Harley-Davidson’s financing division is seeing a spike in delinquent loans to motorcycle buyers, American Business Daily reported May 5. As a result, Harley-Davidson Financial Services Inc., which provides wholesale financing for dealers and retail loans and insurance services to motorcycle buyers, is tightening its credit standards.
“There were two primary forces working against us this year: volatility in the debt capital market due to economic concerns significantly increased the cost of funding … and higher delinquency and credit losses among our customers,” Thomas Bergmann, Harley-Davidson's chief financial officer, told shareholders at the company’s annual meeting April 26 in Milwaukee, Wis.
About 29 percent of Harley-Davidson’s outstanding loans were to subprime, or lower-rated, credit customers at the end of 2007, according to the company.
The subprime loan figure is consistent with the company’s retail loans during the past several years, but now the company is seeing more delinquencies “across all credit tiers, not just subprime,” Bergmann said.
“We’re tackling this issue by tightening our lending standards and enhancing our collection processes to work our way through this challenging environment,” he said.
Harley-Davidson Financial Services reported first-quarter 2008 operating income of $34.9 million, a decrease of $24 million, compared with the year-ago quarter.Click here for reuse options!
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