Something like half of these motorcycle loans were made by the financial subsidiary (HDFS). They were packaged and sold off (duh! we're in a securitized universe!) We can infer what's happening at the subsidiary via the delinquencies in the book.
And something like 28% of these loans have FICO's below 650 (a.k.a. we're in subprime territory.)
| Harley-Davidson's 30-Day Delinquencies | |
| 4Q2006 | 5.18% |
| 3Q2006 | 4.46% |
| 2Q2006 | 3.61% |
| 1Q2006 | 3.69% |
| 4Q2005 | 4.83% |
| 3Q2005 | 4.07% |
| 2Q2005 | 3.66% |
| 1Q2005 | 3.60% |
| Source: Lehman Bros. | |
(Source: here.)
All these companies (Harley-Davidson, General Motors, Ford) have their own lending units which they are desperately trying to unload.
Only problem? Nobody's biting.
I mean, why back at 90 cents on the dollar what you will be able to get at 40 cents on the dollar two years down the road?
My research friends at all the big banks assure me that there's no chance of the subprime problem spreading. No chance at all! Of course, they're all singing for their supper, but there's no chance of any problem. (Not that I would ever dream of accusing my friends of a conflict of interest.)
Nothing to see here. Move along! These are not the subprime droids that you are looking for.
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