Asset-Backed Securities in Auto Finance. An analysis of the market and the impact of electrification.

Abstract

The ABS market serves as a crucial source of refinancing for entities in the auto finance industry, providing a blend of diversification and cost-efficiency in refinancing options. Despite witnessing a downward trend in issuance volumes over the past three years, particularly noticeable in Europe, auto ABS continues to obtain interest from investors as a viable investment choice. In the light of current and future challenges within the automotive and auto finance industries, this dissertation examines the dynamics of asset-backed securities in this specific finance segment.

Initially, this thesis delves into the theoretical foundations of securitization and ABS, providing some insights into the structure, procedures, and objectives of ABS transactions. Following this theoretical groundwork, the dissertation presents an analysis of the auto finance sector, detailing the diverse product offerings, the main market participants, and the risks and opportunities that underlie the development of this market. The thesis then focuses on the auto ABS market, particularly emphasizing the European context, analyzing market size and the risk factors that influence the pricing of such securities. Finally, the impact of electrification is discussed, providing both an overview of market trends in automotive and a focus on risks and opportunities for the auto ABS market.