The Company provides retail financial services to customers of its dealers in the U.S. and Canada. The origination of retail loans is a separate and distinct transaction between the Company and the retail customer, unrelated to the Company’s sale of product to its dealers. Retail finance receivables consist of secured promissory notes and secured installment sales contracts and are primarily related to dealer sales of motorcycles to retail customers. The Company holds either titles or liens on titles to vehicles financed by promissory notes and installment sales contracts.

The Company offers wholesale financing to its dealers in the U.S. and Canada. Wholesale finance receivables are related primarily to the Company's sale of motorcycles, related parts and accessories and apparel to dealers. Wholesale loans to dealers are generally secured by financed inventory or property.

Finance receivables, net were as follows (in thousands):


	June 30, 2025		December 31, 2024		June 30, 2024
Retail finance receivables	$	6,593,043	$	6,681,106	$	6,993,930
Wholesale finance receivables	1,132,472		1,008,371		1,418,151
	7,725,515		7,689,477		8,412,081
Allowance for credit losses	(399,293)		(401,183)		(393,517)
	$	7,326,222	$	7,288,294	$	8,018,564

The Company’s finance receivables are reported at amortized cost, net of the allowance for credit losses. Amortized cost includes the principal outstanding, accrued interest, and deferred loan fees and costs. The Company's allowance for credit losses reflects expected lifetime credit losses on its finance receivables. Based on differences in the nature of the finance receivables and the underlying methodology for calculating the allowance for credit losses, the Company segments its finance receivables into the retail and wholesale portfolios. The Company further disaggregates each portfolio by credit quality indicators. As the credit risk varies between the retail and wholesale portfolios, the Company utilizes different credit quality indicators for each portfolio.

The retail portfolio primarily consists of a large number of small balance, homogeneous finance receivables. The Company performs a collective evaluation of the adequacy of the retail allowance for credit losses. The Company utilizes a vintage-based loss forecast methodology that includes decompositions for probability of default, exposure at default, attrition rate, and recovery balance rate. Reasonable and supportable economic forecasts for a two-year period are incorporated into the methodology to reflect the estimated impact of changes in future economic conditions, such as unemployment rates, household obligations or other relevant factors, over the two-year reasonable and supportable period. For periods beyond the Company’s reasonable and supportable forecasts, the Company reverts to its average historical loss experience using a mean-reversion process over a three-year period. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, or term as well as other relevant factors.

The wholesale portfolio is primarily composed of large balance, non-homogeneous loans. The Company’s evaluation for the wholesale allowance for credit losses is first based on a loan-by-loan review to determine whether the loans share similar risk characteristics. The Company individually evaluates loans that do not share risk characteristics. Loans identified as those for which foreclosure is probable are classified as Non-Performing, and a specific allowance for credit losses is established when appropriate. The specific allowance is determined based on the amortized cost of the related finance receivable and the estimated fair value of the collateral, less selling costs and the cash that the Company expects to receive. Finance receivables in the wholesale portfolio not individually assessed are aggregated, based on similar risk characteristics, according to the Company’s internal risk rating system and measured collectively. The related allowance for credit losses is based on factors such as the specific borrower’s financial performance and ability to repay, the Company’s past credit loss experience, reasonable and supportable economic forecasts, and the value of the underlying collateral and expected recoveries.

The Company considers various third-party economic forecast scenarios as part of estimating the allowance for expected credit losses and applies a probability-weighting to those economic forecast scenarios. Each quarter, the Company's outlook on economic conditions impacts the Company's retail and wholesale estimates for expected credit losses. At the end of the second quarter of 2025, the Company's probability weighting of its economic forecast scenarios was weighted towards more pessimistic scenarios given continued challenging macro-economic conditions including a persistently high interest rate environment, ongoing elevated inflation levels, and muted consumer confidence.

Additionally, the historical experience incorporated into the portfolio-specific models does not fully reflect the Company's comprehensive expectations regarding the future. As such, the Company incorporated qualitative factors to establish an appropriate allowance for credit losses balance. These factors include motorcycle recovery value considerations, delinquency adjustments, specific problem loan trends, and changes in other portfolio-specific loan characteristics.

