Sept 17 - August brought on steadying performance for U.S. auto ABS, with losses improving after last month’s dip, according to the latest index results from Fitch Ratings.
Auto ABS is again on stable footing as second half-2012 progresses. Prime annualized net losses (ANL) dropped by 24% in August to 0.25% from 0.33% last month, a 47% improvement year-over-year (YOY).
Cumulative net losses (CNL) declined 11% month-over-month (MOM) to 0.32% from 0.36%. However, this was a 50% improvement YOY. This is an indication that the slight MOM improvements in August are still significantly better than levels recorded last year.
60+ days delinquencies from the prime sector dipped slightly (3%) MOM to 0.37% from 0.38%. Since last August, prime delinquencies have improved by approximately 28%.
The subprime sector also exhibited stable performance this past month. 60+ days delinquencies rose to 3.24% from 3.17%, only a 2% increase MOM. The stability in this sector has been driven largely by 2010-2012 subprime deals, which have been subject to stronger underwriting standards than weaker 2007-2009 vintages that have mostly paid down.
Subprime ANL increased to 5.32% in August from 4.74%, a 12% increase MOM but showing no change YOY.
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 over a 2% decline YOY from August 2011. That 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% comprise prime auto loan ABS and the remaining 22% subprime ABS.
Fitch’s 2012 outlook for prime asset performance is stable, and ratings performance outlook is positive for prime auto.