NEW YORK -

Leaves are falling and so is the performance of the auto ABS market, but it’s not a “cause for alarm.” Fitch Ratings indicated that the typically slower fall season is leading to higher losses for both prime and subprime U.S. auto ABS as delinquencies return to levels not seen since the Great Recession.

Analysts determined prime auto loan ABS losses jumped 23 percent on a monthly basis in September while subprime losses moved 20 percent higher. They noted delinquency rates also rose last month versus August levels.

Fitch attributed the weaker performance to typical asset trends recorded during early fall.

“Used-vehicle values recorded their fifth consecutive monthly decline through September, which contributed to the slower asset performance in recent months,” Fitch analysts said.

“New 2015 vehicle model introductions started to hit showrooms last month, and dealers discount existing models in order to clear them out, which impacts used vehicle values negatively,” they added.

“Used vehicle values will likely soften in the remaining months of the year given rising used supply from off-lease returns and trade-ins. This will drive loss severities higher and ultimately push loss rates higher for auto ABS in October,” Fitch went on to say.

The firm reported that prime 60-day delinquencies climbed 14 percent higher on a monthly basis to 0.40 percent in September and were 11 percent higher year-over-year. Fitch mentioned September's rate was the highest level recorded since June 2012.

Analysts mentioned prime annualized net losses hit 0.46 percent in September, rising 15 percent month-over-month and 44 percent higher than a year earlier.

“Despite the notable year-over-year increase, losses are still low historically and below the solid 2005-2006 period,” Fitch said.

The firm reported both subprime delinquency and loss rates hit their highest levels in over four years in September.

Fitch acknowledged subprime 60-day delinquencies jumped to 4.34 percent in September climbing 23 percent month-over-month and 26 percent year-over-year. The development left the reading at the highest level since February 2011 (4.81 percent).

Subprime annualized net losses moved 20 percent higher month-over-month to 7.08 percent in September, and the rate was 46 percent weaker than a year earlier. September's rate was the highest since November 2005 (7.05 percent), and is expected to follow early winter patterns and weaken further in the next couple of months.

“The fall and early winter months are typically the weakest months of the year for both prime and subprime asset performance so Fitch does not see cause for alarm,” analysts said.

“Current performance for 2012-2013 vintages is still tracking well below the weak 2006-2008 recessionary vintages,” they continued. “What's more, 2012-2013 auto ABS performance has improved slightly versus the solid 2005-2006 vintages.”

Fitch insisted that ratings performance remains on track to record one of the best years ever with 55 upgrades this year (through September), up 100 percent over 2013.

Fitch’s indices track the performance of $69 billion of prime and subprime auto loan ABS. Prime auto loan ABS comprises 67 percent of the indices and subprime the remaining 33 percent.