There was a 4.79-percent increase in the Fitch Ratings auto lease residual value index in June, which was fairly close to the behavior shown in the prior six months.

But here’s the thing: residual values were trending downward in the first half of the year, and that’s likely to be the case in the second half, according to the latest vehicle depreciation put out jointly by Black Book and Fitch Ratings.

An influx of trade-ins and lease returns, spurred by booming new-car sales the past three years, has put pressure on residual values, the report said.

“The leasing market volume has seen significant growth over the past three years, and returns have thus increased dramatically as these vehicles hit their lease-end maturities, and will rise higher in the remainder of 2015,” the report indicates.

“Returning lease volumes, totaling approximately 3.81 million units from auto lease ABS transactions rated by Fitch, will hit the wholesale market in the second half of 2015,” it continued. “This will be up 24 percent versus 2014 volumes, and naturally constrain residuals in the latter part of the year.”

Speaking of the wholesale market, NAAA’s latest Auction Industry Report indicates that auction volume through June is up 7.3 percent year-over-year. In all of 2014, it increased 4.9 percent.

Trending of index

Going back to Fitch’s auto lease RV index, April had the largest gain (7.30 percent) so far this year, with February having the lowest gain at 3.92 percent.

On average, the gain has been 5.19 percent this year, down from 5.75 percent last year.

 That said, the picture for auto lease ABS securitizations appears to still be a rosy one.

“Despite the pressure on residuals this year, overall asset performance in auto lease ABS securitizations is expected to be stable, while Fitch continues to have a positive outlook for ratings performance. The agency’s positive rating outlook is driven by the number of subordinate note classes coming up for review in 2015, combined with stable asset performance even with lower residual gains this year,” Fitch explains.

“To date this year, Fitch upgraded seven subordinate tranches from five lease transactions through early August, versus ten from six deals in full-year 2014.”