Harley-Davidson Motorcycle Trust Sees Rising Loan Losses, Delinquencies

TL;DR

**Harley-Davidson's securitized motorcycle loans are flashing red with rising defaults and delinquencies, signaling a bumpy ride for investors in this trust.**

AI Summary

Harley-Davidson Motorcycle Trust 2022-A, a securitization entity, reported a significant deterioration in the credit performance of its underlying retail motorcycle loans for the fiscal year ended December 31, 2025. Annual losses on retail motorcycle loans serviced by Harley-Davidson Credit Corp. (HDCC) increased to 3.44% in 2025, up from 3.31% in 2024, representing a 3.9% increase. Concurrently, the 30+ day delinquency rate rose to 5.77% as of December 31, 2025, compared to 5.34% at December 31, 2024, an increase of 8.05%. These adverse trends are attributed to macroeconomic pressures, including persistent inflation affecting customer affordability, higher motorcycle payments, and continued declines in auction recovery values. The Trust's sponsor, HDCC, a wholly-owned subsidiary of Harley-Davidson Financial Services, Inc., also noted a strategy to prudently expand approvals to sub-prime borrowers, which could further impact future loss performance. Despite these credit challenges, both HDCC and Citibank, N.A., as Servicing Participants, reported no material instances of noncompliance with applicable servicing criteria for the year ended December 31, 2025.

Why It Matters

The rising loan losses and delinquencies within the Harley-Davidson Motorcycle Trust 2022-A signal increasing credit risk for investors holding these asset-backed securities. This trend, driven by macroeconomic headwinds like inflation and declining motorcycle resale values, could lead to lower returns or even principal losses for noteholders. For Harley-Davidson, Inc., the parent company, deteriorating credit performance in its financing arm, Harley-Davidson Credit Corp., could impact its ability to offer competitive financing, potentially affecting motorcycle sales and market share against rivals like Indian Motorcycle. Employees of HDCC may face increased pressure to manage collections, while customers could experience tighter lending standards or higher interest rates in the future.

Risk Assessment

Risk Level: high — The risk level is high due to a clear deterioration in credit performance: annual losses on retail motorcycle loans increased to 3.44% in 2025 from 3.31% in 2024, and the 30+ day delinquency rate rose to 5.77% from 5.34% over the same period. These specific numbers indicate a worsening asset quality within the trust, directly impacting the security of the notes.

Analyst Insight

Investors in Harley-Davidson Motorcycle Trust 2022-A should closely monitor future credit performance reports and consider the implications of rising delinquencies and losses on their investment's yield and principal. Potential investors should exercise caution and factor in the increased credit risk driven by macroeconomic factors and the sponsor's sub-prime lending strategy.

Key Numbers

• 3.44% — Annual losses on retail motorcycle loans (Increased from 3.31% in 2024, indicating worsening credit quality.)
• 5.77% — 30+ day delinquency rate (Increased from 5.34% at December 31, 2024, showing higher payment defaults.)
• 2025 — Fiscal year end (The period for which the adverse credit performance is reported.)
• 2024 — Prior fiscal year end (Used as a comparison point for credit performance metrics.)

Key Players & Entities

• Harley-Davidson Motorcycle Trust 2022-A (company) — issuing entity
• Harley-Davidson Credit Corp. (company) — sponsor, seller, servicer
• Harley-Davidson Customer Funding Corp. (company) — depositor
• Harley-Davidson Financial Services, Inc. (company) — parent company of HDCC
• Harley-Davidson, Inc. (company) — ultimate parent company
• Wilmington Trust, National Association (company) — Owner Trustee
• Citibank, N.A. (company) — Indenture Trustee, Servicing Participant
• David Viney (person) — Vice President and Treasurer of HDCC, senior officer in charge of servicing function
• Ernst Young LLP (company) — accounting firm for HDCC's Attestation Report
• KPMG LLP (company) — accounting firm for Citibank, N.A.'s Attestation Report