Due to the use of projections and assumptions in estimating the losses, the amount of losses incurred by the Company in either portfolio could differ from the amounts estimated. Further, the Company’s allowance for credit losses incorporates known conditions at the balance sheet date and the Company’s expectations surrounding the economic forecasts. The


	Three months ended June 30, 2025						Six months ended June 30, 2025
	Retail		Wholesale		Total		Retail		Wholesale		Total
Balance, beginning of period	$	368,476	$	24,702	$	393,178	$	378,373	$	22,810	$	401,183
Provision for credit losses	49,975		(237)		49,738		100,776		2,296		103,072
Charge-offs	(61,306)		—		(61,306)		(138,840)		(641)		(139,481)
Recoveries	17,683		—		17,683		34,519		—		34,519
Balance, end of period	$	374,828	$	24,465	$	399,293	$	374,828	$	24,465	$	399,293
	Three months ended June 30, 2024						Six months ended June 30, 2024
	Retail		Wholesale		Total		Retail		Wholesale		Total
Balance, beginning of period	$	365,411	$	14,950	$	380,361	$	367,037	$	14,929	$	381,966
Provision for credit losses	55,289		741		56,030		116,278		762		117,040
Charge-offs	(60,712)		—		(60,712)		(142,080)		—		(142,080)
Recoveries	17,838		—		17,838		36,591		—		36,591
Balance, end of period	$	377,826	$	15,691	$	393,517	$	377,826	$	15,691	$	393,517

The Company manages retail credit risk through its credit approval process and ongoing collection efforts. The Company uses FICO scores, a standard credit rating measurement, to differentiate the expected default rates of retail credit applicants, enabling the Company to better evaluate credit applicants for approval and to tailor pricing according to this assessment. For the Company’s U.S. and Canadian retail finance receivables, the Company determines the credit quality indicator for each loan at origination and does not update the credit quality indicator subsequent to the loan origination date.

As loan performance by credit quality indicator differs between the U.S. and Canadian retail loans, the Company’s credit quality indicators vary for the two portfolios. For U.S. retail finance receivables, those with a FICO score of 740 or above at origination are generally considered super prime, loans with a FICO score between 640 and 740 are generally categorized as prime, and loans with FICO score below 640 are generally considered sub-prime. For Canadian retail finance receivables, those with a FICO score of 700 or above at origination are generally considered super prime, loans with a FICO score between 620 and 700 are generally categorized as prime, and loans with FICO score below 620 are generally considered sub-prime.

The amortized cost along with period gross charge-offs of the Company's U.S. and Canadian retail finance receivables by vintage and credit quality indicator was as follows (in thousands):


	June 30, 2025
	2025		2024		2023		2022		2021		2020 & Prior		Total
U.S. Retail:
Super prime	$	549,485	$	828,526	$	545,156	$	335,566	$	142,404	$	52,812	$	2,453,949
Prime	571,939		870,644		671,113		521,027		271,193		141,509		3,047,425
Sub-prime	212,031		263,677		180,987		142,291		90,893		70,602		960,481
	1,333,455		1,962,847		1,397,256		998,884		504,490		264,923		6,461,855
Canadian Retail:
Super prime	19,449		29,869		23,599		13,497		5,522		2,131		94,067
Prime	5,956		7,736		7,359		5,444		3,261		2,305		32,061
Sub-prime	1,019		1,524		1,026		682		305		504		5,060
	26,424		39,129		31,984		19,623		9,088		4,940		131,188
	$	1,359,879	$	2,001,976	$	1,429,240	$	1,018,507	$	513,578	$	269,863	$	6,593,043
Gross charge-offs for the six months ended June 30, 2025:
U.S. Retail	$	552	$	35,544	$	41,325	$	32,086	$	16,614	$	10,125	$	136,246
Canadian Retail	—		748		630		592		292		332		2,594
	$	552	$	36,292	$	41,955	$	32,678	$	16,906	$	10,457	$	138,840


	December 31, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
U.S. Retail:
Super prime	$	1,040,491	$	694,941	$	449,697	$	206,974	$	67,668	$	28,606	$	2,488,377
Prime	1,042,910		821,719		659,000		363,507		141,495		82,771		3,111,402
Sub-prime	318,689		224,656		180,048		119,457		58,297		47,624		948,771
	2,402,090		1,741,316		1,288,745		689,938		267,460		159,001		6,548,550
Canadian Retail:
Super prime	36,011		29,098		17,468		8,330		3,179		1,096		95,182
Prime	9,111		8,687		6,724		4,033		2,212		1,524		32,291
Sub-prime	1,701		1,229		972		435		462		284		5,083
	46,823		39,014		25,164		12,798		5,853		2,904		132,556
	$	2,448,913	$	1,780,330	$	1,313,909	$	702,736	$	273,313	$	161,905	$	6,681,106
Gross charge-offs for the year ended December 31, 2024:
U.S. Retail	$	18,322	$	92,489	$	90,023	$	47,678	$	19,628	$	17,143	$	285,283
Canadian Retail	241		1,474		1,398		755		391		464		4,723
	$	18,563	$	93,963	$	91,421	$	48,433	$	20,019	$	17,607	$	290,006


