Fitch: Losses Hold Steady for U.S. Auto ABS
Fitch Ratings’ latest index reading indicates steady performance within the auto ABS segment, with prime annualized net losses dropping 24 percent.
NEW YORK — The month of August saw steadying performance for U.S. auto ABS, with losses improving after last month's dip, according to Fitch Ratings’ latest index reading.
Auto ABS is again on stable footing as the second half of 2012 progresses. Prime annualized net losses (ANL) dropped by 24 percent in August to 0.25 percent, a 47 percent year-over-year (YOY) improvement.
Cumulative net losses (CNL) declined 11 percent month-over-month (MOM) to 0.32 percent. However, this was a 50 percent improvement YOY. This is an indication that the slight month-over-month improvements in August are still significantly better than levels recorded last year.
Sixty-plus day delinquencies from the prime sector dipped slightly (3 percent) month over month to 0.37 percent. Since last August, prime delinquencies have improved by approximately 28 percent.
The subprime sector also exhibited stable performance this past month. Sixty-plus day delinquencies rose to 3.24 percent from 3.17 percent, a 2 percent MOM increase. The stability in this sector was driven largely by 2010 to 2012 subprime deals, which have been subject to stronger underwriting standards than weaker 2007 to 2009 vintages that have mostly paid down.
Subprime ANL increased to 5.32 percent in August from 4.74 percent, a 12 percent increase MOM. On YOY basis, ANL showed no change.
For the fifth straight month, the Manheim Used Vehicle Value Index has declined, dropping to 120.7 in August from 121.2 in July. This is more than 2 percent decline year over year from August 2011. Fitch said the wholesale vehicle market remains healthy, with prices and demand for used vehicles still much stronger than years prior to 2011.
Fitch's auto ABS index is comprised of $65.56 billion of outstanding notes issued from 121 transactions. Of this amount, 78 percent comprise prime auto loan ABS and the remaining 22 percent subprime ABS.
Fitch's 2012 outlook for prime asset performance is stable, and ratings performance outlook is positive for prime auto.
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