FAQ

Risk Factors

• Deteriorating Credit Performance of Underlying Loans [high — financial]: Annual losses on retail motorcycle loans increased to 3.44% in 2025 from 3.31% in 2024, a 3.9% rise. The 30+ day delinquency rate also climbed to 5.77% as of December 31, 2025, from 5.34% a year prior, an 8.05% increase. These trends are attributed to macroeconomic pressures like inflation impacting affordability and declining auction recovery values.
• Sub-prime Borrower Expansion Strategy [medium — financial]: HDCC, the sponsor, is implementing a strategy to prudently expand approvals to sub-prime borrowers. This could further exacerbate future loss performance given the already deteriorating credit quality observed in the portfolio.
• Macroeconomic Pressures on Affordability [high — market]: Persistent inflation is cited as a key driver for increased customer affordability challenges. This leads to higher motorcycle payments and contributes to the observed rise in delinquencies and losses within the securitized pool.
• Declining Auction Recovery Values [medium — market]: The value of repossessed motorcycles at auction has continued to decline. This directly impacts the recovery rates on defaulted loans, increasing the net losses for the Trust.

Industry Context

The motorcycle industry, particularly for premium brands like Harley-Davidson, is sensitive to economic conditions and consumer discretionary spending. Macroeconomic pressures such as inflation and rising interest rates can significantly impact affordability for new vehicle purchases and financing. Competition exists from other large motorcycle manufacturers and potentially from the used vehicle market, especially as auction values for pre-owned vehicles fluctuate.

Regulatory Implications

While the filing notes no material noncompliance with servicing criteria by HDCC and Citibank, the increasing loss and delinquency rates could attract regulatory scrutiny. Changes in lending practices, particularly the expansion into sub-prime segments, may also be subject to evolving consumer protection regulations.

What Investors Should Do

1. Monitor HDCC's sub-prime lending strategy and its impact on future loss rates.
2. Closely track 30+ day delinquency rates and annual net losses.
3. Analyze the trend in motorcycle auction recovery values.

Key Dates

• 2025-12-31: Fiscal Year End — Reporting period for the observed deterioration in credit performance metrics, including losses and delinquencies.
• 2024-12-31: Prior Fiscal Year End — Provides a baseline for comparison, highlighting the adverse trends in credit performance from 2024 to 2025.
• 2022-04-01: Trust Agreement and Indenture Effective Dates — Establishment date of the Harley-Davidson Motorcycle Trust 2022-A and its associated indenture, setting the framework for the securitization.
• 2025-07-30: Certificate Purchase Agreements Executed — Agreements between Harley-Davidson Credit Corp. and entities like Cavendish LLC and KKR Morrow Residuals Purchaser 1 LLC for the purchase of certificates, indicating ongoing securitization activities.

Glossary

Securitization Entity

A legal entity created to pool assets (like loans) and issue securities backed by the cash flows from those assets. (Harley-Davidson Motorcycle Trust 2022-A is a securitization entity holding retail motorcycle loans.)

HDCC (Harley-Davidson Credit Corp.)

The wholly-owned subsidiary of Harley-Davidson Financial Services, Inc., responsible for originating and servicing the retail motorcycle loans. (As the sponsor and servicer, HDCC's underwriting and servicing practices directly impact the Trust's performance.)

30+ day delinquency rate

The percentage of loans where payments are more than 30 days past due. (A key indicator of borrower stress and potential future losses for the Trust.)

Auction recovery values

The amount of money recovered when repossessed vehicles are sold at auction. (Lower recovery values increase the net loss severity on defaulted loans held by the Trust.)

Sub-prime borrowers

Borrowers with a lower credit score, indicating a higher risk of default. (HDCC's strategy to lend to this segment could increase the risk profile of future securitized pools.)

Servicing Criteria

A set of standards and requirements that loan servicers must adhere to, often related to collection, reporting, and asset management. (Compliance with these criteria by HDCC and Citibank is important for the operational integrity of the Trust.)

Year-Over-Year Comparison

The 10-K for Harley-Davidson Motorcycle Trust 2022-A indicates a worsening credit performance compared to the prior year. Annual losses on retail motorcycle loans have increased by 3.9% to 3.44%, and the 30+ day delinquency rate has risen by 8.05% to 5.77%. These adverse trends are attributed to macroeconomic pressures and a strategic decision by HDCC to expand lending to sub-prime borrowers, introducing new potential risks not as prominent in the previous year's assessment.