	June 30, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
U.S. Retail:
Super prime	$	684,675	$	858,653	$	575,749	$	282,472	$	103,657	$	53,898	$	2,559,104
Prime	682,513		988,918		810,245		462,594		194,018		136,465		3,274,753
Sub-prime	207,576		275,532		222,858		150,961		78,021		72,736		1,007,684
	1,574,764		2,123,103		1,608,852		896,027		375,696		263,099		6,841,541
Canadian Retail:
Super prime	25,927		38,107		23,842		12,492		5,744		2,558		108,670
Prime	6,535		11,106		8,880		5,513		3,232		2,680		37,946
Sub-prime	1,282		1,593		1,213		537		643		505		5,773
	33,744		50,806		33,935		18,542		9,619		5,743		152,389
	$	1,608,508	$	2,173,909	$	1,642,787	$	914,569	$	385,315	$	268,842	$	6,993,930
Gross charge-offs for the six months ended June 30, 2024:
U.S. Retail	$	615	$	42,843	$	48,949	$	26,374	$	11,088	$	9,932	$	139,801
Canadian Retail	—		740		704		398		187		250		2,279
	$	615	$	43,583	$	49,653	$	26,772	$	11,275	$	10,182	$	142,080

The Company's credit risk on the wholesale portfolio is different from that of the retail portfolio. Whereas the retail portfolio represents a relatively homogeneous pool of retail finance receivables that exhibit more consistent loss patterns, the wholesale portfolio exposures are less consistent. The Company utilizes an internal credit risk rating system to manage credit risk exposure consistently across wholesale borrowers and individually evaluates credit risk factors for each borrower. The Company uses the following internal credit quality indicators, based on an internal risk rating system, listed from highest level of risk to lowest level of risk for the wholesale portfolio: Doubtful, Substandard, Special Mention, Medium Risk and Low Risk. Based upon the Company’s review, the dealers classified in the Doubtful category are the dealers with the greatest likelihood of being charged-off, while the dealers classified as Low Risk are least likely to be charged-off. Additionally, the Company classifies dealers identified as those in which foreclosure is probable as Non-Performing. The internal rating system considers factors such as the specific borrower's ability to repay and the estimated value of any collateral. Dealer risk rating classifications are reviewed and updated by the Company on a quarterly basis.

The amortized cost of the Company's wholesale finance receivables, by vintage and credit quality indicator, was as follows (in thousands):


	June 30, 2025
	2025		2024		2023		2022		2021		2020 & Prior		Total
Non-Performing	$	901	$	1,017	$	287	$	—	$	—	$	—	$	2,205
Doubtful	23,393		20,292		2,552		50		—		8,537		54,824
Substandard	3,542		4,215		127		—		—		—		7,884
Special Mention	6,135		2,250		168		—		71		—		8,624
Medium Risk	4,320		1,006		156		—		—		—		5,482
Low Risk	791,701		198,540		24,938		35,801		1,321		1,152		1,053,453
	$	829,992	$	227,320	$	28,228	$	35,851	$	1,392	$	9,689	$	1,132,472
Gross charge-offs for the six months ended June 30, 2025:
Wholesale	$	1	$	506	$	134	$	—	$	—	$	—	$	641


	December 31, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
Non-Performing	$	6,430	$	4,702	$	129	$	—	$	—	$	2	$	11,263
Doubtful	25,827		3,869		139		—		—		8,196		38,031
Substandard	14,470		2,928		—		—		—		—		17,398
Special Mention	3,162		362		19		—		—		—		3,543
Medium Risk	1,471		271		—		—		—		—		1,742
Low Risk	808,771		83,611		38,815		1,702		3,358		137		936,394
	$	860,131	$	95,743	$	39,102	$	1,702	$	3,358	$	8,335	$	1,008,371
Gross charge-offs for the year ended December 31, 2024:
Wholesale	$	709	$	710	$	42	$	—	$	—	$	1	$	1,462


