NEW YORK — As expected by Fitch Ratings, U.S. auto ABS
posted "stellar" seasonal results in March.

Fitch indicated both losses and delinquencies declined
across prime and subprime auto ABS even as used-vehicle values softened, a
trend analysts are expecting to continue for the remainder of the year.

"Despite volatility and uncertainty, economic conditions are
stable with ongoing improvement and a strong equity market," Fitch said.

The firm pointed out the unemployment rate dropped to a
three-year low of 7.6 percent, representing the lowest level since hitting a
high of 10 percent in October 2009.

Fitch explained the boost in household income levels over
the last few months enabled consumers to continue to pay down debt obligations,
thus boosting auto ABS performance in March.

Analysts determined prime 60-day delinquencies dropped to
0.33 percent in March, a 20-percent decline month-over-month. They pointed out this
movement was the highest month-over-month improvement recorded in the past 12
months. Delinquencies in March were 5.7 percent lower compared to March of last
year.

Fitch also noted prime annualized net losses posted a solid
18-percent drop month-over-month to 0.33 percent in March, down from 0.40
percent in February.

The firm found that annualized net losses were 3 percent
below the level in March of last year.

Furthermore, Fitch mentioned cumulative net losses were
virtually unchanged in March versus February at 0.30 percent and were 32 percent
stronger year-over year.

Moving over to the subprime market, Fitch highlighted that 60-day
delinquencies fell to 3.02 percent in March, down from 3.65 percent in the
prior month. The movement resulted in a decrease of 17 percent both on a month-over-month
and year-over-year basis.

Analysts said subprime annualized net losses came in 3
percent lower in March, sliding to 5.36 percent from February's reading of 5.53
percent.

On a year-over-year basis, analysts pointed out subprime annualized
net losses were still 14 percent higher in March versus the same month last
year.

"While an improving job market contributed to the downward
path for losses, recoveries also are a significant factor in loss mitigation
for US auto ABS. Used-car values have been robust over the past two years, aiding
in higher recovery levels," analysts said.

"Importantly, there has been some softening recently amongst
used vehicles values in the latter part of 2012 and early 2013 as new car sales
volume has begun to pick up," they continued.

Fitch referenced that the Manheim Used Vehicle Value Index
stood at 120.4 in March, down from 122 in February and was 4.8 percent below the
March 2012 level.

Fitch reiterated that prime and subprime auto ABS indices are
comprised of $69.6 billion of outstanding notes issued from 126 transactions.
Of this amount, 71 percent comprise prime auto loan ABS and the remaining 29
percent subprime ABS.

Analysts added that there were no upgrades issued in March, consistent
with March of last year. Fitch upgraded 13 prime outstanding notes year-to-date
in 2013, versus four in 2012 through the first quarter.

"Fitch's outlook for prime auto ABS asset performance is
stable, while the ratings performance outlook remains positive for 2013,"
analysts said.

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