...Since 2010, elevated recovery rates and residual realizations on loans and off-lease vehicles have supported historically low loss levels in auto securitizations. Many of the factors that had sustained the abnormally strong wholesale used vehicle market during this time have reversed. Turned-in and off-lease vehicle supply increased again in 2014, and new vehicle production and sales are expected to remain on the rise this year. Fitch Ratings expects this growing supply and potential for other stresses, like increased incentives, will lead to deteriorating used vehicle values in 2015 and 2016. As a result, recoveries and residual realizations in ABS transactions are expected to suffer. This report evaluates scenarios that illustrate the extent to which representative auto ABS transactions can withstand various levels of deterioration within the U.S. wholesale used vehicle market....
