In the auto salvage business, bad weather is great news for profits
Can anything good come from bad weather? Yes, if you're in the vehicle salvage business.
Insurance Auto Auctions is the auto salvage subsidiary of KAR Auction Services and a corporate sibling of auction company ADESA. IAA's auctions, where vehicles that have been totaled are sold for scrap or parts, will get a business boost this quarter from selling some of the wrecks that didn't survive the tough winter.
"There were a lot of cars off to the side of the road getting picked up by tow trucks. We will benefit from that activity without a doubt," KAR CFO Eric Loughmiller told analysts during KAR Auction's fourth-quarter earnings call last week.
He declined to quantify the bump from cars that got bumped, but said: "It's been a very difficult winter, which makes for a strong supply of total-loss vehicles."