NEW YORK — Fitch Ratings indicated the subprime sector of
the auto asset-backed securities market exhibited a stable performance this
past month.

Analysts arrived at that assessment today because August 60-day
delinquencies rose only 2 percent month-over-month, climbing to 3.24 percent
from 3.17 percent

"The stability in this sector has been driven largely by
2010–2012 subprime deals, which have been subject to stronger underwriting
standards than weaker 2007–2009 vintages that have mostly paid down," Fitch
explained.

The firm also noted annualized net losses within the subprime
space increased to 5.32 percent in August from 4.74 percent a month earlier.
The change represented a 12-percent increase month-over-month, but analysts
indicated the level held steady year-over-year.

As previously reported by sister publication Auto
Remarketing in this online report, Fitch mentioned that the Manheim Used
Vehicle Value Index declined for the fifth straight month, dropping to 120.7 in
August from 121.2 in July. The reading dip translated into a year-over-year drop
of more than 2 percent.

"That said, the wholesale vehicle market remains healthy
with prices and demand for used vehicles still much stronger than years prior
to 2011," Fitch emphasized.

Meanwhile when looking at prime auto ABS, Fitch determined
the market is again on stable footing as second half of the year progresses.

Analysts found that prime annualized net losses dropped by
24 percent in August to 0.25 percent from 0.33 percent in July. That changed a
47-percent improvement year-over-year.

Fitch also mentioned cumulative net losses declined 11
percent month-over-month to 0.32 percent from 0.36 percent. However, this development
marked a 50-percent improvement year-over-year.

"This is an indication that the slight month-over-month improvements
in August are still significantly better than levels recorded last year," Fitch
projected.

Analysts went on to point out that 60-day delinquencies from
the prime sector dipped slightly month-over-month — 3 percent to be exact — to
0.37 percent from 0.38 percent.

Since last August, prime delinquencies have improved by
approximately 28 percent, according to the firm.

Fitch's auto ABS index is comprised of $65.56 billion of
outstanding notes issued from 121 transactions. Of this amount, 78 percent
comprise prime auto loan ABS and the remaining 22 percent subprime ABS.

"Fitch's 2012 outlook for prime asset performance is stable,
and ratings performance outlook is positive for prime auto," analysts
concluded.