At least one part of the subprime auto finance market is starting to resemble what the landscape was before the pandemic.

S&P Global Ratings published a report last week that highlighted the U.S. auto ABS sector’s performance for August, noting that it weakened, with prime and subprime losses increasing month-over-month.

Analysts explained the deterioration in subprime was more acute, as its losses are now close to pre-pandemic levels.

According to the report shared with SubPrime Auto Finance News, S&P Global Ratings said that on a month-over-month basis, subprime losses rose to 7.61% from 6.50% and are now only about 13% below their August 2019 pre-pandemic level of 8.75%.

If subprime losses climbed at that rate in September — analysts said they’re still gathering data — S&P Global Ratings projected the levels will be back to what they were September 2019.

“This rapid ascent in subprime losses is not only due to lower recoveries, but also higher defaults,” analysts said in the report, which can be acquired online.

“Certain originators are reporting higher gross defaults in their second-half 2021 and/or first-half 2022 securitizations than in their issuances in 2019. We believe this increase comes from the loss of government stimulus payments beginning in January 2022 and the effects of higher rent and food prices, along with a spike in fuel prices at the beginning of the Russia/Ukraine war,” analysts continued.

“In addition, those with recent car loans are facing monthly payments that are $100 to $200 more than those of previous car loans thanks to higher vehicle prices and higher borrowing costs,” S&P Global Ratings went on to say.

A couple of other notable trends that S&P Global Ratings mentioned.

Analysts indicated delinquencies of more than 60 days as well as contract extensions not only increased in August but also exceeded levels reported three years earlier in August 2019, while recoveries declined.

“However, seasoned pools continue to perform better than expected: Of the 45 transactions we reviewed in September, we lowered our expected cumulative net losses on 44,” S&P Global Ratings said.