Filing Documents

• a2022-aform10xk2025.htm (10-K) — 78KB
• a2022-aform10xkxex3112025.htm (EX-31.1) — 10KB
• a2022-aform10xkxex3312025.htm (EX-33.1) — 78KB
• a2022-aform10xkxex3322025.htm (EX-33.2) — 26KB
• a2022-aform10xkxex3412025.htm (EX-34.1) — 9KB
• a2022-aform10xkxex3422025.htm (EX-34.2) — 7KB
• a2022-aform10xkxex3512025.htm (EX-35.1) — 5KB
• 0001921031-26-000014.txt ( ) — 215KB

Risk Factors

Item 1A. Risk Factors.

Legal Proceedings

Item 3. Legal Proceedings.

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments Not Applicable. Substitute information provided in accordance with General Instruction J to Form 10-K

(b) of Regulation AB. Significant Obligors of Pool Assets (Financial Information)

Item 1112(b) of Regulation AB. Significant Obligors of Pool Assets (Financial Information). Not Applicable. Item 1114(b)(2) of Regulation AB. Credit Enhancement and Other Support, Except for Certain Derivatives Instruments (Financial Information). Not Applicable.

(b) of Regulation AB. Certain Derivatives Instruments (Financial Information)

Item 1115(b) of Regulation AB. Certain Derivatives Instruments (Financial Information). Not Applicable.

of Regulation AB. Legal Proceedings

Item 1117 of Regulation AB. Legal Proceedings. There are no legal proceedings pending, or any proceedings known to be contemplated by governmental authorities, against the servicer, sponsor, the depositor or the issuing entity that are material to the holders of notes. To the knowledge of the issuing entity, there are no legal proceedings pending, or any proceedings known to be contemplated by governmental authorities, against Wilmington Trust, National Association (the "Owner Trustee") or Citibank, N.A. (the "Indenture Trustee") that are material to the holders of notes. PART II The following Items have been omitted in accordance with General Instruction J to Form 10-K

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Quantitative and Qualitative Disclosures About Market Risk

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data.

Changes in and Disagreement with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure.

Controls and Procedures

Item 9A. Controls and Procedures.

Other Information

Item 9B. Other Information. None. PART III The following Items have been omitted in accordance with General Instruction J to Form 10-K

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance.

Executive Compensation

Item 11. Executive Compensation.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Certain Relationships and Related Transactions

Item 13. Certain Relationships and Related Transactions.

Principal Accountant Fees and Services

Item 14. Principal Accountant Fees and Services. Substitute information provided in accordance with General Instruction J to Form 10-K

of Regulation AB. Affiliations and Certain Relationships and Related Transactions

Item 1119 of Regulation AB. Affiliations and Certain Relationships and Related Transactions. Harley-Davidson Credit Corp. ("HDCC" or "Company"), the seller, servicer and sponsor, is a Nevada corporation and wholly-owned subsidiary of Harley-Davidson Financial Services, Inc. ("HDFS"). HDFS, a Delaware corporation, is a wholly-owned subsidiary and the financing division of Harley-Davidson, Inc. HDCC and its affiliates provide retail financial services to consumers primarily in the United States and Canada and wholesale financial services primarily to Harley-Davidson motorcycle dealers in the United States and Canada. Harley-Davidson Customer Funding Corp. ("CFC"), the depositor, is a Nevada corporation and wholly-owned special-purpose finance subsidiary of HDCC. All of the officers and directors of CFC are also employed by HDCC or HDFS, except that at least two directors of CFC will at all times be independent of HDCC, HDFS and Harley-Davidson, Inc. CFC's business is limited to, among other things, (i) purchasing the contracts and related property (and other similar promissory note and security agreements) from HDCC (in its capacity as seller), (ii) acting as the beneficial owner of the issuing entity—Harley-Davidson Motorcycle Trust 2022-A (the "Trust")—and other similar trusts and (iii) performing its obligations under the transfer and servicing agreements to which it is a party (including similar agreements entered into in connection with the formation of similar trusts). On a managed basis, which considers all loans serviced by the Company, a nnual losses on retail motorcycle loans serviced by the Company increased to 3.44% in 2025, compared with 3.31% in 2024. Similarly, the 30+ day delinquency rate rose to 5.77% as of December 31, 2025, up from 5.34% at December 31, 2024. The deterioration in credit performance was driven primarily by macroeconomic pressures and industry dynamics, including higher motorcycle payments, persistent inflation affecting customer

