Fitch: Credit Challenges Remain For Auto Finance Companies

    NEW YORK--April 25, 2002--Despite the efforts of auto finance companies to control credit quality, Fitch Ratings expects asset quality measures to remain pressured during 2002, according to a new report published today by Fitch Ratings. Nonetheless, should industry and economic conditions improve, Fitch sees a potential for stabilization in the latter part of the year.
    'Deterioration in asset quality - brought about by increased defaults and a spike in loss severity - was the focal issue during 2001,' said Christopher Wolfe, Director, Fitch Ratings. 'In response to this deterioration, auto lenders sought to better control credit quality by tightening underwriting criteria, and applying more conservative loan-to-value ratios. Despite these efforts, Fitch expects that asset quality measures will remain pressured during 2002.' In addition, funding profiles for many auto finance companies have changed, particularly for the major auto captives, where there was a pronounced shift towards increased long-term debt and asset securitization, while reducing short-term unsecured commercial paper, mainly due to lower short-term credit ratings. Fitch's Rating Outlook is Negative for the sector reflecting asset quality and funding pressures for many auto finance companies.
    The new report goes into detail on a number of different topics related to U.S. auto finance, including captive and specialty auto finance companies, operating performance and financial management. Additionally, the new report includes profiles of the seven auto finance companies Fitch rates.
    For a copy of Fitch's report 'U.S. Auto Finance Companies 2002 Outlook' please visit FitchResearch, Fitch's subscription-based Web site located at 'www.fitchratings.com.'