NEW YORK — Thanks in large part to unprecedented seasonal strength in the used-vehicle market, Fitch Ratings reported that both prime and subprime auto loan asset-backed securities showed delinquency improvements in October.

Another factor helping to push the drops in delinquencies was two months of lower jobless claims, Fitch highlighted.

"Historically, high used-vehicle values brought on by positive supply and demand dynamics by manufacturers are helping to contain loss levels," explained senior director Hylton Heard.

"Lower loss levels are expected for the remainder of 2010 and into 2011 and should lead to more positive ratings actions," Heard added.

Sourcing date from Manheim, the company pointed out that seasonally adjusted used-vehicle values were up 3.4 percent month-over-month in October. Moreover, the four-week rolling average of new claims for unemployment benefits declined 5.8 percent month-over-month in September and 0.5 percent in October. New jobless claims trended 16.1 percent lower in September on a year-over-year basis, while this figure was 13.3 percent lower in October, Fitch noted.

Prime auto loan ABS annualized net losses were stable in October month-over-month, which officials said "is unusual for this time of the year as losses typically rise in the fall."

Fitch's Prime ANL index decreased 1.1 percent in October, compared to September. However, it was 43-percent higher over the same period in 2009. In fact, Fitch said the ANL rate of 0.89 percent for October was within range of pre-recessionary levels of 0.85 percent to 0.94 percent recorded during the same period in 2007.

Prime ANL levels are expected to range from 1 percent to 1.3 percent in the fourth quarter and hold well below 2009 levels, consistent with the continued strong performance of the 2009 and early 2010 collateral vintages, officials indicated.

Prime auto ABS delinquencies of 60-plus days decreased to 0.58 percent in October, down 9.4 percent from September, but were down more significantly by 22.7 percent over October 2009, Fitch stressed. Current delinquencies are relatively in line with the 10-year total average for the index of 0.57 percent despite persistently high unemployment figures and low consumer confidence, the company revealed.

Meanwhile, subprime 60-plus day delinquencies also declined in October to 3.47 percent. According to Fitch, this represents a 10.8-percent decrease since September, and is 27.1-percent lower than the same period of 2009.

Continuing on, the firm reported that subprime ANL dropped to 6.64 percent in October, down 1.6 percent month-over-month, which represents a decline of 27.8 percent from the 2009 number.

"Due to the limited subprime auto ABS issuance in recent periods, monthly subprime index results are more subject to individual transaction volatility," officials highlighted.

Fitch went on to indicate it has upgraded 55 classes of auto ABS notes through October of this year, compared to 27 upgrades through the same period of last year. Officials said this represents approximately a two-to-one ratio.

Looking forward, Fitch officials said their outlook for prime and subprime auto loan ABS ratings performance is currently stable/positive for the remainder of 2010.

"Primary catalysts include positive asset performance from the 2009 and 2010 vintages and support of structural features present in transaction," according to officials.

Fitch ultimately said its prime auto loan indices total about $46.4 billion issued from 77 transactions, while the subprime indices are composes of 19 transactions totaling about $5.8 billion.