NEW YORK — Performance remained stellar for U.S. prime auto ABS, with losses dropping to a new record low, according to the latest index results from Fitch Ratings.
In line with Fitch's recent forecasts, prime annualized net losses (ANL) dropped 28 percent last month. Fitch's prime ANL index dropped to 0.38 percent in February from 0.53 percent in January, and is 57.8 percent better year over year. This new record low for the index eclipses the prior low of 0.41 percent in June 2011.
The ratings agency also reported that used-vehicle values have remained strong for the last four months, recording gains in each month since November. To date, Fitch has seen little impact from rising gas prices on the demand and values of larger, less fuel-efficient vehicles, such as trucks and SUVs. This has helped to further minimize impact on auto loan ABS and auto lease residual values in 2012.
Additionally, recent good news about the U.S. economy, including lower unemployment and jobless claims in recent months, has benefited auto ABS so far this year. “However, it is important to note that the overall job and housing markets remain weak,” Fitch stated in its news release. “Additionally, the ongoing European debt crisis is still a concern that continues to constrain the economy and consumer households.”
Prime cumulative net losses also hit a new record low, falling by 11.5 percent month over month to 0.46 percent in February and 40.3 percent lower year over year. These improvements are the highest month-over-month and year-over-year declines for the past 12 months for both the ANL and CNL indices.
Prime accounts 60 days delinquent or more declined by 9.8 percent month over month to 0.46 percent in February, and were 24.6 percent lower year over year vs. February 2011.
Subprime performance experienced a modest pull back in February. ANL increased 1.8 percent month over month to 6.67 percent, and were 12.3 percent higher year over year. Accounts 60 days delinquent or more rose 3.6 percent month over month to 3.43 percent in February, and were 5.6 percent higher vs. a year earlier.
“Fitch's outlook on auto loan ABS asset performance is stable, while the rating outlook remains positive,” stated Fitch. “Fitch upgraded ten tranches of notes in February, compared to eleven in February 2011.”
Fitch's auto ABS indices comprise of $58.6 billion of outstanding notes issued from 114 transactions. Of this amount, 80 percent comprise prime auto loan ABS and the remaining 20 percent consist of subprime ABS.