U.S. auto loan ABS collateral performance has turned the corner over the past two years, despite ongoing economic stress and persistent pressure on U.S. consumers overall. Losses among 2009 deals have reverted to pre-recession levels, with losses in the 2010 vintage likely to follow suit.
Stricter underwriting, improved pool characteristics, a gradually stabilizing economy, and an improved wholesale used-vehicle market have all contributed to the notable improvements in expected loss performance for auto loan ABS rated by Fitch Ratings. As of October 2010 reporting, Fitch's forecast cumulative net losses on the 2009 vintage were 1.3%-1.5%, notably lower than the 2.8%-3% range Fitch projects for the 2008 and 2007 vintages. Fitch expects cumulative net losses for 2009 will be more likely to reach levels consistent with recent, pre-recessionary vintages, namely 2005-2006.