Copart's Management Addresses a Future Risk
Among automobile industry investments, shares of online vehicle auction behemoth Copart (NASDAQ: CPRT) are notable for having soared nearly 400% over the last five years as the company has expanded globally and improved its auction platform to attract a wider range of sellers and bidders for salvage and used vehicles. In this midst of this success, now seems an opportune time to assess new risks that might impair the company's business model over the next several years.
During Copart's fiscal fourth-quarter earnings conference call last month, an analyst asked for management's perspective on the rise of car-sharing, and the potential for a reduction in individual vehicle ownership as car fleets tied to ride-hailing businesses grow more prevalent. The question addressed the risk that declining car ownership could translate to fewer vehicles available for auction.
CEO Jay Adair offered the insight that automobile ownership doesn't rest on practical considerations alone. Adair pointed out that at least in America, car owners choose vehicles for reasons extending past utility. We buy cars even where mass transportation is readily available. Many purchasers opt for new vehicles replete with the latest technology when a used, utilitarian car might do. Adair also cited brand attachment as a purchase factor: "[T]here is nothing practical about buying a Mercedes-Benz or a BMW or any luxury car. It's a personal choice."
Source Fool.com
