Fitch: U.S. Auto ABS Improves in April; Losses Still Well Above 2015
Delinquencies and losses fell again for both U.S. prime and subprime auto ABS last month, though losses are still higher year-over-year, according to Fitch Ratings in its latest monthly index.
In the prime sector, 60+ days delinquencies were unchanged in April over March at 0.34%, but were 21% above April 2015. ANL recorded a 29% decline down to 0.45% in April versus 0.63% in March. April's loss rate was comfortably below the ten-year average of 0.80%, but 17% higher year-over-year (YOY).
Subprime delinquencies declined 11% MOM to 3.70% in April, but were 15% higher versus a year earlier. ANL were at 7.41% last month, 14% improved over April but 33% above the same month in 2015.
Tax refunds appear to be flat year-over-year (YOY) but continue to support improved auto ABS performance, as is typical for this time of the year. That said, monthly improvements last month slowed relative to the prior three years. Overall, this is a sign that the strong performance from late 2010 through early 2015 is behind us.
Used vehicle values continue to show signs of softening in 2016 but still are healthy on a historical basis. The Manheim Used Vehicle Value Index (MUUVI) was at 122.8 in April, virtually unchanged versus March. Vehicle values were slightly down on a yearly basis by 1.1%. The index ranged from a low of 123.8-125.7 in 2015 and averaged 124.7, so April's figure is marginally lower.
Low oil prices are boosting the demand and sales of larger trucks and SUVs, and are also helping to bolster wholesale vehicle prices over the past year. According to ADESA Analytical Services, wholesale truck values were nearly 6% stronger in April on an annual basis, led by mid and full-size SUV/CUVs up 8.5% follow by full-size vans and minivans. Smaller vehicle classes remain down by 3.6% on an annual basis, as consumers shy away from this segment due to the low gas price environment.
Despite the gradual increase in losses over the past year, Fitch continues to issue positive rating actions in 2016. Through mid-May, Fitch issued 34 upgrades which was in line with the first five months of 2015.
Fitch's auto ABS indices track the performance of $92.3 billion of outstanding collateral, of which 60% is backed by prime collateral and the remaining 40% subprime. The indices include transactions rated by Fitch as well as non-rated issuer platforms.
Additional information is available on www.fitchratings.com.
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