Harley-Davidson Financial Services saw a 3.9% drop — to $1.03 billion — in year-over-year origination volume in the second quarter, the company announced today. However, this is a 51% increase from 1Q’s $683.6 million.
Annualized net losses at HDFS — at 1.5% in 2Q — continue to rise, and are at the highest level the captive has seen since 2011 when losses were at 1.1%, according to the company’s second-quarter earnings released today. Additionally, 30-day delinquencies rose 45 basis points to 3.16% in 2Q, from 2.71% the same time a year prior.
“The increase was a result of higher losses on loans in oil-dependent areas, normalizing subprime performance, and lower used-bike values at auction,” John Olin, Harley-Davidson Inc.’s chief financial officer, said during the earnings call.
HDFS has seen — through all its auction houses — a softening in auction values, Ryan Green, the captive’s CFO, said at AFSA’s Credit Summit for Fixed Income Investors in June. “There has been sort of a supply-and-demand dynamic [shift] with maybe a larger supply from us and other financial companies,” he said. “We’ve also seen more buyers, so we view it as more of a supply-demand-at-the-auction impact.”
Wholesale and retail finance receivables outstanding were up 2% year over year to $7.4 billion in 2Q. Financial services operating income was also up 8.9% to $89.6 million in 2Q, from $81.9 million the same time a year prior, which was driven by a $9.3 million gain generated from the captive’s 2Q full securitization, Olin said.