Harley-Davidson Motorcycle Trust Sees Rising Loan Losses, Delinquencies

TL;DR

**Harley-Davidson's motorcycle loan trust is flashing red with rising defaults and delinquencies, signaling trouble for investors in its asset-backed securities.**

AI Summary

Harley-Davidson Motorcycle Trust 2023-B, 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 year.

Why It Matters

The increasing loss and delinquency rates for Harley-Davidson Motorcycle Trust 2023-B signal growing credit risk within Harley-Davidson's financing arm, Harley-Davidson Credit Corp. This trend, driven by macroeconomic headwinds and declining motorcycle resale values, could impact the profitability and liquidity of Harley-Davidson Financial Services, Inc., potentially affecting the parent company, Harley-Davidson, Inc. Investors in asset-backed securities tied to motorcycle loans should be wary of these deteriorating credit metrics, as they suggest a higher probability of future principal losses. The competitive landscape for motorcycle financing, already sensitive to economic shifts, will likely see increased pressure on underwriting standards and loan performance across the industry.

Risk Assessment

Risk Level: high — The risk level is high due to the significant 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% as of December 31, 2025, from 5.34% at December 31, 2024. These specific increases, coupled with macroeconomic pressures and declining auction recovery values, indicate heightened risk for the Trust's assets.

Analyst Insight

Investors should scrutinize the underlying collateral performance of Harley-Davidson Motorcycle Trust 2023-B and similar asset-backed securities, considering the rising loss and delinquency rates. Re-evaluate exposure to motorcycle loan-backed assets, as macroeconomic pressures and declining recovery values could further erode returns.

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, showing a 0.13 percentage point increase in 2025.)
• 5.77% — 30+ day delinquency rate (Increased from 5.34% at December 31, 2024, reflecting higher payment defaults.)
• 5.34% — 30+ day delinquency rate at December 31, 2024 (Baseline for comparison, showing a 0.43 percentage point increase in 2025.)
• 2025 — Fiscal year end (The period for which the reported credit performance metrics apply.)
• 2024 — Prior fiscal year end (The period used for comparison of credit performance metrics.)

Key Players & Entities

• Harley-Davidson Motorcycle Trust 2023-B (company) — issuing entity
• Harley-Davidson Credit Corp. (company) — sponsor, seller, servicer
• Harley-Davidson Financial Services, Inc. (company) — parent company of HDCC
• Harley-Davidson, Inc. (company) — ultimate parent company
• Harley-Davidson Customer Funding Corp. (company) — depositor
• Wilmington Trust, National Association (company) — Owner Trustee
• Citibank, N.A. (company) — Indenture Trustee, Servicing Participant
• David Viney (person) — Vice President and Treasurer of HDCC
• Ernst & Young LLP (company) — independent public accounting firm
• KPMG LLP (company) — independent public accounting firm

FAQ

Risk Factors

• Deteriorating Credit Performance of Underlying Loans [high — financial]: The Trust experienced a significant increase in annual losses on retail motorcycle loans, rising to 3.44% in 2025 from 3.31% in 2024. Concurrently, the 30+ day delinquency rate climbed to 5.77% as of December 31, 2025, up from 5.34% in the prior year, indicating a weakening credit quality of the securitized assets.
• Macroeconomic Pressures on Borrower Affordability [high — market]: Macroeconomic factors such as higher motorcycle payments and persistent inflation are impacting customer affordability, contributing to the rise in loan delinquencies and losses. Decreased auction recovery values for repossessed motorcycles further exacerbate the financial impact.
• Expansion of Credit to Sub-prime Borrowers [medium — financial]: The Trust's strategy to prudently expand approvals to sub-prime borrowers, while potentially increasing origination volume, introduces higher credit risk. This expansion is a noted factor influencing future loss performance.

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 higher financing costs directly impact affordability for new motorcycle purchases. The used motorcycle market, reflected in auction recovery values, also plays a crucial role in the overall financial performance of loan portfolios.

