Harley-Davidson Motorcycle Trust Sees Rising Loan Losses, Delinquencies

TL;DR

**Harley-Davidson's motorcycle loan trust is flashing red with rising defaults, signaling trouble for consumer credit and used bike values.**

AI Summary

Harley-Davidson Motorcycle Trust 2024-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 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., maintains its compliance with servicing criteria, with both HDCC and Citibank, N.A. reporting no material instances of noncompliance. The Trust's business is limited to purchasing contracts and acting as the beneficial owner of the issuing entity, with its officers and directors largely employed by HDCC or HDFS, except for two independent directors.

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 Trust's notes. The macroeconomic headwinds cited, such as inflation and declining auction values, suggest broader challenges for consumer discretionary spending and the used vehicle market, potentially affecting other auto ABS issuers. For Harley-Davidson, Inc., these credit performance issues could signal reduced demand for new motorcycles or increased pressure on its financing arm, Harley-Davidson Financial Services, Inc., impacting its competitive position against other powersports lenders.

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. These trends, driven by macroeconomic pressures and declining auction recovery values, directly threaten the cash flows to the noteholders of Harley-Davidson Motorcycle Trust 2024-A.

Analyst Insight

Investors should scrutinize their exposure to asset-backed securities backed by consumer discretionary products, particularly those in the powersports sector. Consider re-evaluating the credit quality of underlying collateral and the potential for further macroeconomic deterioration to impact recovery rates and delinquency trends.

Key Numbers

• 3.44% — Annual losses on retail motorcycle loans (Increased from 3.31% in 2024, indicating worsening 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 (As of December 31, 2025, up from 5.34% in 2024, reflecting higher payment defaults.)
• 5.34% — 30+ day delinquency rate in 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 data applies.)
• 2024 — Previous fiscal year end (The period used for comparison of credit performance metrics.)

Key Players & Entities

• Harley-Davidson Motorcycle Trust 2024-A (company) — issuing entity
• Harley-Davidson Credit Corp. (company) — seller, servicer, and sponsor
• 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
• David Viney (person) — Vice President and Treasurer of HDCC
• Ernst Young LLP (company) — attestation report provider for HDCC
• KPMG LLP (company) — attestation report provider for Citibank, N.A.

FAQ

Risk Factors

• Deteriorating Credit Performance of Motorcycle 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 increased to 5.77% as of December 31, 2025, up from 5.34% in the prior year. This trend is attributed to macroeconomic pressures impacting customer affordability.
• Macroeconomic Pressures on Affordability [high — market]: Higher motorcycle payments, persistent inflation, and decreased auction recovery values are negatively impacting the affordability of motorcycle ownership for customers. This is a direct driver of the observed increase in loan delinquencies and losses within the Trust's portfolio.
• Decreasing Auction Recovery Values [medium — market]: The decline in auction recovery values for repossessed motorcycles directly impacts the net loss on defaulted loans. Lower recovery rates exacerbate the financial impact of defaults, contributing to the overall increase in annual losses reported by the Trust.
• Reliance on Servicing by HDCC [medium — operational]: The Trust's operations are heavily reliant on Harley-Davidson Credit Corp. (HDCC) for servicing the underlying retail motorcycle loans. While HDCC reports compliance with servicing criteria, any future operational issues or non-compliance by HDCC could materially affect the Trust's performance.

Industry Context

The retail motorcycle industry is facing headwinds from macroeconomic pressures, including inflation and higher financing costs, which are impacting consumer affordability. This environment is leading to increased delinquencies and losses in loan portfolios, as evidenced by the performance of Harley-Davidson's securitized assets. The competitive landscape requires robust credit risk management and effective servicing to navigate these challenging conditions.

Regulatory Implications

The Trust's operations are subject to regulations governing securitization and financial services, including Regulation AB. While HDCC and Citibank report compliance with servicing criteria, any future findings of non-compliance could lead to regulatory scrutiny and potential penalties. The increasing delinquency rates may also attract attention from regulators monitoring consumer credit markets.

What Investors Should Do

1. Monitor the trend of increasing delinquencies and losses: The rise in the 30+ day delinquency rate to 5.77% and annual losses to 3.44% warrants close observation in future reporting periods.
2. Assess the impact of macroeconomic factors: Investors should evaluate how persistent inflation and higher interest rates continue to affect borrower affordability and the potential for further credit deterioration.
3. Review HDCC's servicing performance: Given HDCC's role, any changes in its operational efficiency or compliance status should be a key focus for investors.
4. Analyze auction recovery value trends: The decline in recovery values exacerbates losses; understanding future trends in this area is crucial for assessing net loss expectations.

