Jeff Liaw
Co-Chief Executive Officer at Copart
Great. Thank you, Paul. Good afternoon, and welcome everyone to our quarterly earnings call. We're pleased to report good results for the third quarter of fiscal 2023. We take pride in being the most customer-centric organization in our industry, so I'll orient my introductory comments today around our clients. Leah will follow thereafter with details on our financial results.
We recently concluded our 23rd Annual Advisory Board meeting with our key insurance clients, in honor of our 40th anniversary as a company, we hosted this event in Northern California, close to our headquarters from which we moved about 10 years ago. It was something of a homecoming for all of us. Every year we gather in-person to solicit feedback from our clients about the opportunities and challenges they face, which in-turn informs our service offerings, tech deployments and capital investment programs.
I thought I'd start with some of the key themes that emerged from those discussions this year. The insurance industry continues to experience radical change across a multitude of dimensions, including across-the-board inflation as reflected in their rising combined ratios. They and we are observing an apparent reversion to increasing total loss frequency trends. According to CCC total loss frequency bottomed at 17% or thereabouts in the second calendar quarter of 2022. And has subsequently rebounded to 19% in the first calendar quarter of 2023, the third consecutive sequential quarterly increase.
We anticipate that vehicle prices will likely stabilize or soften faster than repair costs will, which will drive total loss frequency to pre-COVID levels and beyond. We see new vehicle prices as a leading indicator for the used vehicle market. Kelley Blue Book data in particular indicates that average retail transaction prices for new vehicles in March of 2023 and were below MSRP for the first time in nearly two years. The long-term drivers of total loss frequency, of course, remain unchanged.
First, repairs are more expensive and less attractive over time, due to increasing accident severity, vehicle complexity, labor costs and rental car costs. And two, salvage economics are more attractive because the fastest-growing economies in the world in Central and South America, Africa and Eastern Europe, lean on our damaged vehicles to provide the mobility, they need.
Although our U.S. insurance volumes increased 6% or so year-over-year, we estimate the total loss volumes remain suppressed, when compared to historical total loss frequency norms. In the first calendar quarter of 2023 alone -- pardon me, in this past quarter alone, if total loss frequency had been at their pre-COVID levels, our insurance volumes could have been 10% more than they were.
Another theme that emerged is that our insurance clients continue to experience hiring and retention challenges for their own workforces, which we believe will have them leaning more heavily on trusted partners like us to provide additional services, including virtual inspection, loan payoff, title procurement services among others. Our clients also had expressed a strong interest in engaging with our image recognition tools and machine-learning algorithms to enable better decision-making; and importantly, faster decision-making.
For a vehicle that will ultimately be totaled, insurance companies often incur literally thousands of dollars in towing, storage, estimating tear down costs and appraiser labor, much of which could have been mitigated with streamlined decision-making. Our meetings with our clients also underscore the importance of our global marketplace in providing superior salvage returns to the insurance industry.
I'll turn next to our non-insurance business. For several quarters now, we've reported on our progress with our non-insurance customers. Particularly in the bank and finance fleet and rental segments, which we collectively call Blu Car. We drove ongoing growth in our third quarter of approximately 7% year-over-year despite a still constrained supply base. Likewise, we grew our dealer volume by nearly 5% year-over-year as well. We view these additional customer segments as examples of our ability to leverage our existing infrastructure to add both mass and velocity to the flywheel of our auction marketplace.
Last comment, we've fielded a number of questions already from some of our analysts and investors about our growing cash balance, and I thought I would address that question proactively here. I'll start with our long-standing position and follow with a more nuanced current view. Our evergreen position is that we take our responsibility as stewards of capital seriously, and evaluate prospective investments with an owner's mindset, because we are owners from Willis Johnson, our Founder to our newest employees who elect to participate in our Employee Stock Ownership program. We prioritize, investing in our core business, land and technology, in particular.
Secondly, we consider strategic extensions that leverage our key capabilities, as is evident from our conservative M&A track record, these opportunities generally must meet a very high bar. And as we have done episodically, but very substantially over the years. We ultimately return excess cash flow to our investors, and subject to how the tax code evolves, generally in the form of share buybacks.
Regarding where we stand specifically today, I do want to emphasize how the strength of our balance sheet empowers and differentiates Copart. In comparison to other participants in our industry, we do not prioritize interest payments, debt pay-down, dividends or massive cost-reduction initiatives. We can deploy our resources. Specifically, our capital and our management bandwidth to prioritizing the long-term prosperity and satisfaction of our clients. Three simple examples.
First. We can continue investing in our owned real-estate portfolio, which provides a strong, durable protection against an inflationary environment; and also ensures the sustainability of our service model for the next 50 years.
Second, we can provide superior service to our clients in catastrophic events, even when doing so, requires substantial capital investments in technology, trucks, land and people.
And third, we can invest in the tech platforms and marketing resources that create and sustain our global buyer base. In short, we believe our long-term orientation is in itself a distinct competitive advantage.
I'll turn it over to Leah.
