Study On The Application Of Asset Securitization In Chinese Auto Finance Companies

Auto finance company is one of the main power to promote the development of auto finance industry in our country. At present, China’s auto finance market has huge potential of development, car consumers have increasing demand of getting auto consumption loan from auto finance companies because they can provide competitive loan services. However, auto finance companies are facing with some financing problems such as narrow financing channels and high cost of financing. Auto loan securitization is a way to solve these problems. But for now, in China, there are several application problems of auto loan securitization in auto finance company. Thus, this article will make a study and discussion on the auto loan securitization in the view of reality.This article adopts the method of case studying. To begin with, after summarizing related theory, the research status and the related concepts, the article makes a summary of the present situation of the development and problems of auto finance in China, and explains the significance of developing auto loan securitization to the auto finance company.Then, this article’s selected case, Driver China two Trust product issued by Volkswagen Financial Service, will be introduced in detail. And the article will carry on discussing this case by studying its motivation of issue, and core part. The main conclusions of this study are as follow: first, in terms of the issuing reasons of the product, this product can promote the completion of the company development strategy, expand the company’s business, enrich the company’s financing channels, and optimize the capital structure of the company. Second, in terms of the core part of the product, the carefull selection of assets and the mature measures of the loans management through Volkswagen Financial Service successfully ensure the quality of the assets into the pool. Besides, the unique issuance mechanism of the amount as well as the asset pool conversion model ensure the stability of the product’s cash flow. Third, non-complete order payment mechanism of cash flow increases protection for priority securities, and meanwhile, reduces the cost of financing. Fourth, the advanced credit enhancement measures successfully improve the product’s credit rating. The fifth, the introduction of international credit rating increases the reliability of the credit rating of the product. Last but not the least, in the aspect of product defects, this product has the problems of the mortgage registration and the registration of change, repays ahead and the lack of flexibility of the credit enhancement measures. Based on these main conclusions mentioned above, this article puts forward some useful suggestions at last.