| DETROIT, April 6
DETROIT, April 6 Ratings agency Fitch said on
Thursday that it expects further credit deterioration in auto
lenders' portfolios in 2017 as the U.S. auto market comes off a
boom cycle in which smaller subprime lenders have been
aggressively pursuing market share.
Fitch said it expects a U.S. new-vehicle sales to decline to
17 million this year after reaching a record 17.55 million in
Auto sales have been strong for six years, and there are
concerns the industry may be headed for a downturn.
That record run has been accompanied by looser standards by
lenders, rising loan-to-value ratios and extended loan terms,
"As asset performance slows, rising used-vehicle supply from
both lease returns and increasing repossessions will drive
depreciation higher," the Fitch report said, "putting downward
pressure on recovery rates and accelerating loss severity and
Fitch said the subprime segment "has underperformed the
most" and that its subprime Annualized Net Loss (ANL) index hit
10.4 percent through February - the first time it has crossed
the 10 percent threshold since the height of the Great Recession
"There are signals indicating tightening auto lending
standards by banks," the ratings agency said. "Fitch would view
continued tightening by auto lenders as a prudent step given the
potential for higher losses in the event of default."
In late March Moody's Investors Service said competition to
finance car loans in a flat market would intensify and drive
increased credit risk for auto lenders.
(Reporting By Nick Carey; Editing by Steve Orlofsky)