July 30 (The following statement was released by the rating agency)
Despite a slight uptick in loss rates last month, U.S.
auto loan ABS asset performance continues to be solid with historically low
delinquency rates and loss rates at or near record lows, according to Fitch
There are numerous macro factors that are helping to bolster auto ABS
performance. Among them are: stable employment levels, the revival in the
housing market, repaired household balance sheets and healthy used vehicle
values including strong consumer demand for new and used vehicles. From a
structural standpoint, performance of 2009-2012 vintage transactions has been
better than expected.
In the prime sector, 60+ days delinquencies were 0.30% in June virtually
unchanged over the 0.29% recorded in May, and were 25% lower year-over-year
Prime annualized net losses (ANL) were still within record low levels at 0.20%
in June despite rising from 0.17% in May. However, it was the second lowest
level recorded this year. Prime cumulative net losses (CNL) hit a new record low
of 0.28% in June, just off of 0.29% posted in May, and down 24% YOY.
Subprime 60+ days delinquencies were up by 5.5% in June at 2.90%, compared to
2.75% seen in May. June's level was 7.5% down YOY. Subprime ANL dropped to 3.80%
in June from 3.84% in May, almost 3% better YOY.
Asset performance for auto ABS is likely to soften as we approach the fall
following typical seasonal patterns, but historically will still be strong
overall. The outlook for asset performance is stable in 2013, with a positive
rating outlook. Fitch upgraded 18 outstanding classes of prime auto ABS notes in
2013 year-to-date, consistent with the first half of 2012.
The Manheim Used Vehicle Value Index crept up to 119.7 in June from 119.1 in
May. Despite being down 8% YOY and softening for most of 2013, wholesale vehicle
values are healthy in 2013 and well above the historical average from 2011-2012
(114.0). This is helped to produce elevated recovery rates in auto ABS
transactions and contain loss severity, and ultimately loss levels.
Strong new vehicle sales have resulted in low inventories, which coupled with
the availability of credit and low incentive levels are all supporting used
vehicle values mid-year. Additionally, the recovering housing market is propping
up demand and sales of trucks and SUVs in 2013. Used pickup truck values have
risen almost 4% through June of this year, versus June 2012.
Fitch's prime and subprime auto ABS indices are comprised of $68.3 billion of
outstanding notes issued from 125 outstanding transactions. Of this amount, 71%
comprise prime auto loan ABS and the remaining 29% subprime ABS.