Harley-Davidson Trust Sees Rising Loan Losses, Delinquencies

TL;DR

**Harley-Davidson's motorcycle loan trust is flashing red, with credit quality deteriorating significantly due to macroeconomic headwinds and sub-prime lending expansion.**

AI Summary

Harley-Davidson Motorcycle Trust 2023-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. Concurrently, the 30+ day delinquency rate rose to 5.77% as of December 31, 2025, compared to 5.34% at December 31, 2024. This decline was primarily attributed to macroeconomic pressures, including higher motorcycle payments, persistent inflation impacting customer affordability, and continued decreases in auction recovery values. The Trust, sponsored by HDCC, a wholly-owned subsidiary of Harley-Davidson Financial Services, Inc., also noted its strategy to prudently expand approvals to sub-prime borrowers as a factor influencing future loss performance. Despite these credit challenges, both HDCC and Citibank, N.A., as Servicing Participants, reported no material instances of noncompliance with servicing criteria for the period.

Why It Matters

This filing reveals a concerning trend for investors in asset-backed securities tied to Harley-Davidson motorcycle loans, as rising delinquencies and losses directly impact the performance of the underlying collateral. The increase in annual losses to 3.44% and 30+ day delinquencies to 5.77% signals potential stress on future cash flows for noteholders. For Harley-Davidson, Inc., these credit quality issues in its financing arm, Harley-Davidson Credit Corp., could constrain future sales if lending standards tighten further, impacting its competitive position against other motorcycle manufacturers. Employees at HDCC may face increased pressure to manage these deteriorating loan portfolios, while customers could experience stricter lending criteria or higher interest rates.

Risk Assessment

Risk Level: high — The risk level is high due to the explicit 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. This trend, driven by macroeconomic pressures and a strategy to expand approvals to sub-prime borrowers, directly impacts the asset quality of the Trust.

Analyst Insight

Investors holding notes in Harley-Davidson Motorcycle Trust 2023-A should closely monitor future credit performance reports and consider the implications of rising delinquencies and losses on their investment's yield and principal recovery. Potential investors should exercise caution and factor in the increased credit risk and macroeconomic headwinds when evaluating new investments in similar asset-backed securities.

Financial Highlights

debt To Equity

Not Disclosed

revenue

Not Disclosed

operating Margin

Not Disclosed

total Assets

Not Disclosed

total Debt

Not Disclosed

net Income

Not Disclosed

eps

Not Disclosed

gross Margin

Not Disclosed

cash Position

Not Disclosed

revenue Growth

Not Disclosed

Key Numbers

• 3.44% — Annual losses on retail motorcycle loans (Increased from 3.31% in 2024, indicating deteriorating credit quality.)
• 3.31% — Annual losses on retail motorcycle loans in 2024 (Baseline for comparison to 2025's increased losses.)
• 5.77% — 30+ day delinquency rate (Increased from 5.34% at December 31, 2024, showing rising payment defaults.)
• 5.34% — 30+ day delinquency rate at December 31, 2024 (Baseline for comparison to 2025's increased delinquencies.)
• 2025 — Fiscal year end (The period for which the reported credit performance data applies.)
• 2024 — Prior fiscal year end (The period used for comparison of credit performance metrics.)

Key Players & Entities

• Harley-Davidson Motorcycle Trust 2023-A (company) — Issuing entity of the securitization
• Harley-Davidson Credit Corp. (company) — Seller, servicer, and sponsor of the Trust
• Harley-Davidson Customer Funding Corp. (company) — Depositor for the Trust
• Harley-Davidson, Inc. (company) — Parent company of Harley-Davidson Financial Services, Inc.
• Wilmington Trust Company, National Association (company) — Owner Trustee for the Trust
• Citibank, N.A. (company) — Indenture Trustee and Servicing Participant
• David Viney (person) — Vice President and Treasurer of HDCC, senior officer in charge of servicing function
• J.P. Morgan Securities, LLC (company) — Underwriter for the Trust
• Clayton Fixed Income Services LLC (company) — Asset Representations Reviewer for the Trust
• Ernst Young LLP (company) — Public accounting firm providing attestation report for HDCC

FAQ

Risk Factors

• Deteriorating Credit Performance of Motorcycle Loans [high — financial]: Annual losses on retail motorcycle loans increased to 3.44% in 2025 from 3.31% in 2024. The 30+ day delinquency rate rose to 5.77% as of December 31, 2025, up from 5.34% at the end of 2024, indicating a significant weakening in the credit quality of the underlying assets.
• Macroeconomic Pressures on Affordability [high — market]: Macroeconomic factors such as higher motorcycle payments and persistent inflation are impacting customer affordability. This is a primary driver for the observed increase in loan losses and delinquencies.
• Decreasing Auction Recovery Values [medium — market]: Continued decreases in auction recovery values for repossessed motorcycles are exacerbating losses. This trend directly impacts the net loss experienced by the trust when loans default.
• Expansion into Sub-prime Borrowers [medium — financial]: The trust's strategy to prudently expand approvals to sub-prime borrowers is identified as a factor influencing future loss performance. This move inherently carries higher credit risk.

