Beneath the bustle of a used car lot lies a swarm of activity that few of us have ever seen, a thriving ecosystem of wholesalers, rebuilders, parts recyclers, insurers, and intermediators whose trading activities usher some vehicles to dealer lots for resale and others to repair shops or salvage auctions. Roughly 45mn used cars are sold in the US every year. 10mn+ of those are consumer-to-consumer private transactions that take place on eBay, Craigslist, and the like. The other ~30mn+ are captured by a fragmented base of over 40k used car dealerships (CarMax, Penske, Asbury, etc.) strewn across the country, 10mn of which are sourced through wholesale auctions…so, you might trade in your Chevy Bolt for a new Toyota Camry, but that Toyota dealer doesn’t want a Chevy sitting on the lot and so will sell that trade-in at a wholesale auction, through which the vehicle will find its way to a GM dealer. This being an auction market with two-sided network effects, wherein buyers attract sellers and sellers attract buyers, you will not be surprised to learn that value lopsidedly accrues to just two companies – KAR Auction Services, through its ADESA subsidiary, and Cox, through its Manheim subsidiary – who together process ~70%-75% of the market.