Research On The Application Of Asset Securitization Financing Of Auto Finance Companies

Since the reform and opening up,the national economy has developed rapidly under the drive of many factors,and consumer demand for automobiles has also shown a surge.At the same time,with the change of the population structure,the post-80 s and post-90 s have become the main force of consumption.Some groups are more inclined to use credit to purchase cars in advance,which makes consumers have a great demand for car credit products and services.In this context,more and more auto brands have established their own auto finance companies to operate auto credit business.Therefore,the number and scale of auto finance companies in my country are also increasing day by day.As a light asset company,auto finance companies need a lot of funds to support the operation of credit business,and these auto finance companies almost all face the same financing dilemma: large liquidity requirements,high financing costs,narrow financing channels,and financing thresholds.high.Therefore,how to raise sufficient funds efficiently and at low cost has become an urgent problem for auto finance companies to solve.According to data,at the beginning of 2020,the assets of 25 auto finance companies across the country reached 906.371 billion yuan,an increase of 8.03% year-on-year,and the compound growth rate in the past 10 years reached 25.8%.This shows that auto finance companies will have a great demand for funds in the future.At present,the financing methods commonly used by my country’s auto finance companies include inter-bank lending,shareholder investment,bank loans,etc.However,these financing methods cannot fully meet the capital needs of auto finance companies,and the financing costs are high,and the financing threshold is also high.At the same time,the retail loans of the main business of auto finance companies will generate a large amount of non-current assets with a maturity of more than one year,which greatly reduces the rationality of the corporate financial structure.On this basis,traditional financing methods such as bank loans are adopted.,Not only could not increase the liquidity of assets,but also increased a large amount of liabilities,which increased the financial risks of enterprises and severely restricted the development of auto finance companies.Facing the financing dilemma of high financing costs and narrow financing channels,an effective way for auto finance companies to solve these problems is to carry out auto mortgage loan asset securitization financing activities.This financing method can activate assets and raise a large amount of funds,and the financing cost Relatively low,therefore,it is quite necessary to study the application of asset securitization financing of my country’s auto finance companies.This article mainly uses the research method of case analysis.The case used is the eighth asset securitization financing activity of Volkswagen Finance Company,because the final link of the asset securitization financing activity was issued by a third-party institution called Huayu Phase 8 Asset-backed securities,so this article will use "Huayu Phase 8" as the abbreviation of this financing case.This article will analyze the financing process of Huayu Phase Eight.First,combine the development status of my country’s auto finance company and the financing difficulties faced by Volkswagen Finance Corporation to analyze the financing motivation of Volkswagen Finance during asset securitization financing activities.Taking the basic asset pool design and credit enhancement method selection links that the auto finance company actually participated in as the research focus,the asset pool quality,cash flow analysis,and credit enhancement process analysis were carried out,and then combined with the cost analysis to summarize the financing effect of the financing plan,and Further analysis of the possible risks,through risk analysis,found that Public Finance has taken measures to reduce various risks and unresolved problems.Finally,combined with the entire case analysis,summarized the promotion value of the case and the existing problems and proposed solutions.It is hoped that the research in this article can provide reference and inspiration for my country’s auto finance companies to carry out asset securitization financing.Through case analysis,this article believes that auto finance companies’ asset securitization financing can promote the company’s development strategy,and the effects are mainly reflected in: 1.Broadening of financing channels.2.Reduced financing costs.3.Optimized the capital structure.4.Promote the company’s business development.Its overall advantage is reflected in the high quality of the basic asset pool,the qualifications of the participating entities in the securitization process meet the standards,and the reasonable process design.In terms of credit enhancement,credit enhancement measures such as priority/subordinate structure and excess collateral provide certain credit support for preferred securities.Finally,the red-black pool conversion mechanism can minimize issuance costs,improve asset utilization,flexibly choose issuance time,lock in the actual financing scale,and optimize financing costs.In addition to the above advantages,this case also has the problems of excessive concentration of collateral for asset pool credit loans,a single credit enhancement method,and the failure of real sales of basic assets.Regarding the problems of this asset securitization financing,this article puts forward corresponding suggestions from Volkswagen Finance itself and national policies.When auto finance companies build basic asset pools in their securitization financing activities,they should improve the screening procedures of pooled assets,raise the entry threshold for pooled assets,strengthen the collection of information on basic assets,and achieve dynamic asset pools Monitoring to obtain more accurate future cash flow data of the asset pool and prevent the risk of default.Recommendations at the national policy level include improving the legal and regulatory system for asset securitization,establishing a sound social credit system and a third-party evaluation system.my country ’ s asset securitization financing method is in its infancy,and there are few related applied researches.However,foreign countries have developed relatively mature and have shown good financing effects.Therefore,this article aims to resolve the financing difficulties of domestic auto finance companies and carry out asset securitization financing.Has certain guiding significance.