Fitch: Auto ABS Losses Down, But Subprime Warrants ‘Close Watch’

Auto loan ABS performance ended the year with a strong December: losses were down in both prime and subprime, month-over-month, according to Fitch Ratings’ latest index results, released today.

Prime annualized net losses were at 0.37% for December, down 21%, from the month prior, and were 16% improved versus the same period in 2013, according to the index. Supbrime annualized net losses were at 7.84% during the same time period, down 15% over November. However, those losses were up 24% over 2013 at yearend, and warrant “close watch in the coming months” according to Fitch.

Delinquencies of 60+ days were at 0.39% for prime, up 15% from November, and up 8% for the year, versus 2013. Subprime 60+ days delinquencies climbed to 4.41%, a rise of 11% for December, and were 29% year-over-year.

“Despite weaker subprime asset performance during 2014,” Fitch wrote. “Losses are currently forecasting within historical levels and are tracking below initial loss forecasts for Fitch-rated transactions.”

Currently, Fitch only rates two subprime platforms, the ratings agency said, General Motors Financial Company, Inc.’s AMCAR platform, and Santander Consumer USA, Inc.’s SDART platform.

Fitch also noted that off-lease volumes and vehicle trade-in volumes “rose notably throughout the past year, and expects the trend to continue in 2015, and pressure loss severity in ABS transactions and push loss rates higher.