The positive bump from federal tax refunds on auto securitizations evidently faded notably as this year has moved along.

Fitch Ratings reported last week that performance in U.S. auto loan ABS softened during the first half of this year following a temporary tax-refund boost. Analysts spotted delinquencies and losses moving higher year-over-year.

According to its latest update, Fitch indicated prime delinquencies eased to 0.48% from 0.54%, which is where they sat at the end of last year. However, at the midpoint of last year, Fitch said the rate was 0.42%.

When it comes to annualized net losses in the prime space, Fitch watched them move from to 0.49% from 0.68% at the halfway point of 2026 compared to the close of 2025. When last year reached its middle, prime annualized net losses stood at 0.44%.

Fitch noticed similar movements in subprime.

Comparing them from the midpoint of this year to the end of last year, analysts said subprime delinquencies decreased to 5.80% from 6.50%. But when 2025 reached the halfway juncture, Fitch found subprime delinquencies at 5.60%.

Analysts tracked that subprime annualized net losses declined to 8.42% from 10.00%, comparing the halfway point this year with the finish of last year. A year ago, Fitch had subprime annualized net losses at 8.17%.

But the scene is changing. Fitch explained in a news release.

“July, however, showed renewed deterioration, particularly in subprime: prime delinquencies rose to 0.49%, while subprime increased to 6.13%,” analysts said. “Fitch attributes the divergence to affordability pressures weighing disproportionately on lower-income, highly leveraged borrowers in a K-shaped economy.”

“Tax refunds supported used-vehicle demand and recoveries before fading into summer,” analysts added.

Fitch reported prime recoveries rose from 52.4% at the close of 2025 to 64.0% in June, easing to 59.0% in July.

Analysts added subprime recoveries “saw a more modest benefit, peaking in April and easing to 39.5% in June and 38.0% in July, reflecting subprime pools’ higher concentration of older, higher-mileage vehicles.”

Effective with the July index, Fitch mentioned its prime and subprime index inclusion methodologies were revised to reflect the continued evolution and expansion of the underlying issuance universe.

“Previously excluded shelves were incorporated where the market has broadened sufficiently to support representative inclusion without disproportionate platform-specific effects. This change was applied retroactively across all historical data,” analysts said.

Fitch is projecting prime and subprime auto loan ABS performance to weaken further during the second half of this year relative to 2025.

Analysts said their expectations are “driven by tariff uncertainty, oil-price volatility tied to the U.S.-Iran conflict, and a cooling labor market, with subprime remaining under greater pressure than prime.”

Fitch’s entire report can be found here.