Jeff Liaw
Co-Chief Executive Officer at Copart
Thank you, Maria. Good morning, everyone, and welcome to our second quarter call, and thanks for joining us. I'll actually start briefly with the safe harbor. Good morning.
During today's call, we'll discuss certain non-GAAP measures, including adjustments to income tax benefits related to stock-based compensation. We've provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures on our Investor Relations website and in our press release issued yesterday. We believe these non-GAAP measures, together with the corresponding GAAP measures, are relevant in analyzing our results and assessing our business trends and performance.
In addition, our comments today include forward-looking statements within the meaning of federal securities laws, including management's current views with respect to trends, opportunities and uncertainties in our markets. These forward-looking statements involve substantial risks and uncertainties and uncertainties. For more detail on the risks associated with our business, we refer you to the section titled Risk Factors in our Annual Report on Form 10-K for the year ended July 31, 2022, and each of our subsequent quarterly reports on Form 10-Q. Any forward-looking statements are made as of today, and we have no obligation to update or revise any forward-looking statements.
With that, I wanted to start today by introducing our new Chief Financial Officer, Leah Stearns, who will provide additional data and context in a few minutes as well. We're very excited to have her join the leadership team here at Copart after an expansive search. We hired Leah for the richness and relevance of her prior experience both at CBRE and American Tower, two industry leaders and public companies in their own right. She has experience with institutional customers, complex regulatory environments, real estate certainly as well and brings exceptional analytical capabilities and leadership skills as well. So we're very -- quite excited to have her on board.
I'll start my comments today starting with our customers. We aspire to be a customer-centric organization, first and foremost, and I'll start with our insurance business. Our insurance customers certainly have experienced a rapidly changing industry environment now for three years with remote work volatility and driving patterns and across-the-board cost inflation. They've made a number of business process and personnel adaptations that, in many cases, have proven more durable than they initially expected and now we think may persist forever. We have likewise adapted our business processes to help them navigate this environment, including providing more virtual inspection, loan payoff and title services and the like.
For the quarter, in terms of unit volume, we achieved US insurance volume growth of 9% year-over-year and large part attributable to the sell-through of volume from Hurricane Ian. The single most unexpected change, as most of you know, for our insurance customers has been the suspension and reversal of the rising total loss frequency trend that we had experienced almost completely uninterrupted for the past 40 years. According to CCC, total loss frequency increased from 17.4% in the third calendar quarter of 2022 to 19.7% in the fourth quarter. We think approximately half of this increase was attributable to flood vehicles from Hurricane Ian.
Today, as had nearly always been true, total loss frequency is rising due to a combination of two forces. First, repairs are more expensive and less attractive due to increasing accident severity, vehicle complexity, labor costs and rental car costs. And secondly, salvage economics are more attractive because of 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.
We've discussed on prior calls what would happen if and when used vehicle prices were to decline. And we've said that we think our selling prices may compress somewhat, but would be offset by increasing volume. We're seeing the beginnings of that phenomenon unfold today. In the fourth quarter of -- pardon me, in the second -- our second fiscal quarter, if total loss frequency had been at historical levels, we think our insurance volumes sold would have been 10% to 20% higher than it was.
Now turning our attention to the non-insurance space. We've made a proactive effort to grow our business in the bank and finance fleet and rental car segments, a group we collectively call Blue Car. Blue Car volume for the quarter and the first half of the year has grown approximately 20% versus the prior year despite a still supply-constrained environment. We believe we've outperformed the overall wholesale vehicle auction industry.
The technology and service offerings required to support these customers is different, and we've invested meaningfully in our capabilities to enable us to serve these sellers, and our auction returns have enabled us to grow with them.
Finally, I wanted to mention our members in a supply-constrained inflationary environment. Our buyers have certainly seen Copart as a valuable source of increasingly newer, lower damaged and whole cars. And we've noted often that the fastest-growing economies in the world generally have the fewest vehicles per capita. We invest significantly in our staff, in traditional and digital marketing and in our global lounge network to expand our member base. We remain committed to empowering more buyers driving auction returns, which in turn enables our sellers to consign still more vehicles through us.
In closing, I wanted to note the bedrock principles that have guided us and are the foundation of our success. These principles certainly long predates both Leah and me, and there's nothing particularly magical about them. We continue to make decisions for the 30-year prosperity of our customers and our shareholders. We will invest in the technology of today and tomorrow to enable us to serve both our members and our sellers. We will invest to recruit members to engage them and to expand the marketplace of services available to them to continue to expand the buyer universe. For every vehicle we sell, we are committed to finding the highest and best use of that vehicle anywhere in the world.
And finally, we will invest in land. We will own our land whenever possible to ensure that our ability to serve our customers is never compromised by the wins or economic optimizations of third-party landlords.
With that, I'll turn it over to our CFO, Leah Stearns, to provide some additional commentary and data and to walk through some key statistics, and then we'll turn it over -- open it up for Q&A.
