Mercedes-Benz Auto Receivables Trust 2023-1 Annual Report: Performance Update

This guide explains how the Mercedes-Benz Auto Receivables Trust 2023-1 performed this year.

A quick note: This isn't a typical company like Apple. This "Trust" is a financial tool holding a pool of car loans. You aren't buying the Mercedes-Benz car company. Instead, you are buying into the monthly payments people make on their Mercedes-Benz auto loans.

1. What is this Trust and how did it perform?

Think of this Trust as a bucket filled with thousands of car loans. In February 2023, the Trust started with about $1.5 billion in prime auto loans. Investors buy pieces of this bucket—called Class A-1 through A-4 notes—and receive monthly payments from the loans. Throughout 2025, the Trust successfully paid interest and principal to investors as planned.

2. Financial performance

This Trust doesn't have "sales" or "profit" like a standard business. Instead, we measure its health by how many people pay their loans on time. By the end of 2025, the Trust remained stable. The total loan balance dropped as expected as people paid off their debts. The Trust generated enough cash from the $1.5 billion pool to pay all investors and keep the required financial safety buffers in place.

3. Operational oversight

The company managing these loans (Mercedes-Benz Financial Services) and the Trustee (Citibank) underwent formal audits to ensure they followed industry rules for handling your money.

• The Wins: Independent accounting firms confirmed that the systems managing your investment work correctly. They verified that interest calculations and payments to the Trust are accurate and timely.
• The Fix: The manager is updating internal systems and training staff to address minor administrative process errors identified during the year, ensuring continued accuracy in loan handling.

4. Financial health

The Trust is stable. No legal issues threaten the money owed to investors. The manager confirmed they are meeting all obligations from the original 2023 agreement. The safety buffers—provided by other classes of notes and extra collateral—remain strong enough to cover current losses.

5. Key risks

Your main risk is that borrowers might stop paying their loans. If they default, the Trust has less money to pay you. While losses remain within the expected range for prime loans, a weak used-car market could lower the value of repossessed vehicles.

6. Future outlook

The Trust is working as expected. Management is refining their processes, showing they are watching the details closely. The Trust should continue to pay investors as scheduled until the final maturity date.

Investor Tip: When considering this investment, focus on the stability of the "prime" borrower pool and the fact that the Trust has consistently met its payment obligations since 2023. If you are looking for steady, predictable income rather than high-growth potential, this type of asset is designed to provide exactly that.