NEW YORK — A recent report by Standard & Poor's Ratings
Services reiterated that the U.S. subprime auto finance market is growing again
and — despite some potential risks — its near-term growth prospects look good.

As increased capital flows into this market and competition
strengthens, S&P analysts acknowledged that they were reminded of the
industry's first "boom" period in 1994 to early 1997, which was followed by a
severe contraction.

S&P recapped that the period was characterized by high
loan losses, disclosed accounting irregularities (including understated
defaults), bankruptcies and liquidations, and decentralized loan collections.

Analysts insisted the market has changed considerably since
then, and S&P believes there are several key differences in today's market
that bode well for the industry. These include:

—Subprime origination volumes have not yet returned to
pre-crisis levels, so it appears there is still room for the market to grow
further.

—The new subprime auto originators are mostly private and,
therefore, are under no pressure to meet public quarterly earnings targets.

—Auto finance companies are no longer using gain-on-sale
accounting.

—Most subprime companies now service and collect payments
centrally.

"While near-term growth prospects are positive, over the
longer term, we expect increased competition to weaken credit standards and
lead to increased losses," said credit analyst Amy Martin.

"Nevertheless, we believe credit enhancement and other
structural protections in asset-backed securities transactions will serve to
insulate the ‘AA' and ‘AAA' classes from incurring losses should another 'BBB'
economic environment ensue," Martin added.