage parts. The salvage parts will come from Copart's network. In other words, when you get you gender bender repaired, there is a good chance that you insurance company is requiring that the shop try to use salvage parts first.
  - tmh88j 7y ago
    >When a car is being repaired, they can generally lookup available parts and prices using whatever software they use for generating quotes. They can choose from new oem parts, aftermarket parts, or salvage parts. The salvage parts will come from Copart's network. You can call any junkyard and do the same from my experiance. Copart's advantage is a large inventory.
    - jjeaff 7y ago
      If I'm not mistaken, many of those junkyards are part of Copart's network as well.
  - 7y ago
russellbeattie 7y ago
As we move to electric over the next few decades, I wonder what we're going to do with all the ICE vehicles that are on the road now? There's going to be a tipping point where finding a gasoline station will be hard. There are a lot of gas stations, so this is going to be pretty huge by itself. Some states may go as far as banning ICE vehicles all together. I guess we already churn through a huge amount of cars yearly as it is... I don't see many 1979 Plymouths on the road. They must have been all chopped up at some point, so this is probably a non issue. That said, I can't imagine the transition will be without pain for lots of people...
- TrueGeek 7y ago
  I have an old 1967 car that I like to drive a couple times a week so I wonder about this as well. I think the bans will start in the cities (they already have) but it will take a while before ICE vehicles are gone from the areas far from large cities.
  - sokoloff 7y ago
    I’m 48 and don’t expect the premise of Rush’s Red Barchetta to become a reality in my lifetime.
- RickJWagner 7y ago
  Yeah. I'm a car enthusiast, have long dreamed of the day retirement approaches and I can have a cool hobby car. But lately I'm thinking maybe it'll be one of those fast, 2 motor electrics. Probably a lot more reliable, and faster too.
  - WalterBright 7y ago
    > Probably a lot more reliable, and faster too. Yeah, but cars that don't buck, snort and belch fire are boring.
    - asudosandwich 7y ago
      Reminds me of the Beetle with aftermarket afterburner http://www.ronpatrickstuff.com/ http://www.ronpatrickstuff.com/
RickJWagner 7y ago
The American dream. I'm a car nut, I really like this guy's story. Lucky dog.
turk73 7y ago
From what I have experienced locally, there are several levels in the junk car space and all the best parts and parts cars are picked clean before they get anywhere near the public. There is a "U Pull R Parts" type place nearby but it is a complete joke as far as what's there. It's nothing like junkyards used to be. It's also nothing at all like where these Youtubers are pulling LS V-8 engines out of trucks to soup up. Pretty much anything of value is already gone before it gets to the consumer level, especially if it's German.
rmason 7y ago
Want to see the inside of a Copart yard? There's a guy I follow on YouTube who buys and repairs cars purchased at Copart and then sells them. He does three 'walk arounds' each week and comments on the cars he finds. https://www.youtube.com/watch?v=HGGsYirSZhw https://www.youtube.com/watch?v=HGGsYirSZhw What's interesting is that he ends up making very little on his repaired cars. But he's so fascinating as he repairs them in his suburban driveway that he's making $250,000 a year off YouTube. Talk about failing upward! The key is that he manages to be very entertaining doing it.
- stevekemp 7y ago
  That was actually a lot more fun than expected, thanks for sharing!
- Scoundreller 7y ago
  I really wanted to do the opposite one day: Part-out a car. The numbers actually looked pretty good. Not for the hours, but I would learn about every part of a car, outside-in while making money. I think there’s a sweetspot for parting out though: probably 5 year old cars because they are worth repairing. May 6-8 year old cars for more luxury models.

61 points by yarapavan 7y ago

Context: Copart specializes in online auctions of cars that are too damaged for insurance companies to justify paying the price of repairing them; buyers include scrap yards and companies like LKQ Corp., which dismantles old cars and reconditions their parts to be sold in collision-repair shops. The insurance companies get what’s recovered in the auction, minus fees due to Copart that in some cases will increase proportionally with the value of a vehicle. “There was a lot of concern that safety technology would reduce accidents and so there’d be less cars for auction -- good for society, bad for Copart,” said Craig Kennison, a senior research analyst at Baird. But that didn’t account for the spread of smartphones, he added. “Cars may be safer, but drivers are more distracted.” Another article from Bloomberg, with more info - https://www.bloomberg.com/opinion/articles/2019-11-08/junk-car-dealer-copart-is-pricier-than-apple-and-microsoft-k2qkdw2k https://www.bloomberg.com/opinion/articles/2019-11-08/junk-c...

