Jeff Liaw
Co-Chief Executive Officer at Copart
Great. Thank you. Good morning, everyone.
We're pleased to report our results for the third quarter of fiscal 2022. As you are all, no doubt, well aware, our industry and the global economy in general are experiencing a number of variables at unusual levels, new and used vehicle shortages, evolving workplace practices and traffic patterns, volatile and elevated fuel and commodity prices and global instability. Against that backdrop, we continue to perform well for our customers, and therefore, by extension for our business as well.
Our long-term core operating beliefs and principles remain unchanged. Above all else, we'll invest in our physical infrastructure, our technology platform, our people and our customer service offerings to improve auction liquidity and returns for our sellers in our more mature markets. We'll continue to collaboratively engage with our sellers both day-to-day and through catastrophic events, including what appears to be an active storm season ahead, to protect them and their policyholder relationships. We will actively expand our addressable markets by growing our volume of lesser damaged and whole cars from both insurance and noninsurance sellers. And we'll continue our expansion into international markets in Western Europe and beyond, including Germany and Spain.
But turning to the events of the quarter. Our -- starting with unit volume trends and our auction performance. Our global unit sales increased 12% year-over-year for the quarter with a U.S. increase of 11% and an international increase of 18%. Our insurance business itself grew relative to the third quarters of both last year and the year prior on a two-year basis due to a continued recovery in overall driving activity and accident frequency and severity. We'd also note, however, that record-high used vehicle prices have for the past few quarters negatively impacted total loss frequency and have tempered overall insurance volume growth relative to what it otherwise would have been.
On the notion of driving activity, at least as measured in vehicle miles driven as tracked by the U.S. Department of Transportation, for example, we've seen a rebound in driving activity now to a level similar to pre-pandemic levels, including as measured by gasoline consumption and the like. The character of driving has evolved with less, of course, workplace commuting, more leisure travel as a substitute.
On the question of total loss frequency, contrary to very consistent long-term trends, total loss frequency has declined sequentially over the past few quarters and year-over-year with a strong used car price environment and vehicle availability, reducing assignment volume relative to what it otherwise would be. While our auction returns themselves are at all-time highs and have kept pace with the used car market in general, higher pre-accident values do reduce volume relative to what it otherwise would be. In layman's terms, in a world in which replacement vehicles are hard to come by, total loss settlements are less compelling than they otherwise would be.
While total loss frequency has declined over the course of the past 12 months or so, the 40-year trend is nonetheless clear. We believe the market will ultimately revert to the historical norm of steadily rising total loss frequency and in fact, a number of other variables, increasing accident severity, repair duration, repair labor costs, rental car costs and the like should contribute to that reversion as well. The history of total loss frequency is quite clear. It was 4% or thereabouts in 1980 and is approximately 20% today. And it in turn has been the product of two key factors. Vehicle complexity and composition have made cars more expensive to repair over time, while our auction liquidity and global buyer base have made them ever more efficient to total instead. As used vehicle values eventually moderate and potentially trend back to lower levels in the future, we may see a moderation in our average selling prices as well. In that scenario, however, we believe we will benefit from volume increases, perhaps substantially so.
We continue to grow our business as well in noninsurance vehicles, including -- excluding, pardon me, cars and sources like wholesalers and charities. Our U.S. noninsurance business grew approximately 3% in unit volume year-over-year, driven in part by growth in our consumer-based Cash For Cars business as well as growth in non-salvaged sources of volumes, such as rental car fleets, corporate fleets and financial institutions.
Overall, our growth across the full spectrum of vehicles generates improved auction liquidity, auction attendance and returns for our sellers as well. The greater number of noninsurance cars we sell, whether they're from dealers or rental car companies, fleet managers, lenders or from consumers ultimately contributes to auction liquidity and generating better returns for our insurance sellers in turn.
I wanted to provide a few comments on environmental sustainability and governance matters before turning it over to John. We play a meaningful role in the global circular economy. We sold more than 3 million vehicles in our last fiscal year and estimate that 40% to 50% of those vehicles are ultimately returned to drivable services somewhere on the planet. And of course, the balance are subsequently harvested for parts and raw materials. In both cases, we provide meaningful benefits to the world environmentally through the avoidance of manufacturing of vehicles and of replacement parts.
According to recent research from Argonne National Laboratory, a science and engineering research house operated by the University of Chicago on behalf of the U.S. Department of Energy, the vehicle manufacturing processes -- process produces nearly 2 metric tons of CO2 per new vehicle manufacturer. We estimate, therefore, that our business facilitates the avoidance of literally millions of carbon dioxide -- millions of tons of carbon dioxide per year.
Our business, especially given our emphasis on providing access to international buyers, also contributes to the advancement of other important societal objectives, including the reduction of global poverty with affordable transportation as a crucial lever and improved outcomes for people around the world in commuting to work, advancing their education or accessing medical care and the like.
In the weeks ahead, we intend to publish our inaugural ESG report, in which we'll provide additional disclosure about our role and impact in the circular economy.
And with that, I'll turn it over to John North, our CFO, to walk through the third quarter financial results.
