Fitch: U.S. Auto Lease Residuals Speeding Ahead of Expectations

NEW YORK--December 20, 2011: Residuals on U.S. auto lease ABS are still producing substantial gains versus initial forecasts through third-quarter-2011 (3Q'11), according to the latest index results from Fitch Ratings.

In fact, residual realizations on Fitch-rated auto lease ABS have exceeded the securitization value of returned lease residuals every month since July 2009 after a period of protracted losses which began in 2008. The index has continued to closely track Manheim Consulting's used vehicle value index, a good barometer for the health of the US wholesale vehicle market.

The index showed gains of 14.5% relative to securitized lease residual in September 2011. Though gains decreased from 19.86% in June and 16.86% a year prior, any residual gain is viewed as positive and compares well to peak loss levels of 20.70% in December 2008.

Used vehicle supply is likely to remain constrained over the next 12 months, which is a plus for positive residual experience on U.S. auto lease ABS. However, as factors like increased new vehicle sales and lease volumes and increased residual value forecasts penetrate the secondary market, gains will likely subside.

Fitch's auto lease residual value (RV) loss index is an aggregation of residual value performance on Fitch-rated U.S. auto lease securitizations. Periodic residual losses are calculated as the sum of all residual losses each month divided by the securitized value of the forecasted residuals returned that same month.

The index and supporting data can be found in the "Fitch Auto ABS Dashboard" available at Fitch Ratings.

Additional information is available at 'Fitch Ratings'