Credit FAQ: How Lower Residual Values Affect U.S. Auto Lease And Loan Securitizations Aug 08

Standard & Poors, August 2008

Abstract
As retail gas prices steadily increased during the first six months of 2008, U.S. consumers' demand for sport utility vehicles (SUVs), pickup trucks, certain crossover utility vehicles (CUVs), and low miles-per-gallon (MPG) sedans (collectively, low-MPG vehicles) fell considerably. This resulted in an unprecedented and rapid decline in the secondary market prices of these vehicles. Manheim Consulting reported mileage-adjusted declines in used-vehicle prices for large SUVs and pickup trucks of 28% and 25%, respectively, for the 12-month period ended June 30, 2008. From March 2008 to May 2008, these prices dropped by 10% and 12%, respectively. (Listen to the related podcast titled, "How Residual Values Are Affecting The Auto Leasing Industry," dated Sept. 22, 2008.) This swift price decline for used...

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Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

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