Abstract
Along with the ‘Dieselgate’ scandal more and more consumers in continental Europe are expected to decide no longer to buy a new car but to lease it to transfer reselling risk to the leasing company. This change in behavior can have consequences for refinancing loan and lease contracts via auto asset-backed securities (ABS) transactions, especially in Europe. We empirically analyze auto ABS in Europe and the U.S. with a focus on loan and lease transactions. We find that the European market did not differentiate between loan and lease contracts as collateral for ABS, while the U.S. market significantly preferred prime loans over lease contracts. If leasing becomes more common in Europe, too, we expect that investors will react more sensitively to changes in the composition of auto ABS and require higher yields resulting in worse refinancing conditions for European ABS.