CPRT
#You're welcome.
No.
Go ahead.
We do not and in these, and in our strategy we won't do much to these.
So every yard is unique.
The question whether we fence it is even one that's subject to discussion.
If we don't fence it, that means in times of use, we need to have security.
So then it's just a math equation, of how many times do you think you will use it and need security versus the cost of a fence.
Generally in these temporary, they're not temporary, but these standby locations we'll put in roads, we'll rock some roads, and that's about it.
So beyond the cost of the land there's very little capital necessary to put them in a stand by state.
I believe it is.
And this doesn't provide salvage frequency.
It provides the drivers to that decision.
And so this is more focused on accident frequency.
So the numbers I cited were that the number of paid claims on a year-over-year basis, and this is based on the third quarter of last calendar year, we're up 3.5%, and on a two-year period we're up almost 8%.
While at the same time the paid losses were up 10% and 20%.
And I guess I will also note that accident frequency reached 6% for the first time.
I don't know if it's the first time.
I only go back to 2011.
And it's never been 6%.
So the effect of accident avoidance systems, and some of the new technology isn't being demonstrated in the numbers at least at this point.
Yes.
That's correct.
You are welcome.
I would just add some closing remarks from listening to some of the questions.
One is that you may want to look into the use of adaptive headlights, and the multiple component bumpers today that exist in the market.
There is plenty of research out there that you can find, you named off CCC and some of the other sources that are out there, but there's no doubt that bumper covers being three components, and now being 15 components, and all the complexity in headlights, headlights are now as high as $5,000 for a headlight.
Coming from the days when they were less than $100.
So we're seeing some big increases there.
You may want to research on some of the carriers as well, because they're reporting that in their claims costs, and why their claims costs are up because of that.
That increase in cost is increasing severity, and that severity going up causes total loss frequency, or salvage frequency as we call it, to go up.
The other thing that I'm not sure that the analysts maybe you understand it, I'm not positive that you fully understand it, is this cost that we have associated with building yards, and asking questions about what would be normal.
Right now we have got people in advance of all of this growth, that are finding locations, developing locations, and it takes a number of resources to do that, and then once those yards are ready, we have got to staff them, and turn them on completely before we ever assign one car.
And so you have got all of this cost when you go from adding I think <UNK> stated three locations over four years, to ten locations this year, and we believe we'll open up in addition in the calendar year we are in, another plus ten or more.
So there are a lot of costs that's associated with that, and then once we start to see some normalcy in total loss frequency and the total losses that are coming in, those yards will have excess capacity.
So we don't build those yards for 85% capacity.
We'll build those yards for 30% or 40% utilization, and a much higher number of capacity, so that they have room to grow into that.
As <UNK> stated, we want to operate the Company at 85% on an average for our locations.
So these new stores are being built, these new yards are being built with significantly more capacity than that, and so that, you're going to see some of these costs.
And then finally I would just mention in addition there was the towing component that <UNK> outlined, could be a pretty significant component when you're out of a space in a market.
You may have to shuttle cars and we have had a few scenarios like that, we're okay with that, we're handling those cars, we're moving them to areas where we have room, and then when we expand all of that cost goes away.
So we looking all of this as a upside, we're getting a lot of volume.
In the history of my career I have not seen where the volume increases like this, and then goes the other direction.
So at some point this may start to shrink.
As <UNK> stated, we don't see that currently, but at the point that we start to see volume normalize, we don't think it goes into a negative situation.
So we slow down at that point.
The adding of yards, we slow down the expansion of facilities, and we process those vehicles as incremental units.
So that was it.
Just wanted to add that color.
Thank you all for attending the call, and we look forward to reporting third quarter.
Thank you much.
