Jeffrey Liaw
President and Chief Executive Officer North America at Copart
Thanks, John. Good morning, everyone. We're pleased to report a strong second quarter for fiscal 2022. I know that over the course of our discussion today, we'll naturally migrate to a discussion of near-term trends, such as driving patterns, new vehicle production, total loss frequency, cost inflation, market share trends and the like, but I'll start by observing that the long-term fundamentals of our business are as strong as they've ever been, auction liquidity and returns, member recruitment and participation, our collaborative engagement with our clients day to day and in catastrophic situations. And certainly, our aggressive reinvestment in capacity, technology and people that make all of the above a reality. A quick thank you to the Copart team worldwide for their efforts in making these true. Our results in the second quarter financially were largely a continuation of what we experienced in the first quarter as we observe commerce and mobility continuing to trend back to the "new normal," which we'll elaborate on in greater detail, accident and assignment volumes beginning and continuing to recover and ASPs remaining elevated as well. As I've done previously, I'll elaborate on a handful of key themes for the quarter, and John will provide additional detail and perspective as well. Starting with our unit trends for the quarter. Our unit sales globally increased 19% year-over-year, with the U.S. increase of 21% and an international increase of 9%. Our insurance business in the U.S., in particular, grew over the second quarter of 2021 by 21.5% and was also up on a two-year comparison versus fiscal 2020 due to the recovery I described a moment ago as well as share gains. Notably, our unit volume has been reduced by increasing used car prices, which I'll describe in greater detail momentarily.
As we noted a moment ago, driving activity continues to rebound as measured across a number of different dimensions, including simply vehicle miles driven as measured by the U.S. Department of Transportation and the U.K. Department of Transport Statistics and gasoline consumption and a host of other statistics as well. We note, however, that the character of driving has evolved as well. With downtown office occupancy remaining quite low, driving is less focused at rush hour and more distributed over the course of the day. There are a number of other phenomenon that have emerged with COVID-19 with nuanced outcomes like that one. The next theme I'd tackle is total loss frequency, which for the first time in our memory, we have noted has declined sequentially from the third quarter -- calendar quarter of 2021 to the fourth quarter from 19.3% to 19%. That's, of course, a very fine measure in that case. But in any case, it's the first time we have seen a decline as opposed to the long-standing increases we've observed over the course of our 40-year history. This is a reflection of the very strong used car price environment and vehicle availability, used car availability, reducing assignment volume relative to what it otherwise would be. As most of you already well know, insurance companies typically compare the cost to repair a vehicle to the difference between the pre-accident value and what they can recover at an auction through Copart for the damaged vehicle. While our auction returns are at or near all-time highs and have kept pace with used car appreciation on a percentage basis, higher pre-accident values certainly do reduce our volume relative to what they otherwise would have been. As those who are following us and the industry in general would well know, there are a host of countervailing forces also working in our favor, which have been incorporated into our clients' total loss decision process to varying degrees.
Accident severity and repair costs are up. We are facing, and our clients are facing larger repair supplements, repair cycle times are up, parts are delayed and rentals are both longer and at higher rates than they ever have been. We certainly look to the 40-year trend in the 40-year history of total loss frequency as the right long-term perspective. Total loss frequency, as a reminder, was 4% in 1980 and effectively 20% today, a fivefold increase over the company's history. We take that to mean that we're likely experiencing a temporary dislocation as a function of used car prices. The secular trends we have discussed previously remain true. Vehicle complexity rises, vehicle composition becomes less repairable substrates like composites and aluminum, making cars more expensive to repair. And our auction liquidity and international member base make them ever more efficient to total instead. We believe that as used vehicle values potentially peak and trend back to historical norms in the future, we may see some moderation in our ASPs will certainly benefit from volume increases as well. Moving to our noninsurance business. We've continued to expand our market share there. Excluding cars as we customarily do, from sources such as wholesalers and charities, our U.S. noninsurance business grew on a unit basis by 4.5%, driven in part by growth in our Copart Direct business as well as consignments from rental fleets and financial institutions. Across our various noninsurance channels, we believe our growth is a reflection of market share capture as a function in turn of our auction liquidity and returns combined with our own proactive selling efforts.
The cars we earn the right to sell on behalf of insurance companies through our online auction platform, no doubt, enables to -- enable us to achieve superior returns for progressively more noninsurance cars as well. And, in turn, these dealer, rental, bank and consumer cars further contribute to our auction liquidity, spinning the flywheel to benefit our insurance sellers as well. Turning then to our average selling prices. We continue to experience ASP strength as previously noted. Worldwide, our selling prices grew 20% year-over-year for the quarter. The Manheim used car vehicle index is currently at record levels in January at 236.3, an increase of 45% year-over-year. Since the beginning of the pandemic, our selling prices, frankly, increased earlier, but have kept pace in the aggregate with the Manheim used car index. When we look forward prospectively, we note that a variety of industry sources indicate that chip shortages will persist for 2022 and potentially well into 2023. We've seen a variety of forecasts. We are, from a business perspective, certainly prepared for the influx of volume that may come with softening in used car prices.
With that, I will hand the call to John North.
