Will Copart's international buyer share of US auction value decline below 35% by Q2 FY2027?

International buyer participation is currently at ~40% of US auction value and TRENDING UPWARD — all five liquidity indicators are at all-time highs. For a decline to below 35%, a 5+ percentage point drop would need to occur within approximately 12 months. The committee confirmed no current evidence of declining international participation. The only plausible mechanism is DOJ enforcement restricting buyer geographies, but the committee agreed enhanced KYC (more likely than outright restrictions) would reduce participation through friction, not collapse it. Even with friction, 40% to below 35% in one year is a large move for a metric that has been expanding for years.

I assign slightly higher probability than pure trend analysis suggests because of the DOJ tail risk. If the DOJ moves to formal enforcement with buyer geography restrictions (OFAC-style), international participation could decline rapidly. The committee estimated this as low probability but high impact. However, even if the DOJ investigation progresses, the remedy design and implementation timeline likely extends beyond Q2 FY2027. Legal and compliance processes for buyer restrictions would take months to implement after any enforcement action.

The base rate for a metric at all-time highs declining by 12.5% (from 40% to below 35%) within 12 months is very low absent an external shock. The only external shock with sufficient magnitude would be DOJ buyer geography restrictions, which the committee classified as 'low probability but high impact' and less likely than enhanced KYC. Even global trade disruptions or currency shocks would unlikely reduce participation by 5pp given the structural value proposition (38% higher prices for sellers). The auction liquidity flywheel is self-reinforcing and has been widening for years.

All trend data points in the opposite direction — international buyer share has been rising, not falling. No evidence of any current pullback. The DOJ investigation is the only realistic catalyst for this decline, and even DOJ action would need to occur AND be implemented within the next ~12 months. The resolution requires an actual measured decline in quarterly data, not just an announcement. Very unlikely given current trajectory.

I assign slightly higher probability than the baseline trend suggests because of compounding risk factors. DOJ investigation could accelerate if a political administration prioritizes AML enforcement in non-financial sectors. Currency movements (dollar strength) could simultaneously reduce international buyer purchasing power. Global trade tensions or tariffs on vehicle exports could independently reduce cross-border flows. While each factor is individually unlikely to cause a 5pp decline, their correlation could amplify effects.

The structural economic incentive is overwhelmingly in favor of continued international participation. International buyers pay 38% more than domestic — this price premium reflects genuine demand from buyers who can extract value from vehicles through lower-cost repair and parts markets globally. This economic incentive would persist regardless of DOJ action (enhanced KYC creates friction but doesn't change the underlying economics). Only outright geography bans could produce a 5pp decline, and those are unprecedented in vehicle auctions.

International buyer share at 40% and rising. Would need 5pp decline in 12 months. Only DOJ enforcement could cause this magnitude of decline, and even DOJ action unlikely to be implemented within the window. Very low probability.

The committee's conclusion is clear: all five liquidity indicators trending at all-time highs with no evidence of decline. The auction flywheel is self-reinforcing. Even DOJ enhanced KYC would reduce participation by friction, not collapse it below 35%. This is close to a minimum-probability event.

While the base case is strongly against a decline below 35%, the DOJ investigation creates genuine tail risk. If formal charges include buyer restrictions as a remedy, implementation could begin within the window. Assigning slightly higher probability to account for this tail scenario, though it remains unlikely.