Friday, February 11, 2005

Copart to expand online technology beyond junk cars

By Matthew Bunk

FAIRFIELD - Internet auctions helped Copart Inc. to its most profitable year in 2004, and now the auto salvage company wants to take its online auction technology to other industries.

For more than a year, Fairfield-based Copart watched sales and profits jump after converting from a live auction format solely to Internet sales. Using that method to sell junked cars kept operating costs down and opened the sales to buyers worldwide, instead of just those who showed up in person at one of Copart's 107 auto lots across North America.

Copart now sells salvage vehicles to repair shop owners as far away as Europe and the Middle East. In its most recent financial report, Copart said 20 percent of the cars sold during the quarter were shipped to buyers outside the U.S.

The company, which for the first time topped $400 million in sales last year, said its recent success was due to its proprietary online auction technology, Virtual Bidding Second Generation, or VB2.Now Copart executives are trying to show VB2 can grow sales in industries outside the salvaged auto genre.

Last month, the company facilitated an online auction that included items such as electronics, contemporary art and sporting goods. It was a way to showcase VB2, Willis Johnson, CEO and chairman of Copart, said in a statement.

"Just as we have revolutionized the salvage vehicle auction industry with VB2, we will continue to explore opportunities to apply VB2 to other businesses," Johnson said. "We believe VB2 is ideally suited to industries with a large number of goods for sale, with no fixed price.

"While selling jewelry and DVD players can seem a stretch for a company whose expertise is clearly in the auto industry, Copart executives are taking small steps to push VB2 beyond junked cars. One of those first steps is to sell used cars, damaged or not, to dealers and other bulk buyers, which the company started to do almost two months ago.

Copart hopes to become a bigger player in the wholesale used car market, which is about four times larger than the salvage vehicle market. Right now, it's a small player up against giants such as Atlanta-based Manheim and Carmel, Ind.-based ADESA.

Also, Copart is working with 44 wholesale vehicle auctions to provide its technology for their use. And the company is integrating VB2 with other vehicle auction software to widen its base of users and potential buyers.

There's no doubt VB2 led to higher profits for Copart's salvaged vehicle business, but leaders in the used car industry wonder if people will clamor to buy used cars without first inspecting them up close.

Kicking the tires and getting a whiff of the interior's essence have long been a key part of choosing a new car, critics argue, and buyers might shy away from cars they can't touch and smell first.

Though Copart still allows people to inspect vehicles parked at its lots prior to making a bid, it might be impractical for someone, say in Florida, to go to a Copart lot in Montana to look over a batch of cars. Pre-visiting a far-away car lot, in any case, would detract from the convenience intended with the implementation of VB2.

Trusting the Internet, with its digital pictures and brief disclosure statements, might be easier with a grading system being developed by the National Auto Auction Association.

While a grading system might not mean much to individual consumers, Copart hopes it will be enough to convince wholesale buyers that they can profit from turn-around sales of Copart vehicles.

Reach Matthew Bunk at 425-4646 Ext. 267 or

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