NEW YORK — Fitch Ratings believes that since U.S. auto loan asset-backed securities posted steady results in December, the market is entering 2011 on firm footing.

Fitch also contends delinquency and loss performance is currently within range of what it called "pre-crisis levels," the time between 2005 and 2007.

"Fitch's auto ABS asset performance outlook for 2011 is stable, while its rating outlook moved to positive for the year," senior director Hylton Heard asserted.

"Fitch expects collateral from the 2009-2010 vintages to produce low cumulative net losses (CNL) relative to 2007-2008, while used-vehicle values should be elevated given current positive market dynamics, supporting overall performance," Heard continued.

To support its used-vehicle value claims, Fitch cited analysis by Ricky Beggs, the managing editor for Black Book. Beggs noticed wholesale vehicle values were very steady at year-end and into early January.

"Solid consumer demand coupled with improving access to credit and low used-vehicle supply continues to support recovery rates on defaulted and repossessed loans, containing loss severity and supporting low loss rates in auto loan ABS," Fitch explained.

Along with looking into how 2011 might unfold, Fitch offered analysis on various kinds of vehicle loan performances, starting with subprime auto loan ABS annualized net losses (ANL).

The firm determined subprime delinquencies of 60 days or longer rose to 3.32 percent in December, a 6.4-percent increase over November. However, Fitch said the level marked a 25.7 percent improved over December 2009.

Analysts also calculated subprime ANLs decreased by 6.0 percent month-over-month in December to 6.63 percent. The reading also was 25.5 lower than the year-ago period.

"Due to the limited subprime auto ABS issuance in recent periods, monthly subprime index performance is more subject to individual fluctuations in both delinquencies and losses month-to-month," Fitch noted.

Turning next to prime loan performance, Fitch discovered prime auto loan ABS annualized net losses ended 2010 at 0.83 percent in December, a measure unchanged versus the prior month. The firm indicated this level is currently within range of the loss rates recorded between 2005 and 2007, which averaged 0.85 percent during those three years.

Prime ANLs in December settled 45.4 percent below the amount recorded during the same month in 2009. The reading also marked a 57.9-percent improvement over December 2008.

Fitch added that prime CNLs were 0.81 percent in December, 2.4 percent below November and 33.6 percent improved versus December 2009.

Moving along within the prime vehicle loan space, Fitch noticed prime auto loan ABS delinquencies of 60 days or longer increased to 0.57 percent in December, up 5.6 percent from November.

Delinquencies typically rise in December as consumers spend more and work less during the holidays," Fitch stressed.

"However, year-over-year delinquencies were again improved, down 19.7 percent in December versus a year earlier, as has been the case for all of 2010," the firm continued.

Fitch said it upgraded 65 classes of prime auto loan ABS notes in 2010 through year-end, compared with 29 recorded in 2009. Analysts expect positive rating actions to continue this year with limited negative actions given current asset performance and structural features present in transactions.

"The recovering U.S. economy, including improving new jobless claims, continues to support auto ABS performance," Fitch insisted.

To back up the assertion, Fitch mentioned the four-week rolling average of new claims for unemployment benefits was down 4.8 percent month-over-month in December, resulting in the fourth straight month of decline. Analysts added the unemployment rate dropped to 9.4 percent in December, the lowest level since May 2009.

"The job market remains weak so it will continue to drive loss frequency in 2011," Fitch conceded.

"Additionally, the housing market remains poor and personal bankruptcy filings are elevated, but should have limited impact on auto ABS performance this year, consistent with 2010," the firm added.

Fitch reiterated that its prime auto loan indices total approximately $48.8 billion issued from 79 transactions, while the subprime indices comprise the performance of 21 transactions totaling $8.5 billion.

In wrapping up its market analysis, Fitch touched on rising fuel prices. Analysts relied on Black Book's view to make judgments.

"Despite gas prices hitting the $3 mark in early 2011, to date, it appears that this factor is not yet affecting demand for and values of trucks and SUVs," Fitch stated.

"Fitch is closely watching the level of gas prices and impact on used vehicle values, and on loss severity in auto loan ABS pools," the firm continued.