Black Book and Fitch Ratings’ annual used-vehicle depreciation and auto ABS report predicts a 15% depreciation rate for U.S.-registered vehicles, up from 12.4% in 2018.
The vehicle valuation firm said the depreciation rate will rise from 17.3% in 2016 to 17.8%, while Fitch said Auto ABS performance will continue to slow in 2017 as losses slowly rise to more normalized levels.
Annualized net losses for prime auto loan ABS declined on a monthly basis in October, while subprime losses rose 32 basis points to 9.61%, according to the ratings agency. Subprime ANL, however, remain within levels recorded earlier this year.
Moody’s expects the performance of new and outstanding auto loan ABS deals to suffer temporarily due to current regulatory activity, but it does see a silver lining in the increased scrutiny of the auto finance marketplace.
U.S. auto loan ABS asset performance continues to be solid with historically low delinquency rates and loss rates at or near record lows, despite a slight uptick in loss rates during June.
Fitch Ratings’ latest index reading indicates steady performance within the auto ABS segment, with prime annualized net losses dropping 24 percent.
Prime delinquencies are stable and prime cumulative net losses have improved, but the ratings agency says economic volatility and the European financial crisis could dampen growth prospects.
In a note to bondholders, Fitch Ratings said it believes the move toward slightly riskier borrowers in prime auto ABS pools is unlikely to present a near-term risk.
More than $5 billion in auto asset-back securities sales were made on Wednesday, providing more proof that investor demand for auto bonds remains high.
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.
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