Low Gas Prices Could Slow US Auto ABS Performance
As fuel prices drop, the shift away from smaller, more fuel-efficient vehicles could result in lower wholesale vehicle prices and marginally slow the asset performance of auto asset backed security (ABS) transactions according to the latest research.
According to Fitch, the group “expects used vehicle supply to rise in 2015 and place pressure on wholesale vehicle values.
Additionally, low gas prices may raise consumer demand and purchases of larger vehicles.” Auto manufacturers may increase small car incentives if inventories rise beyond optimal levels.
If these trends continue in 2015, this may impact securitized auto ABS pools with high concentrations of cars, particularly pools with cars totaling over 50%.
Trucks and SUVs captured approximately 52% of the market in 2014, up from 48% through YE12. Conversely, sales of cars declined to 48%. The top selling vehicles in 2014 were trucks and SUVs, with the top three being the Ford F-Series, Chevrolet Silverado and Ram trucks.
Most manufacturers’ small car sales fell last year versus the prior two years.
Total vehicle sales hit 16.5 million units in 2014, the highest level in over six years. Fitch predicts that auto sales may hit 16.8 million units in 2015.
Category: Commercial
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