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Harley-Davidson originations slide as OEM posts 12th straight sales decline

Originations at Harley-Davidson Financial Services dropped 5.9% in the fourth quarter of 2019, prompted by the 12th consecutive decline in U.S. retail sales, Harley-Davidson reported in its earnings call today.

Specifically, originations dropped to $503.3 million compared with $535 million year over year. The origination decline was due to lower new bike sales, John Olin, senior vice president and chief financial officer of Harley-Davidson, said on the call.

HDFS originations totaled $3.13 billion in 2019, down 0.3% YoY.

Additionally, delinquencies 30 days or older rose 27 basis points to 4.39% in 2019, “despite having moved past startup deficiencies resulting from the implementation of our new loan management system,” Olin said. The rise in delinquencies partly resulted in the annual credit loss rate rising to 2% compared with 1.76% YoY.

Looking ahead to 2020, “we do see a slight increase in credit loss, but nothing like what we saw this year,” Olin said. “That will be offset by increased revenue at HDFS.”

Breaking down the retail numbers, U.S. sales dropped 3.1% to 20,204 units compared with the same time last year. The decline marks the 12th quarter in a row in which the OEM experienced a sales drop.

However, the YoY sales rate of decline in the fourth quarter was the lowest since sales began to drop in 2017. Sales declined in every foreign market except for Asia Pacific, which saw an increase of 6.2% to 7,187 units YoY.

For the first quarter of 2020, Harley expects motorcycle segment revenue of about $1.09 billion to $1.17 billion. For the full year, the company is forecasting revenue of between $4.53 billion to $4.66 billion.

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