Fitch: Prime U.S. Auto ABS Delinquencies Hit Record Low Headed into Summer

NEW YORK--()--Delinquencies on prime U.S. auto loan ABS reached another record low in April, with asset performance positioned for a strong summer, according to the latest monthly results from Fitch Ratings.

Auto loan ABS losses and delinquencies declined in April due largely to lower unemployment and healthy used vehicle values over the past couple of months. Fitch expects prime and subprime auto loan ABS asset performance to remain stable during the summer. Though losses for both prime and subprime auto loans will creep higher, they will stay comfortably within range of levels exhibited during the strong 2005-2006 period.

Fitch's prime 60+ day delinquency index hit a new record low of 0.28% in April, down 10% over March and was 3.4% below April 2013. The prior record low was 0.29% in spring last year. Prime annualized net losses (ANL) recorded the second month of double-digit improvement, hitting 0.22% in April, the lowest level since June 2013 and a 29% down over March. The rate was 8.3% better than in April 2013.

In step with the prime sector, subprime 60+ days delinquencies sank 10% to 2.51%, a 6% improvement over the same period in 2013. The April rate was the lowest level since April 2012 (2.33%). Subprime ANL were at 3.89% in April, 22% down over March and 5% better than a year earlier.

The U.S. added 288,000 jobs in April picking up steam following the cold winter months which were a drag on economic output and growth. The U.S. unemployment rate dropped to 6.3% in April down from 6.7% in March. The rate was the lowest level since September 2008.

Used Vehicle Values rose 5% year-over-year (YOY) in April, notching the fourth consecutive month of improvement as recorded by the Manheim Used Vehicle Value Index. Fitch does expect used vehicle values to soften in the remaining months of 2014 with increased off-lease volumes coming into the market, among other factors, and recovery rates should moderate but still be strong overall.

Fitch upgraded 34 classes of auto loan ABS notes through May this year, versus the 18 issued during the same period in 2014. Of these 34 upgrades, 21 subordinate note upgrades were issued on prime auto loan ABS transactions and the remaining 13 on subprime transactions. The Rating Outlook remains Positive for the remainder of 2014.

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Contacts

Fitch Ratings
Hylton Heard
Senior Director
212-908-0214
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Eugene Kushnir
Associate Director
212-908-0830
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Hylton Heard
Senior Director
212-908-0214
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Eugene Kushnir
Associate Director
212-908-0830
or
Media Relations
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com