After hitting a rough patch last year, the U.S. prime auto sector is expected to display strong performance through the remainder of the year, according to Standard & Poor's.

Taking a queue from the mortgage market, nonprime and subprime auto sectors, on the other hand, are showing higher losses for 2005 vintages compared to loans originated in 2004. Nonprime cumulative net losses are up 24% for the 2005 pools compared with 2004 deals, an increase S&P said could be attributed to riskier borrowers and longer loan terms.

Another interesting note in the report -- despite troubled corporate credit ratings, both Ford Motor Credit Co. and GMAC prime auto loan ABS transactions are performing above the average prime index.

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