Cars and trucks are likely to depreciate to a greater degree this year, though not enough to present any major obstacles to U.S. auto loan and lease securitizations, according to a new report developed by Black Book and Fitch Ratings.
According to Black Book, values of cars and trucks fell by an average of just under 13% in 2012, below the historical range of 15%-18%.
Black Book expects vehicle depreciation rates in 2013 to remain low, but rise to the lower end of this historical range. The average monthly depreciation on wholesale values of one- to five-year-old vehicles was 2.1% in late 2012 (based on sales volumes over the past 12 months at wholesale vehicle auctions).
During the last quarter of 2012, even with high gas prices, compact cars, entry level cars, entry mid-size cars and upper mid-size cars (all of which are more fuel efficient models) depreciated at inflated levels of monthly averages of 3.3% and 1.5%, respectively.
That said, Fitch believes auto loan ABS asset performance will still benefit from healthy used vehicle values in 2013.
“'A higher amount of auto leases coming due this year will squeeze residual values down marginally from current elevated levels, but not enough to impact auto ABS asset performance materially,” senior director Hylton Heard said in a press release accompanying the report.