cperciva 7y ago
A lot of that safety technology -- crumple zones, reinforced passenger cages, airbags, rear view cameras -- make things safer for people but contribute to increasing the dollar value of vehicle damage. I'd say that the concern was overstated, quite aside from a supposed increase in smartphone-induced accidents.
- Scoundreller 7y ago
  And those proximity sensors are expensive. ... but the remaining working ones retain their value really well in the parts market making the carcass more valuable.

neonate 7y ago

https://outline.com/zXFL9s https://outline.com/zXFL9s

ng12 7y ago

I don't get why the article is treating this as an exciting new business. It's as old as automobiles are -- every town has a junkyard or two that buys junked cars for a pittance. If you've had the displeasure of trying to keep a 15 year old junker running on a limited budget you may have even gone to one of these yards to source some parts. What's the innovation here? He has an online platform? He may be really good at running his junkyards but the article does a terrible job accounting for his success.

rb808 7y ago
Just as old as breaking down stolen cars too.
jjeaff 7y ago
Individuals are not using copart to find parts in any significant number. Copart is the defacto standard for most every mechanics shop and body shop in the country. When a car is being repaired, they can generally lookup available parts and prices using whatever software they use for generating quotes. They can choose from new oem parts, aftermarket parts, or salvage parts. The salvage parts will come from Copart's network. In other words, when you get you gender bender repaired, there is a good chance that you insurance company is requiring that the shop try to use salvage parts first.
- tmh88j 7y ago
  >When a car is being repaired, they can generally lookup available parts and prices using whatever software they use for generating quotes. They can choose from new oem parts, aftermarket parts, or salvage parts. The salvage parts will come from Copart's network. You can call any junkyard and do the same from my experiance. Copart's advantage is a large inventory.
  - jjeaff 7y ago
    If I'm not mistaken, many of those junkyards are part of Copart's network as well.
- 7y ago

russellbeattie 7y ago

As we move to electric over the next few decades, I wonder what we're going to do with all the ICE vehicles that are on the road now? There's going to be a tipping point where finding a gasoline station will be hard. There are a lot of gas stations, so this is going to be pretty huge by itself. Some states may go as far as banning ICE vehicles all together. I guess we already churn through a huge amount of cars yearly as it is... I don't see many 1979 Plymouths on the road. They must have been all chopped up at some point, so this is probably a non issue. That said, I can't imagine the transition will be without pain for lots of people...

TrueGeek 7y ago
I have an old 1967 car that I like to drive a couple times a week so I wonder about this as well. I think the bans will start in the cities (they already have) but it will take a while before ICE vehicles are gone from the areas far from large cities.
- sokoloff 7y ago
  I’m 48 and don’t expect the premise of Rush’s Red Barchetta to become a reality in my lifetime.
RickJWagner 7y ago
Yeah. I'm a car enthusiast, have long dreamed of the day retirement approaches and I can have a cool hobby car. But lately I'm thinking maybe it'll be one of those fast, 2 motor electrics. Probably a lot more reliable, and faster too.
- WalterBright 7y ago
  > Probably a lot more reliable, and faster too. Yeah, but cars that don't buck, snort and belch fire are boring.
  - asudosandwich 7y ago
    Reminds me of the Beetle with aftermarket afterburner http://www.ronpatrickstuff.com/ http://www.ronpatrickstuff.com/

RickJWagner 7y ago

The American dream. I'm a car nut, I really like this guy's story. Lucky dog.

turk73 7y ago

From what I have experienced locally, there are several levels in the junk car space and all the best parts and parts cars are picked clean before they get anywhere near the public. There is a "U Pull R Parts" type place nearby but it is a complete joke as far as what's there. It's nothing like junkyards used to be. It's also nothing at all like where these Youtubers are pulling LS V-8 engines out of trucks to soup up. Pretty much anything of value is already gone before it gets to the consumer level, especially if it's German.

rmason 7y ago

Want to see the inside of a Copart yard? There's a guy I follow on YouTube who buys and repairs cars purchased at Copart and then sells them. He does three 'walk arounds' each week and comments on the cars he finds. https://www.youtube.com/watch?v=HGGsYirSZhw https://www.youtube.com/watch?v=HGGsYirSZhw What's interesting is that he ends up making very little on his repaired cars. But he's so fascinating as he repairs them in his suburban driveway that he's making $250,000 a year off YouTube. Talk about failing upward! The key is that he manages to be very entertaining doing it.

stevekemp 7y ago
That was actually a lot more fun than expected, thanks for sharing!
Scoundreller 7y ago
I really wanted to do the opposite one day: Part-out a car. The numbers actually looked pretty good. Not for the hours, but I would learn about every part of a car, outside-in while making money. I think there’s a sweetspot for parting out though: probably 5 year old cars because they are worth repairing. May 6-8 year old cars for more luxury models.