Industry Context

The motorcycle industry, particularly the premium segment served by Harley-Davidson, is sensitive to economic conditions and consumer discretionary spending. Macroeconomic pressures like inflation and rising interest rates can significantly impact affordability for new vehicle purchases and financing. The used vehicle market, reflected in auction recovery values, also plays a crucial role in mitigating losses on defaulted loans.

Regulatory Implications

As a securitization trust, Harley-Davidson Motorcycle Trust 2023-A is subject to regulations like Regulation AB, which mandates specific disclosures regarding the underlying assets and credit enhancement. While the filing notes no material noncompliance with servicing criteria by HDCC or Citibank, N.A., ongoing monitoring of credit performance and adherence to disclosure requirements remains critical.

What Investors Should Do

1. Monitor delinquency and loss rates closely.
2. Assess the impact of macroeconomic factors.
3. Evaluate the risk associated with sub-prime expansion.
4. Review HDCC's servicing performance.

Key Dates

• 2025-12-31: Fiscal Year End — Reporting period for the latest credit performance metrics, showing increased losses and delinquencies.
• 2024-12-31: Prior Fiscal Year End — Baseline for comparison, highlighting the deterioration in credit performance from 2024 to 2025.
• 2023-02-01: Trust Agreement and Indenture Establishment — Formation date of the Harley-Davidson Motorcycle Trust 2023-A, establishing the framework for securitization.
• 2023-02-13: Underwriting Agreement — Agreement related to the initial offering of securities by CFC and HDCC.
• 2025-07-30: Certificate Purchase Agreements — Agreements indicating transactions involving the purchase of certificates by Cavendish LLC and KKR Morrow Residuals Purchaser 1 LLC.

Glossary

Securitization Entity

A legal entity created to pool assets and issue securities backed by the cash flows from those assets. (Harley-Davidson Motorcycle Trust 2023-A is a securitization entity holding retail motorcycle loans.)

HDCC (Harley-Davidson Credit Corp.)

The primary financing arm for Harley-Davidson, originating and servicing retail motorcycle loans. (HDCC is the sponsor and servicer for the Trust, and its credit performance directly impacts the Trust's assets.)

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 realized when repossessed vehicles are sold at auction. (Declining auction values directly increase the net loss on defaulted loans held by the Trust.)

Sub-prime borrowers

Borrowers with a lower credit score, indicating a higher risk of default. (The Trust's strategy to lend to this segment is a factor in its increasing risk profile.)

Regulation AB

SEC rules governing the registration, reporting, and disclosure requirements for asset-backed securities. (The filing structure and specific items referenced (e.g., 1112(b), 1114(b)(2), 1115(b)) are dictated by Regulation AB.)

Year-Over-Year Comparison

The provided filing focuses on the Harley-Davidson Motorcycle Trust 2023-A and its performance as of December 31, 2025. Key metrics show a deterioration compared to the prior year (2024), with annual losses rising to 3.44% from 3.31% and 30+ day delinquencies increasing to 5.77% from 5.34%. This indicates a negative trend in credit quality, driven by macroeconomic pressures and a strategic shift towards sub-prime lending, contrasting with a potentially more stable or improving credit environment in the previous reporting period.

Filing Documents

• a2023-aform10xk2025.htm (10-K) — 78KB
• a2023-aform10xkxex3112025.htm (EX-31.1) — 10KB
• a2023-aform10xkxex3312025.htm (EX-33.1) — 78KB
• a2023-aform10xkxex3322025.htm (EX-33.2) — 26KB
• a2023-aform10xkxex3412025.htm (EX-34.1) — 9KB
• a2023-aform10xkxex3422025.htm (EX-34.2) — 7KB
• a2023-aform10xkxex3512025.htm (EX-35.1) — 5KB
• 0001963533-26-000015.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 2023-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 February 1, 2023 between CFC and Wilmington Trust, National Association, incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K (File Number 333-262475-02), filed on February 24, 2023. 4.2 Indenture dated as of February 1, 2023 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 333-262475-02), filed on February 24, 2023. 4.3 Asset Representations Review Agreement dated as of February 1, 2023 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 333-262475-02), filed on February 24, 2023. 10.1 Transfer and Sale Agreement dated as of February 1, 2023 between HDCC and CFC, incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K (File Number 333-262475-02), filed on February 24, 2023. 10.2 Sale and Servicing Agreement dated as of February 1, 2023 among the Trust, CFC, HDCC and the Indenture Trustee, incorporated by reference to Exhibit 10.2 to Registrant's Form 8-K (File Number 333-262475-02), filed on February 24, 2023. 10.3 Administration Agreement dated as of February 1, 2023 among the Trust, HDCC, CFC and the Indenture Trustee, incorporated by refere

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