NEW YORK--(BUSINESS WIRE)-- Seasonal trends resulted in another positive month of performance for U.S. auto loan ABS, with the trend likely to continue into the second quarter, according to Fitch Ratings.

'Late winter/early spring has shown to be a consistently strong period for auto loan ABS,' said Director Brian Vorderbrueggen. 'Tax refunds, annual bonuses and salary increases will enable many consumers to make their auto loan payments, translating to lower loss and default rates for auto ABS.'

Prime annualized net losses (ANL) declined 3.2% in February to 0.90% versus January, and were 42% below 2010 levels. Prime cumulative net losses (CNL) (adjusted for seasonality) were 0.77% in February, 2.5% below January's level and 37% below 2010. However, prime 60+ days delinquencies increased by 5% in February month-over-month (MOM) to 0.61%, but remain well below February 2010's levels by 24%.

In the subprime sector, Fitch's 60+ days delinquency index declined 7% to 3.24% in February, well below 2010 levels of 33%. ANL were 5.94% in February, down 13.7% from January, and 35% below February 2010.

Manheim Consulting's Used Vehicle Value Index declined for the first time in February since July 2010, but is still at a record levels. The Index dropped 1% month-over-month to 123.6 from a record high 124.9 in January and is up nearly 5% over February 2010. Despite the slight decline last month, used vehicle values remain strong and are supporting high recovery rates on defaulted and repossessed vehicles.

Fuel prices across the U.S. remain elevated as a result of the turmoil in North Africa and the Middle East. The average price for a gallon of regular gasoline was $3.56 as of March 21, while the nationwide average for diesel was $3.91 per gallon. Fitch has observed marginal softness in the values of larger trucks and SUVs and slight a pickup in demand for smaller fuel efficient cars.

'Due to improved industry fundamentals, the used vehicle market is better-positioned to manage the impact of higher gas prices than in 2008, when gas rose above $4.00 a gallon,' said Vorderbrueggen. 'As a result, the rate of auto ABS loss severities will be lower than three years ago.'

Rating performance in 2011 continues to be positive with an uptick in rating upgrades issued this year relative to the same period in 2010. Fitch upgraded 26 classes of prime auto loan ABS outstanding notes through the first two months of the year, compared to 11 issued through February 2010.

Fitch expects positive rating actions to continue in 2011 with limited negative actions given the solid asset performance. Stabilizing macroeconomic conditions, positive momentum in the auto industry, and the benefits of sound structural features present in transactions, contribute to Fitch's stable outlook for asset performance for 2011.

Fitch's indices track the performance of $52.4 billion in auto loan ABS. Of this amount, 85.9% from 77 outstanding auto loan ABS transactions is prime collateral totaling $45.0 billion, while the remaining 14.1% comprised of $7.4 billion in subprime collateral from 20 transactions.

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CONTACT:

Fitch Ratings
Brian Vorderbrueggen, +1-212-908-9102
Director
Fitch Inc., 1 State Street Plaza, New York, NY 10004
or
Hylton Heard, +1-212-908-0214
Senior Director
or
U.S. Auto/Commercial ABS group head
John Bella, Jr., +1-212-908-0243
Managing Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
Email: sandro.scenga@fitchratings.com

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:   Professional Services  Banking

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