According to Moody's, around Rs 19,100 crore of Indian ABS backed by commercial vehicle loans, construction equipment loans and auto loans was issued during the six months ended September 30
Auto loan delinquencies in India will increase in the next few quarters as the economic slowdown will constrain demand for freight transportation and put pressure on freight rates, said Moody’s Investors Service on Friday. However, the slowing economic growth is yet to significantly impact the performance of underlying loans as the decline in commercial vehicle sales over the past quarters has helped ease the surplus capacity situation in the medium and heavy commercial vehicle segments and supported the performance, it said.
Overall delinquency for the Indian auto loan ABS that Moody’s rates has increased slightly from the previous quarter, contributed mainly by the rise in the 31-60 days early delinquency bucket. On an original balance basis, the 30+ and 180+ days delinquency rates were 5.20% and 0.28%, respectively, in September 2019, slightly up from 5.12% and 0.27% in June 2019.
The 60+ and 90+ days delinquency rates, on the other hand, decreased to 2.44%, and 0.92%, respectively, in September 2019, from 2.70% and 1.08% in June 2019, Moody’s said.
On a current balance basis, the 30+, 60+ and 180+ days delinquency rates for the Indian auto loan ABS increased to 11.98%, 5.62% and 0.63% in September 2019, respectively, from 10.24%, 5.40% and 0.54% in June 2019. The 90+ days delinquency rate was 2.12% in September 2019, slightly down from 2.15% in June 2019, but slightly up from 2.10% in June 2018.
Indian commercial vehicle auto loan performance deteriorated slightly in Q3 of 2019 compared with the previous quarter, Moody’s said.
The commercial vehicle sales in India declined 22.95% in the six months ended September 30, compared with the same period a year earlier. Commercial vehicle sales have been hit by the liquidity squeeze in the financial sector and the economic slowdown, despite support from government stimulus measures to boost demand and vehicle purchases ahead of India’s migration to new emission standards.
According to Moody’s, around Rs 19,100 crore of Indian ABS backed by commercial vehicle loans, construction equipment loans and auto loans was issued during the six months ended September 30, 2019, from around Rs 30,500 crore in the fiscal year ended March 31, 2019.
Moody’s said it upgraded three Indian auto ABS, two Australian auto ABS and one Japanese auto ABS in Q3 of 2019. It did not take any rating action on Chinese auto ABS in the quarter.
According to Moody’s, Asia Pacific auto ABS performance remains broadly stable, with delinquency rates in China and Australia holding relatively steady over Q3 2019 compared with the prior quarter, with default rates in Japan remaining relatively steady. In India, delinquency rates increased slightly in the third quarter of 2019 compared with the previous quarter.