NEW YORK — According to U.S. Structured Finance, the market for auto loan asset-backed securities has been slowly coming back.

This market has been helped in part by the Federal Reserve's Term Asset-Backed Lending Facility, officials indicated.

"Also the re-emergence of cash investors in the market have added to the attractiveness of auto ABS and, in some cases, helped with the successful in placement of new issuance subordinate notes," explained Chris O'Connell, of DBRS.

Basically, new-vehicle sales plummeted about 18 months ago when the recession took effect. The company attributes much of the drop in sales to the lack of available credit and rising unemployment.

"Additionally, the precarious financial condition of the Detroit 3 auto manufacturers exacerbated the problem," O'Connell stated.

To help drive sales and get older vehicles that have poorer fuel efficiency off the road, the U.S. Transportation Department launched Cash for Clunkers.

"The program had an immediate positive impact on new-vehicle sales," O'Connell explained.

He went on to point out, "The success of Cash for Clunkers demonstrates that there is purchasing power still available in the consumer market, but that consumers are using it cautiously. It also proves that demand for new vehicles was building for several months prior to the rollout of the Cash for Clunkers program."

However, despite the program's success, O'Connell said the market still has a long way to go.

"Consumer confidence has not returned to the levels achieved in those years (2006 and 2007), and unemployment persists as household incomes remain stagnant or lower than before the start of the recession," he said.

"Additionally, pressures remain for the auto industry, including the long-term viability of the Detroit 3 auto manufacturers, despite Chrysler and GM exiting bankruptcy relatively quickly, and the fact that new-vehicle inventory levels are at the lowest they have been, at 1.4 million cars, when compared to 3 to 4 million cars in inventory during the 2006 to 2008 time frame," O'Connell concluded.