November 20, 2012 / 2:05 PM / 5 years ago

TEXT-Fitch:Still-strong wholesale values drop U.S. auto ABS losses lower

Nov 20 - Still-strong wholesale vehicle values resulted in yet another decline for U.S. auto ABS losses, according to the latest index results from Fitch Ratings.

October auto ABS losses also remained stable as the new model season kicked into gear for vehicle sales.

The Manheim Used Value Index gained 1% increasing to 121.9 in October, up from 120.7 in September. Used vehicle inventories have remained tight for the past year and a half, post-recession, challenged to meet demand and thus driving up values.

Prime cumulative net losses (CNL) continued to drop through October recording the lowest level to date at 0.30%, a 6% improvement month-over-month (MOM) from September. This is a 50% decline year-over-year (YOY), as borrower credit quality of newer ABS has improved through the year.

60+ day delinquencies also dropped for prime auto loans (0.37% for October). This is a 23% improvement YOY, and a 5% drop MOM. Prime sector delinquencies have stabilized since second half-2012 (2H‘12) with the U.S. economy showing gradual (albeit protracted) improvement.

Subprime delinquencies have also remained stable through 2H‘12, with negligible movement in levels since June. 60+ day subprime delinquencies came in 3.73% in October, a 7% increase MOM and 20% increase YOY.

October annualized net losses (ANL) improved YOY for both prime and subprime sectors, while losses ticked up MOM. Prime ANL rose to 0.34%, 40% improved YOY but up 21% MOM, while subprime ANL improved 7% YOY, yet increased 14% MOM.

Fitch’s auto ABS indices comprise of $62.36 billion of outstanding notes issued from 118 transactions. Of this amount, 76% comprise prime auto loan ABS and the remaining 24% subprime ABS.

Fitch’s outlook for prime auto ABS asset performance heading into 2013 is stable, while ratings performance outlook is positive for prime auto ABS.

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