Harley and the Subprime Market

From Forbes:

Americans not only bought homes they couldn’t afford, they also spent money they didn’t have on Harleys.
In a note on Wednesday, Edward Aaron, an analyst for RBC Capital Market, said that Harley-Davidson’s financial unit has seen increased delinquencies and losses on loans given out over the past few years.
One reason for that phenomenon, he said, is the same reason that the subprime lenders are in financial turmoil — that is — they lent money to risky borrowers.
“While we don’t know which borrowers are accounting for the acceleration of loss rates in Harley’s loan securitizations, it’s stands to reason that the lower credit quality customer’s would be accounting for most of that change,” he said.
That doesn’t mean Harley is on the verge of implosion, Aaron said in an interview. But it may cause the motorcycle company’s earnings to sputter over the next few years.

This is old news. Herb Greenberg wrote about Harley’s finance unit years ago.

Posted by Eddy Elfenbein on March 15th, 2007 at 8:26 am

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