(Repeat for additional subscribers)
July 17 (The following statement was released by the rating agency)
Depreciation rates on used vehicles are nearing levels not seen since the recession, though the trend will soon reverse and likely lead to marginally higher losses for U.S. auto ABS, according to the latest joint report from Black Book and Fitch Ratings.
According to Black Book, both new and used vehicle markets are seeing positive growth after hitting a low of 10.3 million new vehicle sales in 2009. As a result, depreciation has increased every year since 2011. Black Book projects new vehicles sales to finish north of 16 million units this year and at least 16.5 million in 2015. As a result, annual depreciation levels on used vehicles will begin climbing to roughly 13% in 2014 and 15% in 2015,' said Black Book Senior Vice President and Editorial Director Ricky Beggs.
A rise in depreciation rates will also lead to a moderate increase in auto ABS losses, albeit well within initial loss expectations. 'Even at the prospect of a marginal increase in losses, used vehicle values are still relatively healthy and auto loan ABS can comfortably withstand a moderate increase,' said Senior Director Hylton Heard.
Fitch points out that rising interest rates, not likely to occur until 2015, can result in higher vehicle depreciation if this were to dent consumer demand for new and used vehicles. 'Rising rates could make purchasing a vehicle more expensive for consumers and in turn help accelerate depreciation levels, though not enough to move the needle on stable ABS performance,' said Heard.
The Black Book-Fitch Vehicle Depreciation report is a joint venture by the two companies utilizing Black Book's used vehicle depreciation data. The report will be released on a quarterly basis. A copy of the Black Book-Fitch Vehicle Depreciation Report is available by either emailing 'LenderSolutions@BlackBookUSA.com' or by going 'www.fitchratings.com' or by clicking on the above link.
About Fitch Group
Fitch Group is a global leader in financial information services with operations in 34 countries. The Group includes: Fitch Ratings, Inc., a global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; and Fitch 7city Learning, a global leader in financial training. Fitch Group is 50% owned by Paris-based Fimalac, S.A., and 50% owned by New York-based Hearst Corporation.
About Black Book
Black Book is best known in the automotive industry for providing timely, independent, and accurate vehicle pricing information, and is available to industry qualified users through our subscription products, mobile applications and licensing agreements. A leading provider of marketplace insight since 1955, Black Book continues to evolve, embracing technological advances and delivering quality products and services throughout the automotive industry.
Black Books Subscription Services, Automotive Solutions, Lender Solutions and Activator groups offer the insight necessary for success whether you're buying, selling or lending. Black Book data is published daily by National Auto Research, a division of Hearst Business media, and maintains offices in Georgia, Florida, and Maryland. For more information, please visit BlackBookAuto.com or call 800.554.1026
Link to Fitch Ratings' Report: Black Book/Fitch Vehicle Depreciation Report: 2Q14 (Depreciation Nearing Pre-Recession Levels; Moderating Vehicle Values Wonâ€™t Dent Auto ABS Performance In 2014)