Morningstar DBRS Finalizes Provisional Credit Ratings on AutoNation Finance Trust 2025-1

DBRS, Inc. (Morningstar DBRS) finalized its provisional credit ratings on the following classes of notes issued by AutoNation Finance Trust 2025-1 (DRVPNK 2025-1 or the Issuer):

-- $91,000,000 Class A-1 Notes at R-1 (high) (sf)
-- $210,000,000 Class A-2 Notes at AAA (sf)
-- $210,000,000 Class A-3 Notes at AAA (sf)
-- $69,360,000 Class A-4 Notes at AAA (sf)
-- $33,930,000 Class B Notes at AA (high) (sf)
-- $35,720,000 Class C Notes at A (high) (sf)
-- $49,990,000 Class D Notes at BBB (high) (sf)

CREDIT RATING RATIONALE/DESCRIPTION
The rating is based on Morningstar DBRS` (MDBRS) review of the following analytical considerations:

(1) The transaction's capital structure, ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of subordination, OC, a fully funded reserve account and excess spread. Credit enhancement levels are sufficient to support MDBRS-projected expected cumulative net loss (CNL) assumptions under various stress scenarios.
-- The Transaction has the ability to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. The rating addresses the timely payment of interest on a monthly basis and the ultimate payment of principal.

(2) ANF management has considerable experience in the automotive sector. The executive team and the operations team managed a successful portfolio of automobile assets at CIG Financial, LLC as well as other automotive lenders. In addition, CIG Financial has issued multiple ABS transactions that have performed within MDBRS's expectations.

(3) Performance Guarantor - AutoNation, Inc. (NYSE: AN), the parent of the servicer, will guarantee the payment and performance obligations of the servicer pursuant to the transaction documents.

(4) The capabilities of AutoNation regarding originations, underwriting (UW), and servicing.
-- Morningstar DBRS performed an operational review of AutoNation Finance and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts.

(5) Although not brand new to the ABS market, AutoNation, Inc. and AutoNation Finance, Inc. (ANF) are newer. AutoNation, an experienced player in the retail automotive industry, recently purchased CIG Financial, LLC and rebranded it as AutoNation Finance (CIG Financial, LLC d/b/a AutoNation Finance). Originations are derived through AutoNation Franchise and AutoNation USA dealerships. AutoNation has 325 dealerships from 243 stores located predominantly in metropolitan markets in the Sunbelt region.

(6) This is the inaugural ABS issuance from AutoNation's captive finance subsidiary: AutoNation Finance. ANF began lending in October 2022, therefore the managed portfolio is not paid down sufficiently to determine CNL as precisely as desired. The MDBRS's CNL assumption is 3.75% based on the expected Cut-Off Date pool composition. MDBRS analyzed performance of proxy issuers in the ABS market and the performance of ANF's auto originations to determine a projected CNL expectation for the DRVPNK 2025-1 pool.

(7) The credit quality of the collateral and performance of AutoNation's auto loan portfolio.
-- The pool will include receivables that are approximately 75.2% used loans and 24.8% new loans.
-- On average, the obligors on the automobile loan contracts have FICO scores of 712.
-- The weighted average coupon on the loans in the pool is 10.61%.
-- The weighted average stated remaining and original term of the loans in the pool are 68 and 73 months.
-- The weighted average loan-to-value ratio of the loans in the pool is 104.57%.

(8) The DRVPNK 2025-1 transaction has positive structural features, including the following:
-- A nondeclining reserve account that is fully funded at closing (equal to 0.25% of the initial pool balance)
-- Initial OC will be 2.00%. Thereafter on any distribution date, the Required Overcollateralization Amount will equal the greater of (i) the Required Overcollateralization Percentage (3.30%) of the pool balance as of the last day of the related collection period and (ii) 3.30% of the pool balance as of the cutoff date.

(9) The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary Baseline Macroeconomic Scenarios for Rated Sovereigns March 2025 Update, published on March 26, 2025. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse coronavirus pandemic scenarios, which were first published in April 2020.

(10) The legal structure and presence of legal opinions that will address the true sale of the assets to the Depositor; the non-consolidation of the special-purpose vehicle with ANF; that the trust has a valid first-priority security interest in the assets; and consistency with the MDBRS Legal Criteria for U.S. Structured Finance.

Morningstar DBRS' credit rating on the securities referenced herein addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for each of the rated notes are the Noteholders' Monthly Accrued Interest and the related Note Balance

Morningstar DBRS' credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. The associated contractual payment obligations that are not financial obligations are the related interest on unpaid Noteholders' Interest Carryover Shortfall for each of the rated notes.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 26, 2025) https://dbrs.morningstar.com/research/454196.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology applicable to the credit ratings is

Rating U.S. Retail Auto Loan Securitizations (May 15, 2025) https://dbrs.morningstar.com/research/454100.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

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The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

For more information on this credit or on this industry, visit dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.