Auto loan performance in India stabilised over Q4 of 2017 after an increase in delinquencies following demonetisation in November 2016, the transition to the new BS-IV vehicle emissions standards in April 2017 and the rollout of GST in July 2017.
Auto loan performance in India stabilised over Q4 of 2017 after an increase in delinquencies following demonetisation in November 2016, the transition to the new BS-IV vehicle emissions standards in April 2017 and the rollout of GST in July 2017, said Moody’s Investors Service report on Monday. “We expect auto loan delinquencies to remain stable at around current levels in 2018 with performance supported by gradually strengthening economic activity. However, diesel prices have risen to Rs 64.7 a litre as of February 28 from Rs 60.5 a litre as of November 30, 2017, and this is a key area that we will continue to monitor,” it pointed out. On an original balance basis, the 30+ days delinquency rate for the Indian auto ABS transactions we rate was 6.23% in December 2017, up from 5.87% in September 2017. The 60+, 90+ 180+ days delinquency rates were 2.65%, 1.70% and 0.47%, respectively in December 2017, largely unchanged from 2.64%, 1.69% and 0.53%, respectively in September 2017. Calculating delinquencies on an original balance basis strips out the effects of prepayments and scheduled amortisation. According to Moody’s, on a current balance basis, the 30+, 60+ and 90+ days delinquency rate for Indian auto ABS we rate increased slightly to 13.62%, 5.80% and 3.71%, respectively in December 2017, from 12.25%, 5.51% and 3.52%, respectively in September 2017. The 180+ days delinquency rates decreased to 1.04% in December 2017 from 1.11% in September 2017. Moody’s report further said that issuance of Indian ABS backed by commercial vehicle loans, construction equipment loans and auto loans increased by 99% to `26,500 crore in fiscal 2017, from `13,300 crore in the prior fiscal year, quoting estimates by ICRA. ABS backed by commercial vehicle loans accounted for around half of all Indian ABS issuance in financial years 2016 and 2017.