Harley-Davidson Motorcycle Trust 2023-B Annual Report - How They Did This Year

I’m here to help you break down the annual report for the Harley-Davidson Motorcycle Trust 2023-B.

First, a quick clarification: This is not a report on the Harley-Davidson Motor Company. This is a "Trust." Think of it as a financial container created to bundle motorcycle loans into an investment for bondholders. When people buy motorcycles on credit, the Trust packages those loans together. Investors then buy pieces of that package to earn interest. The 2023-B Trust started with about $700 million in motorcycle loans.

1. What does this Trust do and how did it perform?

The Trust’s only job is to hold a pool of motorcycle loans and collect monthly payments from riders. It doesn't make products or hire employees. Its performance depends entirely on whether riders keep making their payments.

In 2025, the Trust managed the natural pay-down of its loan pool. As of the end of 2025, the remaining balance of the Trust dropped to about $315 million as borrowers paid down their debt.

2. Financial performance

The data shows that collecting on these loans is becoming slightly tougher as the portfolio ages.

• Loan Losses: The annual loss rate—the percentage of loans that go bad—rose to 3.44% in 2025, up from 3.31% in 2024.
• Late Payments: The number of people at least 30 days behind on payments rose to 5.77% at the end of 2025, up from 5.34% the year before.
• Interest Payments: The Trust continues to pay interest to its noteholders. Despite rising late payments, the Trust had enough cash to cover all scheduled interest. The average interest rate on the underlying loans remains about 8.25%.

3. Major wins and challenges

The Trust is operating exactly as planned, and the companies responsible for collecting payments are following the rules. The Reserve Account, a cash buffer to protect investors, remains fully funded at $3.5 million.

The primary challenge is the current economic environment. Inflation makes life more expensive, and riders are finding it harder to manage their monthly payments. Additionally, when the Trust repossesses a bike and sells it, they get less money back. The average recovery rate on defaulted bikes dropped from 42% in 2024 to 39% in 2025 as the used motorcycle market softened.

4. Key risks

The biggest risk is that loan performance could continue to worsen if the economy stays tough. The Trust also noted that it has been approving more loans for borrowers with lower credit scores. While this helps sell more bikes, it increases the risk of default. About 18% of the remaining loans are held by borrowers with credit scores below 620, who are more likely to struggle during periods of high interest rates.

5. Future outlook

These loans will naturally be paid off over time, and the Trust will eventually close. The current focus is on collecting payments despite the tough economic climate. The Trust should reach its "clean-up call" date in late 2026. At that point, the balance will be low enough that the servicer can choose to buy the remaining loans and close the Trust.

Investor Takeaway: This Trust is a "run-off" investment, meaning it is slowly winding down. While the cash buffer is healthy and interest payments remain consistent, the rising delinquency and loss rates suggest you should keep a close eye on the monthly performance reports to ensure the Reserve Account remains untouched.