of Regulation AB. Compliance with Applicable Servicing Criteria

Item 1122 of Regulation AB. Compliance with Applicable Servicing Criteria. Each of HDCC and the Indenture Trustee (each, a "Servicing Participant") has been identified by the Trust as a party participating in the servicing function during the reporting period with respect to the pool assets held by the Trust. Each Servicing Participant has completed a report on an assessment of compliance with the servicing criteria applicable to such Servicing Participant (each, a "Report on Assessment") during the Trust's fiscal year ending December 31, 2025, which Reports on Assessment are attached as exhibits to this Form 10-K. In addition, each Servicing Participant has provided an attestation report (each, an "Attestation Report") by a registered independent public accounting firm regarding its related Report on Assessment. Each Attestation Report is attached as an exhibit to this Form 10-K. HDCC's Report on Assessment and the related Attestation Report have not identified any material instance of noncompliance with the servicing criteria identified in such Report on Assessment as applicable to HDCC. The Indenture Trustee's Report on Assessment and related Attestation Report have not identified any material instance of noncompliance with the servicing criteria identified in such Report on Assessment as applicable to the Indenture Trustee.

of Regulation AB. Servicer Compliance Statement

Item 1123 of Regulation AB. Servicer Compliance Statement. HDCC has been identified by the Trust as a servicer during the reporting period with respect to the pool assets held by the Trust. HDCC has provided a Compliance Statement, signed by an authorized officer, and such Compliance Statement is attached as an exhibit to this Form 10-K. PART IV

Exhibits, Financial Statement Schedules

Item 15. Exhibits, Financial Statement Schedules. (a) List of Documents Filed as Part of this Report (1) Not Applicable. (2) Not Applicable. (3) See Item 15(b). (b) Exhibits Required by Item 601 of Regulation S-K INDEX TO EXHIBITS Exhibit No. 3.1 Articles of Incorporation of Harley-Davidson Customer Funding Corp. ("CFC"), incorporated by reference to Exhibit 3.1 to CFC's Registration Statement on Form S-3 (File Number 333-37550), filed on May 22, 2000. 3.2 Bylaws of CFC, incorporated by reference to Exhibit 3.2 to CFC's Registration Statement on Form S-3 (File Number 333-37550), filed on May 22, 2000. 4.1 Amended and Restated Trust Agreement dated as of April 1, 2022 between CFC and Wilmington Trust, National Association, incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K (File Number 333-262475-01), filed on April 21, 2022. 4.2 Indenture dated as of April 1, 2022 between the Trust and Citibank, N.A. (the "Indenture Trustee"), incorporated by reference to Exhibit 4.2 to Registrant's Form 8-K (File Number 333-262475-01), filed on April 21, 2022. 4.3 Asset Representations Review Agreement dated as of April 1, 2022 between the Trust, Harley-Davidson Credit Corp. ("HDCC") and Clayton Fixed Income Services LLC, incorporated by reference to Exhibit 4.3 to Registrant's Form 8-K (File Number 333-262475-01), filed on April 21, 2022. 10.1 Transfer and Sale Agreement dated as of April 1, 2022 between HDCC and CFC, incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K (File Number 333-262475-01), filed on April 21, 2022. 10.2 Sale and Servicing Agreement dated as of April 1, 2022 among the Trust, CFC, HDCC and the Indenture Trustee, incorporated by reference to Exhibit 10.2 to Registrant's Form 8-K (File Number 333-262475-01), filed on April 21, 2022. 10.3 Administration Agreement dated as of April 1, 2022 among the Trust, HDCC, CFC and the Indenture Trustee, incorporated by reference to Exhibit 10.3 to Registrant

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