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Fitch: Prime U.S. Auto ABS Rating Performance Stable Amid Harsh Conditions

April 29, 2008

NEW YORK -- The ratings of prime U.S. auto asset-backed securities (ABS) remained stable during first quarter 2008 (1Q’08) despite the presence of harsh economic conditions and a deteriorating wholesale vehicle market, according to Fitch Ratings.

Fitch upgraded eight classes of notes in six prime auto ABS transactions during 1Q’08, as the performance of these transactions continued to be within original loss expectations.

However, as Fitch predicted in its 2008 Outlook report, the rate of upgrades in the prime sector slowed in the first three months of 2008 when compared to the same period (26 upgrades) in 2007.

Fitch believes that the performance of both prime and subprime auto ABS will temporarily benefit from incoming tax refunds and rebates in April and May. Though this time of the year is a seasonally stronger period, Fitch expects auto asset performance to continue to suffer as the economic stress on consumers and a softer wholesale vehicle market offset the benefits of the stimulus package.

The wholesale vehicle market softened throughout 1Q’08. The used vehicle market is suffering from waning demand, a declining job market, and tougher lending practices. All vehicle segments exhibited softness during March including sport-utility vehicles and light trucks, which have seen demand decline due to record high gas prices.

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