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Ever thought that junk cars could be a great business? With repair costs exceeding vehicles’ market value, insurers are declaring more smashed cars as total loss. Salvage auto auctioneers are reaping profits from these damaged cars. In this business, total losses are good! Let’s dive deeper.

Business Model: From Trash to Treasure

The business model of salvage auto auction companies is pretty simple. If the repair costs of a car exceed its market value, insurance agencies usually declare it as a total loss, pushing it to the salvage market. Insurance agencies have a vast collection of cars damaged by accidents or natural calamity. Insurers’ goal is to liquidate the cars they gain possession of after settling claims of customers. Insurance companies usually sell the damaged cars to auction houses. These salvage auto auctioneers sell the vehicles primarily to licensed vehicle dismantlers, rebuilders, used vehicle dealers, exporters and the general public.