Key Dates

• 2025-12-31: Year-end delinquency rate reported — Indicates a rise in 30+ day delinquencies to 5.77%, up from 5.34% in the previous year, signaling increased borrower stress.
• 2025-12-31: Year-end annual losses reported — Shows an increase in annual losses on retail motorcycle loans to 3.44%, up from 3.31% in 2024, reflecting deteriorating credit quality.
• 2024-05-01: Trust Agreement and Indenture established — Marks the formation of the Harley-Davidson Motorcycle Trust 2024-A and its governing documents, setting the framework for securitization.
• 2024-05-14: Underwriting Agreement executed — Indicates the terms under which the Trust's securities were offered to the market, involving HDCC and underwriters like Wells Fargo Securities.
• 2025-07-30: Certificate Purchase Agreements executed — Documents the sale of certificates by HDCC to entities like Cavendish LLC and KKR Morrow Residuals Purchaser 1 LLC, impacting the Trust's capital structure.

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 2024-A is a securitization entity holding retail motorcycle loans.)

HDCC (Harley-Davidson Credit Corp.)

The wholly-owned subsidiary of Harley-Davidson Financial Services, Inc. that originates and services the retail motorcycle loans within the Trust. (HDCC's performance as a servicer and originator is critical to the Trust's financial health.)

30+ day delinquency rate

The percentage of loans in a portfolio where payments are more than 30 days past due. (An increase in this rate indicates a higher risk of default and potential losses for the Trust.)

Annual losses

The total amount of principal lost on defaulted loans over a fiscal year, typically after accounting for any recovery proceeds. (The reported increase in annual losses signifies a worsening credit quality of the underlying loan pool.)

Auction recovery values

The amount realized when repossessed vehicles are sold at auction. (Decreasing auction recovery values directly reduce the amount recovered on defaulted loans, increasing net losses.)

Servicing Criteria

A set of standards and requirements that a loan servicer must adhere to, as outlined in regulations like Regulation AB. (The Trust's compliance with servicing criteria by HDCC and Citibank is essential for investor confidence and regulatory compliance.)

Year-Over-Year Comparison

The Harley-Davidson Motorcycle Trust 2024-A reports a notable deterioration in credit performance compared to the prior year. Annual losses on retail motorcycle loans increased by 0.13 percentage points to 3.44%, and the 30+ day delinquency rate rose by 0.43 percentage points to 5.77%. These increases are attributed to macroeconomic pressures, including inflation and higher payments, as well as decreased auction recovery values, indicating a worsening credit environment for the underlying loan pool.

Filing Documents

• a2024-aform10xk2025.htm (10-K) — 78KB
• a2024-aform10xkxex3112025.htm (EX-31.1) — 10KB
• a2024-aform10xkxex3312025.htm (EX-33.1) — 78KB
• a2024-aform10xkxex3322025.htm (EX-33.2) — 26KB
• a2024-aform10xkxex3412025.htm (EX-34.1) — 9KB
• a2024-aform10xkxex3422025.htm (EX-34.2) — 7KB
• a2024-aform10xkxex3512025.htm (EX-35.1) — 5KB
• 0002017611-26-000014.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 2024-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 May 1, 2024 between CFC and Wilmington Trust, National Association, incorporated by reference to Exhibit 4.1 to Registrant's Form 8-K (File Number 333-262475-04), filed on May 22, 2024. 4.2 Indenture dated as of May 1, 2024 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 333-262475-04), filed on May 22, 2024. 4.3 Asset Representations Review Agreement dated as of May 1, 2024 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 333-262475-04), filed on May 22, 2024. 10.1 Transfer and Sale Agreement dated as of May 1, 2024 between HDCC and CFC, incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K (File Number 333-262475-04), filed on May 22, 2024. 10.2 Sale and Servicing Agreement dated as of May 1, 2024 among the Trust, CFC, HDCC and the Indenture Trustee, incorporated by reference to Exhibit 10.2 to Registrant's Form 8-K (File Number 333-262475-04), filed on May 22, 2024. 10.3 Administration Agreement dated as of May 1, 2024 among the Trust, HDCC, CFC and the Indenture Trustee, incorporated by reference to Exhibit 10.3 to Registrant's Form 8-K (File Numb

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