Jeff Liaw: Retention rate? Got it. So, with — as used vehicle prices soften, we will see — we will eventually see perhaps a softening in the selling prices of our cars, which is a self margin dilutive. We will, at the same time, see an increase in volume because a big part of the suppression of total loss volume today is those high used vehicle prices. So, when we see that additional volume flow through the system, that is margin accretive. Beyond that, as for other actions we can take, we certainly have levers in the business available to us which we explore on a recurring basis, including deploying still more technology and automation and so forth in our business, among other things. I think you know we don’t comment on our fee schedules and how we manage that long-term. But suffice it to say, the business delivers enough value to our members and sellers to ultimately recover and generate a good return on capital.
Unidentified Analyst: Yeah. Gotcha. And are there any data points that you guys are looking at that we should keep track of in terms of this that would help out?
Jeff Liaw: In this, being used car prices?
Unidentified Analyst: Yeah. So, anything you guys are like particularly keeping eye on that we should also look at?
Jeff Liaw: Probably nothing insightful. So, we track the Manheim used vehicle index and ADA. We track anecdotally what’s happening in the auction space, broadly auto retailers and the like. So, nothing that’s not broadly available in what we track.
Unidentified Analyst: Gotcha. Helpful. Thank you.
Operator: Thank you. The next question is from the line of Ali Faghri with Guggenheim Partners. Please proceed with your question.
Ali Faghri: Hi. Good morning. Thanks for taking my question. Was there anything different than your cat response that allows you to process these cars quicker than historically? I think with the storm in mid to late September, I guess I was surprised to see that you were already selling through this inventory in October. I think historically, it’s taken at least 60 days, especially for cat events.
Jeff Liaw: I think, it’s an evolution of our capabilities, but we’ve invested over the years. But certainly, we have in recognition of rising frequency severity of these storms, have invested in that technology. We haven’t gotten to the details of what that means. But in the technology platform, in processing titles, in receiving cars, in helping the insurance companies by absorbing much of the physical work that they used to do, there are many different individual levers pulled to collectively expedite the process on behalf of our sellers.
Ali Faghri: Okay. Great. And then just a follow-up here on total loss rates. They were up modestly sequentially. Do you think we’ve hit the trough there on total loss rates, and we should now see them start to climb higher from here?
Jeff Liaw: A difficult forecast, I’ll leave because that — underlying that then is your belief about used vehicle prices, in particular. The other forces, I think we’ve got a fair bit of conviction in, which is to say that the eventual rising tide is repair costs will rise and will continue to rise because of vehicle complexity. Every car that rolls off the line today is meaningfully more complex than one, five years ago, and probably one a year ago. I saw anecdotally a recent description of a Ford focus having 300 microprocessors in it and a Ford electric vehicle having 3,000 of them for example. And I think that will play itself out over the years and decades to come. So, those forces, I think, are well known. Repair costs will rise.
International demand for Copart vehicles will rise. The near-term variable is what happens to the used car prices, and that forecast is difficult to make in isolation. It does appear to be softening somewhat. But as for how that will play out over the next six to 12 months, that’s harder for us to say.
Ali Faghri: Great. Thanks Jeff.
Jeff Liaw: Thanks Ali.
