Australian prime auto ABS losses and delinquencies rose over 1Q15, according to Fitch's latest Dinkum ABS Index. Losses continue to remain low and below Fitch's expectations despite the annualised net loss rate increasing by 15bp year-on-year to 0.62% and 30+ days delinquencies increasing by 19bp to 1.25%, at the end of March 2015.
Seasonality was the main driver for the higher losses and delinquencies and the current deterioration is in line with historical performance. The first quarter of each year is typically characterised by a deterioration of delinquencies due to holiday spending pressures. Losses may appear higher following more repossessions and recoveries during 1Q15 instead of 4Q14, as recovery actions slow down during the Christmas period.
As of end-March 2015, 60+ days arrears reached 0.49%, an increase of 12bp over the quarter. The rise in 60+ days delinquencies may translate to increases in net losses in the upcoming months, though Fitch expects net losses to remain around the 0.5-0.6% area, as losses from newer and less seasoned transactions continue to flow through.
Australia prime auto ABS issuance continued to remain strong, following 2014 issuance of AUD6.0bn, with 1Q15 issuance of bn, record first quarter levels.
The current and historical Dinkum ABS Index data is available in Excel form through the full report entitled 'Auto ABS Index - Australia: The Dinkum Index - 1Q15', available at www.fitchratings.com or by clicking the link above.
