Table of Contents
Softening Asset Performance
- The performance of Japanese auto-loan assets securitized in ABS pools weakened slightly in the second half of 2025.
- This softening is linked to inflation outpacing wage growth, which has pressured household budgets and made timely auto loan repayment more difficult.
Stable Outlook Expected
- Despite the moderation in performance, Fitch expects overall stability in default rates in the medium term.
- This confidence is based on continued steady employment in Japan and signs that inflation pressures will ease modestly.
Overall Takeaway
- While inflation has created short-term stress in auto-ABS collateral performance, underlying economic fundamentals (especially labor market stability) support a generally stable outlook for Japanese auto-loan ABS going forward.
