NEW YORK, N.Y. — Auto asset-backed securities declined 50.2 percent last year, according to the latest data from DBRS. However, once the capital markets improve, the company predicts that auto ABS will climb significantly.

More specifically, over the past few years, auto ABS issuance was down 16.5 percent in 2006 and 18.8 percent in 2007, with 2008 showing the largest drop.

Additionally, vehicle sales also lessened over the last three years by 2.3 percent, 5.8 percent and 35.6 percent, respectively, the company highlighted.

"These statistics indicate that auto sales are still being financed, but that the financing is occurring outside of the public ABS market," DBRS reported. "The pre-2008 data shows, for example, that when the capital markets provide an efficient source of funding, the public ABS market is an attractive source of funding for vehicle sales."

Moreover, the company indicated that, "Although retail ABS was notably down in 2008, a significant volume of it was funded privately. This fact is a testament to the strength of auto collateral and provides the rationale for why DBRS believes that auto ABS issuance should increase rapidly once conditions in the capital markets begin to ameliorate."

Furthermore, officials explained that performance of retail auto ABS declined a bit throughout the economic turmoil, but has remained "relatively strong" due to the fundamentals behind the product.

"Retail auto ABS collateral is well-diversified both geographically and across the credit spectrum; the de-leveraging structure of auto ABS provides increased loss protection as transactions amortize; and the relatively short tenor of auto ABS collateral allows investors to model expected performance with greater certainty and shorter risk window," they concluded.