Regulatory Implications

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

What Investors Should Do

1. Monitor Delinquency and Loss Trends
2. Evaluate Impact of Sub-prime Expansion
3. Assess Macroeconomic Sensitivity

Key Dates

• 2025-12-31: Fiscal Year End — Reporting period for the observed deterioration in credit performance metrics, including a 3.44% annual loss rate and a 5.77% 30+ day delinquency rate.
• 2024-12-31: Prior Fiscal Year End — Baseline for comparison, with an annual loss rate of 3.31% and a 30+ day delinquency rate of 5.34%, highlighting the negative trend in credit quality.
• 2023-09-01: Trust Agreement and Indenture Establishment — Establishment of the Harley-Davidson Motorcycle Trust 2023-B, setting the framework for the securitization of motorcycle loans.
• 2023-09-20: Underwriting Agreement — Agreement related to the underwriting of securities issued by the Trust, indicating the initial offering and market participation.
• 2025-07-30: Certificate Purchase Agreements — Agreements between Harley-Davidson Credit Corp. and specific entities (Cavendish LLC, KKR Morrow Residuals Purchaser 1 LLC) for the purchase of certificates, suggesting secondary market activity or specific financing arrangements.

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 2023-B is a securitization entity holding retail motorcycle loans.)

HDCC (Harley-Davidson Credit Corp.)

The primary financing arm of Harley-Davidson, responsible for originating and servicing retail motorcycle loans. (HDCC is the servicer for the loans within the Trust and a key party in the securitization structure.)

Regulation AB

A US Securities and Exchange Commission (SEC) regulation that governs the disclosure requirements for asset-backed securities offerings. (References to Regulation AB indicate the filing is related to the disclosure of securitized assets and their performance.)

Annual Losses

The total amount of principal lost on loans during a fiscal year, typically due to defaults and unrecoverable amounts. (A key metric indicating the credit quality of the underlying loan pool, which increased to 3.44% in 2025.)

30+ Day Delinquency Rate

The percentage of loans in the pool where payments are more than 30 days past due. (An early indicator of potential future losses, which rose to 5.77% in 2025.)

Sub-prime Borrowers

Borrowers with a lower credit score or limited credit history, who are considered higher risk for loan defaults. (The Trust's strategy to approve loans for sub-prime borrowers is identified as a factor potentially increasing future losses.)

Year-Over-Year Comparison

This filing indicates a worsening credit environment for the underlying retail motorcycle loans compared to the previous year. Annual losses increased from 3.31% to 3.44%, and the 30+ day delinquency rate rose from 5.34% to 5.77%. These shifts are attributed to macroeconomic pressures and a strategic expansion into sub-prime lending, suggesting increased financial risk within the Trust's portfolio.

Filing Documents

• a2023-bform10xk2025.htm (10-K) — 78KB
• a2023-bform10xkxex3112025.htm (EX-31.1) — 10KB
• a2023-bform10xkxex3312025.htm (EX-33.1) — 78KB
• a2023-bform10xkxex3322025.htm (EX-33.2) — 26KB
• a2023-bform10xkxex3412025.htm (EX-34.1) — 9KB
• a2023-bform10xkxex3422025.htm (EX-34.2) — 7KB
• a2023-bform10xkxex3512025.htm (EX-35.1) — 5KB
• 0001989332-26-000015.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-B (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 September 1, 2023 between CFC and Wilmington Trust, National Association, incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K (File Number 333-262475-03), filed on September 28, 2023. 4.2 Indenture dated as of September 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 333-262475-03), filed on September 28, 2023. 4.3 Asset Representations Review Agreement dated as of September 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 333-262475-03), filed on September 28, 2023. 10.1 Transfer and Sale Agreement dated as of September 1, 2023 between HDCC and CFC, incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K (File Number 333-262475-03), filed on September 28, 2023. 10.2 Sale and Servicing Agreement dated as of September 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 333-262475-03), filed on September 28, 2023. 10.3 Administration Agreement dated as of September 1, 2023 among the Trust, HDCC, CFC and the Indenture Trustee, incorporate

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