Fitch Ratings: U.S. Auto Loan ABS Likely To Remain Under Pressure.Business Editors NEW YORK--(BUSINESS WIRE)--Sept. 11, 2002 Delinquencies and losses for prime auto loan asset-backed securities (ABS) continue to increase amid a sluggish labor market labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience and languishing lan·guish intr.v. lan·guished, lan·guish·ing, lan·guish·es 1. To be or become weak or feeble; lose strength or vigor. 2. consumer sentiment, according to the latest edition of the Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. 'In The Auto ABS Driver's Seat' newsletter. Prime auto loan ABS delinquencies increased during the July collection period and losses, while stabilizing, followed the delinquencies lead. The used car market continues to be a concern as it has played a pivotal role in the increased losses in auto loan transactions. 'With ongoing incentive wars and 2003 models on their way, used vehicle values will be pressured over the next few months,' said Tom Nieliwocki, Director, Fitch Ratings. 'Lower vehicle values lead to lower recovery values on repossessed cars, increasing net losses on transactions.' Subprime delinquency performance was stable for July at 2.82% compared to June's 2.85%, but remains under scrutiny as lower vehicle recovery rates and increased bankruptcies are expected in the near-term. 'Weakened vehicle values tend to affect subprime performance to a greater extent due to a higher proliferation of older, less in-demand vehicles,' said Nieliwocki. Despite the volatile stock market and continued economic weakness, consumers continued to purchase new cars, with affordability the key driving force. Auto sales Auto Sales The major producers of domestic automobiles report sales monthly. These numbers are seasonally adjusted by the U.S. Department of Commerce and are available to the public one to five business days after the end of each month. soared in July to a seasonally adjusted Seasonally adjusted Mathematically adjusted by moderating a macroeconomic indicator (e.g., oil prices/imports) so that relative comparisons can be drawn from month to month all year. annual rate (SAAR Saar, region, Germany Saar, region: see Saarland. Saar, river, France and Germany Saar (zär), Fr. Sarre, river, c.150 mi (240 km) long, rising in the Vosges Mts. ) of 18.1 million unites, compared to June's 16.5 million rate. Despite a slow summer where only five auto deals closed, auto-related issuance continues to account for a large portion of the total U.S. ABS issuance. 'In The Auto ABS Drivers Seat' is available via FitchResearch, the Fitch Ratings subscription-based web site located at 'www.fitchratings.com'. |
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