S&P Global Ratings’ research on subprime auto lenders’ managed portfolio performances revealed a historical pattern of rapid growth followed by performance deterioration, as stated in the article, “Looking Back, Looking Forward: Lessons On U.S. Subprime Auto Loan ABS Performance,” published Aug. 23. The report explores the managed portfolio performance of subprime auto finance companies that have rated outstanding rated subprime auto loan asset-backed securities (ABS). 

In 2023, U.S. subprime auto loan ABS securitizers’ managed portfolio delinquencies hit a record high and net losses rose 32%, reaching 2016 levels. S&P believes this rapid growth, coupled with macroeconomic factors, contributed to subprime auto loan issuers’ managed portfolio deterioration in 2023. However, the stabilization in delinquencies they reported in first-quarter 2024 is the lagged effect of the credit tightening many lenders started in the second half of 2022 through 2023.

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