穿越火线枪战王者吧 www.nqxfd.icu Harley-Davidson Inc. is using loans to reach new riders.
The motorcycle maker is introducing 100 new models through 2027, including its first electric bike, to find new customers outside a pack of aging riders in the U.S. Harley expects buyers of those Hogs to be younger and less wealthy than the baby boomers who drove its sales in recent decades, the company has said in recent years, making financing more important to securing their business.
“We are an enabler of Harley-Davidson’s plan for growing new riders,” Larry Hund, president of Harley’s financing arm, said in an interview.
The strategy presents new risks as Harley draws more of its revenue from lending. The company’s financing unit generated more than 40% of operating income last year, up from 28% in 2012. Profit in the unit has held steady as overall operating income declined in each of the past four years. Harley’s shares are down 16% over the past year.
Harley said in its most recent annual report that credit losses could increase as the company lends to more customers with lower creditworthiness. The percentage of customers who are late on their loans rose to 3.7% in the first quarter from 3.3% a year earlier in the U.S. despite strong economic growth and low unemployment.
Other vehicle makers, including Caterpillar Inc. and Deere & Co., also make loans through in-house financing units. Honda Motor Co.’s write-offs on loans for cars and motorcycles have increased over the past three years. Deere on May 17 raised its provision for credit losses from loans to 0.23% of its total portfolio from 0.17% in the previous quarter. Caterpillar said earlier this year that issues in its boat-engine business had increased the percentage of late loans to 3.55% in 2018 from 2.78% at the end of 2017.
Harley’s increase was the result of temporary problems with a new loan-management system that made reaching customers with late payments more difficult, Mr. Hund said. Delinquency rates for Harley’s customers remain well below rates of around 6% reached during the financial crisis.
“We have a very disciplined process in the way we set our credit criteria,” Mr. Hund said.
But rising delinquency and repossession rates could threaten Harley’s finances if they aren’t monitored carefully, said Jaime Katz, an analyst at Morningstar. Harley owned $20 million in repossessed bikes at the end of 2018, up from $12 million in 2012.
Those repossessions are adding to a glut of used motorcycles at Harley dealerships that is weighing on demand for the company’s new bikes.
The company wants to make more loans to customers purchasing those used bikes as well, generating some revenue from customers the company hopes will one day buy a new model, Mr. Hund said.
Ryan Smith, general manager at Greeley Harley-Davidson in Greeley, Colo., said Harley’s increased loan options have helped him close sales a customer might have walked away from in the past.
“Harley-Davidson Financial has really been a huge tool in helping us move motorcycles,” Mr. Smith said.
About 40% of Harley’s outstanding loans in 2016 were for used bikes, up from less than a quarter in 2006, and that share has continued to grow, Mr. Hund said.
But when financing goes bad, it can turn Harley from a beloved bike brand into a debt collector.
Alex Anker bought a used Harley for $15,800 in 2015, while he was in the Navy. He liked the look of Harley models that his roommates owned.
Harley gave Mr. Anker a six-year loan at a 6.49% annual interest rate, lower than the rate a credit union offered him. Harley didn’t require him to make a down payment.
Three years later, after leaving the Navy and college, Mr. Anker’s income dropped, and he missed a payment on his motorcycle in October.
“It was, honestly, wants versus needs,” he said. “I had to pick which bills I needed to pay.”
Harley started calling his cellphone repeatedly, Mr. Anker said. He filed a lawsuit in recent months claiming Harley broke federal and state laws by continuing to call him after he told them to stop.
Harley declined to comment on the lawsuit and hasn’t yet filed a response.
Mr. Anker resumed paying Harley in November, but continues to pay a late fee each month because he remains one month behind schedule. He enjoys riding his Hog around Lakeland, Fla., where he works at a boat club, and said he would consider buying another Harley someday.
“I don’t know if I would go through them for financing,” he said.
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