H-D Financial Tightens Credit Standards
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, announced to 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.
Cobra Powersports, TGB to Continue Partnership
Cobra Powersports and TGB plan to continue their working relationship under a new multi-year agreement, the companies said in a joint statement May 13.
Under the terms of the agreement, TGB will continue to supply Cobra Powersports with scooters and ATVs for the U.S. market.
This new supply agreement benefits both companies through distribution channels Cobra Powersports set up and manufacturing capabilities from TGB.
TGB will continue to manufacturer scooters and ATVs in Taiwan for Cobra Powersports to distribute in the United States. Under the new agreement, the scooters and ATVs will be sold under the brand name “PEIRSPEED by TGB”. PEIRSPEED is a brand name Cobra Powersports owns.
The agreement extends a long-standing relationship between the two corporations, with Cobra Powersports distributing TGB scooters and ATVs since 2004. The two companies also have agreed to maintain an open dialogue to explore further product opportunities.
BMW Reports Positive April Cycle Sales
BMW announced its worldwide motorcycle sales increased by 1.4 percent in April, reaching 12,489 vehicles sold, according to a BMW press release.
For the year to the end of April, however, motorcycle sales are down 5.1 percent. BMW produced 33,533 vehicles this year compared to 35,348 during the same period last year.
Harley-Davidson Sells $1 Billion in Bonds
Harley-Davidson Inc. has sold $1 billion in bonds, providing cash that one analyst suggested could help the motorcycle maker weather a deteriorating market outlook, according to a May 21 Associated Press report.
The announcement comes a month after the Milwaukee-based company said it would cut its workforce 8 percent and trim bike shipments.
Harley-Davidson agreed to sell the bonds on May 15, according to documents filed Wednesday with the Securities and Exchange Commission.
“We expect proceeds to be used to repay commercial paper borrowings and for general corporate purposes,” wrote Andy Liu, Standard & Poor’s credit analyst, in the AP story.
The Motor Company last month cut its guidance for 2008, saying it expected earnings to decline 15-20 percent. Previously it predicted growth of as much as 7 percent. psb