US auto ABS losses accelerate through first quarter-Fitch

NEW YORK, April 23 (Reuters) - Losses on top-rated U.S. auto asset-backed securities accelerated sharply through March of this year, compared with 2008's first quarter, even as used vehicle values improved, according to Fitch Ratings.

Seen historically, as a seasonally stronger period for prime auto loan ABS, losses on the securities soared by 54 percent to 2.08 percent through March, versus the same year-ago period. The trend of rising losses continued even as used vehicle values rose by 8 percent, the rating agency said.

The sharp increase in the first quarter, Fitch said further emphasizes the high level of pressure auto ABS performance is experiencing from the current recessionary environment, including mounting job losses and strained consumer finances. Prior to 2009, first quarter losses fell 7.0 percent on average in the past six years, it said.

On a positive note, used vehicle values have risen in each month this year, after hitting a record low in the fourth quarter of 2008.

"Used vehicle values were buoyed by lower supplies from trade-ins and rental cars, and increased dealer activity as a result of attractive pricing in late 2008," said managing director John Bella.

"Consumers are also opting for cheaper, used vehicles versus more expensive new vehicles, as used vehicle sales rose in the first quarter for the first time in nearly one year," said Bella.

Prime auto ABS delinquencies of 60-days or more, dropped to 0.69 percent in March, down from 0.87 percent in February, however, despite the decline, levels still remain 10 percent higher than March 2008, said Fitch.

"While higher tax refunds and rebates flowing back to consumers normally provide a short-term boost to delinquencies, the seasonal effect appears to be muted this year given the economic climate," said Fitch.

In the subprime sector, delinquencies of 60 days or more, posted a healthy 23 percent decline to 3.65 percent in March over February, however, subprime delinquencies were 25 percent higher in March than a year earlier. Losses in that segment, however, were 19 percent higher at 8.78 percent through March, versus the year ago period in 2008.

Fitch's index tracks the performance of over 100 prime and subprime auto ABS transactions totaling $58.8 billion of outstanding securities, of which 75 percent comprised prime auto ABS and the remaining 25 percent subprime. (Reporting by Nancy Leinfuss)