NEW YORK -

Fitch Ratings is expecting spring flowers to bloom as well as ABS performance in both the subprime and prime markets to blossom, too.

Analysts indicated loss trends changed direction for both U.S. prime and subprime auto ABS in March, and they explained the common denominator is that both sectors are set to benefit with the “historically strong” spring season approaching.

Fitch indicated prime auto loan ABS delinquencies and losses rose marginally month-over-month in March, However, last month saw both subprime metrics fall with annualized net losses declining 11.4 percent.

“Fitch expects asset performance to benefit both sectors over the next few months as consumers pay down their auto debt moving into the spring months,” analysts said.

Analysts determined prime 60-day delinquencies stood at 0.46 percent in February, just 2.2 percent higher on a sequential basis but were 18 percent higher versus a year ago.

Prime annualized net losses did rise 21 percent month-over-month to 0.52 percent, though this rate is still well below the 10-year average for the month, which was 0.96 percent back in 2006, according to Fitch

“Asset performance remains solid in the sector despite rising off record lows of the past two to three years,” analysts said.

Fitch noted subprime 60-day delinquencies declined 2.7 percent month-over-month through February to 4.62 percent, and were 22 percent higher versus a year earlier. The firm also pointed out that subprime annualized net losses exhibited improvement last month declining to 7.26 percent, and were 5.1 percent above February of last year displaying the best year-over-year metric since the middle of last year.

“Recently modest improvements in used vehicle values supported subprime asset performance in February,” analysts said.

“However, subprime auto performance is slowing overall driven by weaker collateral characteristics in 2013-2014 securitized pools, including softer credit quality, longer loan terms and higher loan-to-values,” they continued. “The current 2013-2014 vintages are currently tracking above the strong 2010-2012 vintages to date, though still remain within Fitch's initial expectations.

Fitch went on to mention the wholesale vehicle market slowed in February after four straight months of improved values through January. The Manheim Used Vehicle Value Index was at 125.1 in February, versus 125.3 in January. The index was still 1.5 percent above the level a year ago.

“Used vehicle supply rose in February as new vehicle sales slowed and retail consumer demand crept lower,” analysts said. “Compact cars continue to be the most pressured vehicle segment along with the mid-size segment as oil remains low and consumers are snapping up new larger SUV, CUV and truck models.

“Fitch expects used-vehicle values will be pressured throughout 2015, driven by rising supply for off-lease and trade-ins volumes as well as strong consumer demand for new vehicles,” they went on to say.

“Ratings performance has been solid in 2015 to date, with Fitch upgrading 13 subordinate note tranches versus nine during the same time in 2014,” analysts added. “Fitch's rating outlook on the prime sector is positive for 2015 and stable for the subprime sector.”

Fitch’s indices track the performance of approximately $67.9 billion in outstanding auto loan ABS. Of this total, 67 percent is backed by prime auto loan ABS and remaining 33 percent by subprime ABS.