NEW YORK--(BUSINESS WIRE)--The road is continuing to diverge for loss trends on U.S. prime and subprime auto loan ABS, according to the latest monthly index results from Fitch Ratings.
Prime auto loan delinquencies and annualized net losses (ANL) declined in October compared to September while subprime auto ANL increased by 13% month-over-month (MOM)
Prime auto loan ABS annualized net losses (ANLs) dropped 13% to 0.40%. This was in line with August's rate and 2.4% improved versus October 2013. 60+ days delinquencies moved down to 0.36% in October, 10% lower MOM and in line with the rate seen a year earlier.
Improving macroeconomic conditions are supporting asset performance in late 2015 as unemployment continues to decline and the job market is growing steadily. Further, declining gas prices and low interest rates are helping consumer households keep a lid on rising costs moving into next year.
Subprime 60+ day delinquencies were at 4.02% last month, down 7% MOM but 11% higher compared to a year earlier. Subprime ANLs followed typical seasonal patterns increasing to 7.61%, a 7.5% rise versus September and 21% higher than the year prior.
Used vehicle values ticked up marginally in October, ending five straight monthly declines. The Manheim Used Vehicle Value Index was at 121.8 in October, up from 121.4 recorded in September. While the improvement in used vehicle values is obviously a positive for asset performance, Fitch expects values to continue to decline over the next six months driven by rising off-lease and trade-in volumes entering the secondary market.
Ratings performance remains on track to record one of the best years ever, with 63 upgrades this year (through September), up from 37 in 2013. The ratings outlook is positive entering 2015.
Fitch's indices track the performance of $76 billion of prime and subprime auto loan ABS. Prime auto loan ABS comprises 67% of the indices and subprime the remaining 33%.
Additional information is available at 'www.fitchratings.com'.
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