Jeff Liaw: So in terms of US purchased vehicle sales, we were actually up sequentially. But year-over-year, that was down slightly. So that does appear. And we do believe that the reduction in purchased vehicle sales earlier in 2023 was really a temporary phenomenon for the business. So we would expect to see that continue to grow going forward on a sequential basis as the market becomes more stable from an ASP perspective and more of the whole car space. And then as it relates to the second part of your question, can you repeat that?
Daniel Imbro: Just internationally, that continues to grow very quickly. I’m curious if that is more of the long-term strategy? Or if that is a — helping onboard new customers remove the risk from the seller, but ultimately shift them to agency is the strategy?
Leah Stearns: It’s really the latter initially. And to the extent that we find opportunities to continue to expand in international markets, we may use that. But I don’t think you’ll see us grow significantly on the international side, particularly for the insurance business. We may increase our full car cash for cars business internationally, but that is a separate endeavor.
Jeff Liaw: Yes. The purchasing approach is a necessary enabler. I think that was the — what you were hinting at when it comes to our institutional clients. In the US, a healthy portion of our purchase volume is our direct-to-consumer business, so to speak. This is Cash For Cars in which we buy cars from customers because, to date, it hasn’t proven to be a scalable solution to create a consumer-branded Copart. So the better solution for an individual vehicle owner is to buy the car to offer a certain value to them and to sell the car at a profit or so. If we could sell those cars purely on a consignment basis, we probably prefer it. And that certainly holds true for institutional clients as well in the US and elsewhere. In the UK when we entered in 2007, so that’s now almost 16, it is 16 years ago when we entered the UK for the first time, the mix there for insurance clients was very heavily principal oriented.
Today, we migrated to be a strong majority of those cars being sold on a consignment basis. That is generally our preferred approach, not necessarily because we make more money doing so, but because it is a better alignment of interest with our customers. When we buy cars from them, they want to sell them for the lowest possible value. We want to sell them for the highest possible value, and we’re on the opposite side of the trade. When we instead our selling cars on their behalf, we’re both rooting for the highest possible outcome and working collaboratively to do so. So it’s a better alignment of interest with our institutional clients. It’s more conducive to a constructive 20-year relationship than a principal trading counterparty arrangement.
Daniel Imbro: Yeah, the Makes a ton of sense. I appreciate all the color and best of luck, guys.
Jeff Liaw: Thank you.
Operator: Thank you. Our next question comes from Craig Kennison with Robert W. Baird. Please proceed with your question.
Craig Kennison: Hey, good afternoon, and thank you for taking my question. I wanted to circle back on ASPs. I think the surprise for me this year is how strong your ASP has been, despite the drop in used car prices as measured by the Manheim index or other sources. I think you’ve explained that in part as a function of mix. And I’m wondering if you can help us understand the — how wide the gap is between your insurance ASPs and your noninsurance ASPs and whether that’s the fundamental driver to that outperformance?
Jeff Liaw: In this case, Craig, it’s not the fundamental driver of the performance in the quarter. I would and I think it’s fair to acknowledge that if you track Copart ASPs versus Manheim every quarter and go back a lot of years, they’re certainly positively correlated and there are certainly some leads and lags. You would have seen our prices jump well before Manheim in the pandemic after the initial declines in the spring of 2020. Our prices increased far earlier than Manheim’s ever did. And then in late 2021, if I have my date straight, we would have seen the wholesale market as reflected in that Manheim Index increase rapidly then, we continue to grow as well, but not at the same rate because we had grown earlier still.
Today, with Manheim declining somewhat meaningfully year-over-year, our prices have held steady or grown, both for insurance units and noninsurance units. So that outperformance is not principally a shift from insurance to noninsurance. What I would observe, I think, is fair is that with used vehicle prices softening, we see total loss frequency rebounding. When total loss frequency increases and Copart earns the right to sell the marginal vehicle, those marginal vehicles will generally sell for more than the average vehicle before it. So I think that’s — that partially explains the strong performance on price on the insurance side as well as, of course, the auction performance itself. We see more bidders, more bids per vehicle, et cetera, et cetera.
All the traditional metrics we used to talk about quarter-to-quarter we’re seeing still better auction liquidity even per unit sold than we did a year ago, than we did 5 years ago and so on. So that explains part of it as well.
Craig Kennison: And as a follow-up, within your, let’s say, dealer service cars or Copart Blue, are you continuing to mix up, in other words, earn the right to sell a more expensive car? And is that in any way a driver to ASP?
Jeff Liaw: Less so in this, yes, but less so in this case. In terms of the pure arithmetic for the quarter, that’s not the principal driver of our outperformance relative to the Manheim Used Vehicle Index.
Craig Kennison: Got it. Thank you.
Jeff Liaw: Thanks, Craig.
Operator: [Operator Instructions] Our next question comes from Bret Jordan with Jefferies. Please proceed with your question.
Bret Jordan: Hey, good afternoon, guys. When you look at the Blue Car and the dealer cars that you’re selling, is the mix of foreign buyers hire in that space? Or do they prefer the salvage cars because they have the arbitrage of low repair cost?
Jeff Liaw: I think it’s similar, Bret. So, yes, they like the arbitrage or repair costs, but and we’re going to pull this up and double check at real time. But I think it’s directionally similar. Also like these cars, once brought to the marketplace, that’s the point we’ve made in the past about the flywheel of liquidity. We bring buyers — we bring vehicles to the buyers and therefore, buyers of the vehicles. And those buyers in turn development an interest for the cars we incrementally bring to the auction as well.
Bret Jordan: Okay. And then you called out Hurricane Idalia in the prepared remarks. I guess that was a Q1 event. Was that — was the cost associated with prepping for that versus the limited cars delivered by that a negative in the quarter? Or is that just sort of a wash?
Leah Stearns: That Idalia happened in the first quarter of ’24 and so that’s not reflected in these numbers.
Bret Jordan: No, no, I was asking whether that’s an impact in the quarter that we are currently in or?
