European Auto ABS: German Portfolios Transition to Alternatively Fuelled Vehicles

This commentary discusses the transition towards alternatively fuelled vehicles (AFVs) and the relevance for auto asset-backed securities (ABS) in the Federal Republic of Germany.

Key summary highlights include:
-- The shift away from internal combustion engine vehicles toward zero- and low-emission vehicles;
-- The direct effect of government policies on the vehicle fuel type mix evolution;
-- Our views on associated risks relating to balloon loans and residual values; and
-- The expected impact of these changes on German auto ABS transactions.

“As the race toward net-zero economies across Europe intensifies, DBRS Morningstar expects the mix of receivables related to underlying AFVs to continue increasing at pace in German auto ABS transactions”, said Miklos Halasz, Assistant Vice President, European ABS at DBRS Morningstar.