DBRS Morningstar Releases Commentary on the Impact of COVID-19 on UK Auto Financing

DBRS Morningstar released a commentary titled, “Impact of FCA Guidance in Response to COVID-19 on UK Auto Consumer Financing”.

This commentary focuses on the UK consumer finance market, in particular, vehicle financing in the auto market. The industry is facing a challenging time during the Coronavirus Disease (COVID-19) health crisis. Lenders are providing payment holidays, tightening lending criteria, and withdrawing products from the market, among other measures. We consider these actions to be a result of lenders demonstrating regulatory compliance and risk management while attempting to minimise losses and manage their short-term exposures. The consequences could have an impact on collateral within asset-backed securities both now and in the future.

Key highlights from the commentary include

-- An outline of the challenges with residual values;
-- The potential impact of declining residual values on auto finance; and
-- How turn-in rates are likely to increase as borrowers opt to hand over the keys.

Notes:
The full commentary is available at www.dbrsmorningstar.com.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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