Turbulence Ahead in Subprime Auto ABS Performance
NEW YORK — Fitch Ratings’ newest U.S. auto ABS index indicated subprime loans are showing more weakness of late while performance for U.S. prime auto ABS is still on solid footing.
Analysts said auto loan ABS produced the strongest performance on record last year. Fitch noted annualized net losses on prime auto loan ABS are still “resoundingly” low (0.40 percent as of December), in what Fitch senior director Hylton Heard said was further testament to resiliency.
“As the wholesale vehicle market begins to normalize, losses will trend marginally higher, though not enough to deter the stable performance of prime auto loan ABS,” Heard continued.
But while Fitch surmised that prime loans remain largely immune to the tepid U.S. economy, the firm contended subprime loans are showing more vulnerability to it.
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