Lawrenceville, Georgia – Blackbook, a division of Hurst that provides industry-leading used car valuation and residual value forecasting solutions, is the latest joint US vehicle depreciation and vehicle asset-backed security (ABS) with Fitch Ratings. Published a report (also a Hurst split). The Blackbook predicts an annual depreciation rate of 5% in 2021 as the effects of the pandemic continue to be felt. This is down from the record 2.0% depreciation rate in 2020.
The latest co-published report can be downloaded by clicking. Here..
In the highlights of the report:
- The closure of the manufacturing industry affected new sales, which, combined with government stimulus payments and additional profits, led to an increase in demand for second-hand inventories.
- On the other hand, there was a shortage of used inventory due to lack of ownership and delays in returning leases.
- Full-size trucks and the luxury segment exceeded depreciation expectations, while full-size trucks exceeded 8.7%. In addition, the premium luxury car segment depreciated only 8.1% compared to 25.9% in 2019.
- Fitch believes that the performance of car loan and lease ABS (automatic ABS) assets is supported by the value of strong used cars, including the severity of the loss, resulting in positive asset recovery and residual value (RV) performance. I will.
- Fitch’s auto-ABS rating outlook is stable in 2021, which coincides with 2020, reflecting expected stable asset performance, protection of trading structures, and the conservative establishment of Fitch’s trading-based case loss proxy. doing.
- The performance of Prime Auto ABS assets will be fairly resilient in 2020 and will continue to include loss levels in both frequency and severity.
Depreciation trends in 2020
The annual depreciation rate for vehicles two to six years ago fell by only 2% in 2020. This is in contrast to the 16.8% annual depreciation in 2019. Market strength was felt primarily in the third quarter, driven by federal stimuli. New inventory levels with benefits and constraints. In addition, the foreclosure moratorium and delayed return of leases kept the available used supply low, further enhancing the reputation of used cars.
The compact car segment fell sharply in the midst of low fuel prices and rising new inventory levels, falling 10.6% in 2020. Full-size trucks and SUVs continued to perform well as used cars became premium due to continued shortages.
The Blackbook Used Car Retention Index decreased 0.8% from 115.4 in January 2019 to 114.5 in January 2020. The index began strongly in 2020, but the effects of the pandemic began to be felt by the end of March 2020. The index rose 13.7% compared to December 2019, rising to a record 130.08 points before the end of the year, stable at 128.8 points.
2021 Trend Outlook
As the economy continues to recover from the COVID recession, wholesale and retail prices are expected to skyrocket in 2021 with annual depreciation of only 5%. As a result, wholesale prices at the end of 2021 will be well above pre-COVID levels. Second-hand inventory levels remain tight throughout the year, contributing to the power of the second-hand market. New car production and sales are expected to return to some normal later this year, and the wholesale market is expected to return to normal seasonal depreciation in the fourth quarter.
2021 US Automotive ABS Outlook
Prime Auto Loan ABS will show considerable resilience in 2020 and will continue to include loss levels in both frequency and severity. Vehicle utility, including reduced public transport usage and debt priorities, is expected to lead to stable and strong performance in 2021, along with payment relief programs and other government-sponsored support.
The outlook for ABS performance on Fitch’s subprime mortgages is weakened by rising unemployment and reduced debt repayment capacity of borrowers. Nonetheless, Fitch Ratings subprime automated ABS trading is expected to perform as expected and the rating outlook is stable. Government support and temporary payment relief programs have helped support performance, but uncertainty about future support risks future performance, according to Margaret Rowe, senior director of Fitch Ratings. Brings.
Click to download the Black Book-Fitch Vehicle Depreciation Report. Here..
https://www.autodealertodaymagazine.com/364511/black-book-fitch-ratings-release-2021-joint-vehicle-depreciation-report Blackbook & Fitch Ratings Release 2021 Joint Vehicle Depreciation Report-Fixed Operation