Securitisation and Regulation News

Auto-ABS - a decisive success factor for the German automotive industry

The automotive industry faces many structural challenges: Mobility concepts are changing, new drive concepts are emerging; old, proven concepts such as diesel engines are being discussed critically. But you can turn it around as you like: Germany's prosperity depends heavily on the automotive industry. And one thing should be clear in all future challenges: The automotive industry's need for financing will increase, especially as sales financing, i.e. the financing of dealers, buyers and leasing companies, is a key success factor in the value chain of German car manufacturers. In the meantime, about three quarters of all new cars are financed by leasing or car loans. The use of financing services demonstrably strengthens brand loyalty; leasing in particular creates a particularly close connection between customer, dealer and brand. It goes without saying that car sales financing must be refinanced. In addition to customer deposits and unsecured debt securities, automobile banks and leasing companies have access to asset-backed securities (ABS) in the form of ABS. With the restructuring of the German automotive industry, the need for financing is increasing.

Auto-ABS are thus a prime example of how securitisation acts as a link between the real economy, credit and capital markets and contributes to the stability of financing in structural change. Auto-ABS can be regarded as part of the automotive value chain, within which the services of manufacturers, dealers and financial service providers, in particular, complement each other symbiotically: The manufacturer produces the vehicle; the financial services provider (automobile bank) procures finance for dealers and end customers and manages credit and residual value risks; the trade markets new and used cars as well as leasing returns in connection with the credit and leasing as well as service offers of the automobile banks.

In recent years, the ABS market in Europe has contributed around EUR 30 billion p.a. to refinancing car sales. The lion's share with almost three quarters of the transactions came from the three major German manufacturers. And over the entire cycle of the last fifteen years, the performance of European car ABS has been extraordinarily good.

Therefore, the following Creditreform Rating survey fits in well with the times: It gives a very good overview of the automotive ABS markets in Europe in recent years.

Go to Creditreform Rating Analysis - Semiannual Report 2018