NEW YORK -

Fitch Ratings reported last week that losses on both prime and subprime U.S. auto ABS rose in July following lows seen earlier in the spring.

Despite the increase, analysts indicated used-vehicle values have stayed strong in the past two months.

"Additionally, overall asset performance remains strong heading into the softer fall months thanks to the healthy wholesale vehicle market and slowly improving economic factors. That said, some leveling off of performance is in store," Fitch said.

"Auto ABS losses are likely to increase as the seasonally weak fall progresses. Dealers will begin discounting existing 2013 models to make way for new 2014 models, which typically impacts loss severity and drives loss rates higher," analysts went on to say.

In the prime sector, Fitch determined 60-day delinquencies rose 10 percent month-over-month to 0.33 percent in July. However, the firm pointed out delinquencies are still 13 percent lower compared to July of last year.

Analysts noted that prime annualized net losses came in at 0.31 percent in July, up from 0.21 percent in June.

"Even with the larger than normal increase, loss rates are still very low historically and in line with July 2012," they said.

Meanwhile, Fitch highlighted prime cumulative net losses settled at a record low in July at 0.27 percent, falling 25 percent lower year-over-year.

"The improving economy and housing market, along with increased construction, has led to rising new and used-vehicle sales (trucks, in particular) and solid demand for automobiles supporting asset values," Fitch said.

The firm recapped that the Manheim Used Vehicle Value Index moved higher in July, marking an increase for the second consecutive month. The latest reading stood at 120.9, representing a 1-percent uptick from 119.7 in June.

Last month's mark is the third highest level recorded in July since 1995. The highest was 125.9 in July 2011.

Turning attention to subprime, Fitch reported that 60-day delinquencies in the subprime space jumped to 3.13 percent in July from 2.90 percent in June. This movement represents an almost 8 percent spike month-over-month, but the level is virtually unchanged year-over-year.

Analysts mentioned subprime annualized net losses increased to 4.45 percent in July, up 17 percent versus June but 6 percent better year-over-year.

"The outlook for asset performance is stable in 2013 while the rating outlook is positive," analysts said. "Fitch upgraded 19 outstanding classes of prime auto ABS notes in 2013 year-to-date, compared to 23 upgrades issued in 2012 during the same period.

Fitch's prime and subprime auto ABS indices are comprised of $67.7 billion of outstanding notes issued from 125 outstanding transactions. Of this amount, 69 percent comprise prime auto loan ABS and the remaining 31 percent subprime ABS.

Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.