The end of 2012 brings continued strong performance for U.S. prime auto
ABS while subprime loans again took a step back, as expected, according
to the latest index results from Fitch Ratings.
Prime auto ABS produced the strongest year to date with losses dropping
to record low levels, ranging from 0.14%-0.53%. As Fitch predicted,
subprime auto ABS performance has declined over the past six months,
driven by the typical weak fall season going into late 2012.
Factors supporting performance in 2012 included the recovering U.S.
economy albeit volatile, strong used vehicle values and high recovery
rates, and strong collateral characteristics and solid performance of
the 2009-2011 vintages to date.
November saw the Manheim Used Vehicle Value Index rising to 122.6 from
121.9 in October, as wholesale vehicle values was strong and values rose
due to increased demand and tight inventories due to the effects of
Hurricane Sandy. Although wholesale vehicle values came down from peak
levels seen earlier in the year, they are holding strong going into
2013. Fitch expects used vehicle values to continue this trend in 2013
albeit at somewhat lower levels.
Prime 60+ day delinquencies dropped to 0.36% in November from 0.37% in
October. This represents a 21.7% improvement year-over-year (YOY). Prime
cumulative net losses (CNL) also dipped in November, improving 3.3%
month-over-month (MOM) and 48.2% lower than in November 2011. Prime
annualized net losses (ANL) were 0.36%, slightly above October's level
(0.34%) but were 32.1% stronger YOY.
Subprime 60+ day delinquencies came down 5.4% in November to 3.53%.
However, ANL rose to 6.72%, a 4.4% increase MOM and 0.5% rise YOY.
U.S. auto ABS issuance has been buoyant in 2012. Driving the strong
issuance numbers are higher new and used auto sales this year, the
expanding consumer credit market, availability of new improved vehicle
models and the aging U.S. vehicle fleet.
Fitch's auto ABS indices comprise of $67.19 billion of outstanding notes
issued from 121 transactions. Of this amount, 75% comprise prime auto
loan ABS and the remaining 25% subprime ABS.
Fitch's outlook for prime auto ABS asset performance heading into 2013
is stable, while ratings performance outlook remains positive for prime
auto loan ABS.
Additional information is available at www.fitchratings.com.