	June 30, 2024
	2024		2023		2022		2021		2020		2019 & Prior		Total
Non-Performing	$	2,738	$	2,672	$	145	$	—	$	—	$	5	$	5,560
Doubtful	5,105		4,661		144		—		—		9		9,919
Substandard	11,038		4,943		98		—		—		—		16,079
Special Mention	2,934		986		96		—		—		211		4,227
Medium Risk	—		—		—		—		—		—		—
Low Risk	1,088,176		236,891		41,749		3,877		3,716		7,957		1,382,366
	$	1,109,991	$	250,153	$	42,232	$	3,877	$	3,716	$	8,182	$	1,418,151
Gross charge-offs for the six months ended June 30, 2024:
Wholesale	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Retail finance receivables are contractually delinquent if the minimum payment is not received by the specified due date. Retail finance receivables at amortized cost, excluding accrued interest, are generally charged-off when the receivable is 120 days or more delinquent, the related asset is repossessed, or the receivable is otherwise deemed uncollectible. The Company reverses accrued interest related to charged-off accounts against HDFS interest income when the account is charged-off. The Company reversed $8.2 million and $7.6 million of accrued interest against HDFS interest income during the three months ended June 30, 2025 and June 30, 2024, respectively, and $17.6 million and $17.1 million during the six months ended June 30, 2025 and June 30, 2024, respectively. All retail finance receivables accrue interest until either collected or charged-off. Due to the timely write-off of accrued interest, the Company made the election provided under Accounting Standards Codification (ASC) Topic 326, Financial Instruments - Credit Losses to exclude accrued interest from its allowance for credit losses. Accordingly, as of June 30, 2025, December 31, 2024, and June 30, 2024, all retail finance receivables were accounted for as interest-earning receivables.

Wholesale finance receivables are delinquent if the minimum payment is not received by the contractual due date. Wholesale finance receivables are written down once the Company determines that the specific borrower does not have the ability to repay the loan in full. Interest continues to accrue on past due finance receivables until the date the Company determines that foreclosure is probable, and the finance receivable is placed on non-accrual status. The Company will resume accruing interest on these accounts when payments are current according to the terms of the loans and future payments are reasonably assured. While on non-accrual status, all cash received is applied to principal or interest as appropriate. Once an account is charged-off, the Company will reverse the associated accrued interest against HDFS interest income. As the Company follows a non-accrual policy for interest, the allowance for credit losses excludes accrued interest for the wholesale portfolio. There were no charged-off accounts for the three months ended June 30, 2025 and June 30, 2024, and as such, the Company did not reverse any wholesale accrued interest in those periods. The Company reversed $0.1 million of accrued interest related to the charge-off of Non-Performing dealer loans during the six months ended June 30, 2025. There were no charged off accounts for the six months ended June 30, 2024, and as such, the Company did not reverse any wholesale accrued interest in this period.

Additional information related to the wholesale finance receivables on non-accrual status was as follows (in thousands):


	Amortized Cost		Amortized Cost		Interest Income
	January 1, 2025		June 30, 2025		Recognized
Wholesale:
No related allowance recorded	$	7,510	$	—	$	—
Related allowance recorded	3,753		2,205		53
	$	11,263	$	2,205	$	53

	Amortized Cost		Amortized Cost		Interest Income
	January 1, 2024		June 30, 2024		Recognized
Wholesale:
No related allowance recorded	$	—	$	5,560	$	246
Related allowance recorded	—		—		—
	$	—	$	5,560	$	246

The aging analysis of the Company's finance receivables was as follows (in thousands):


	June 30, 2025
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Still Accruing		Greater Than 90 Days Past Due and Not Accruing		Total Past Due		Total Finance Receivables
Retail	$	6,342,019	$	150,788	$	54,983	$	45,253	$	—	$	251,024	$	6,593,043
Wholesale	1,128,499		1,157		653		1,712		451		3,973		1,132,472
	$	7,470,518	$	151,945	$	55,636	$	46,965	$	451	$	254,997	$	7,725,515

	December 31, 2024
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Still Accruing		Greater Than 90 Days Past Due and Not Accruing		Total Past Due		Total Finance Receivables
Retail	$	6,368,447	$	178,752	$	69,257	$	64,650	$	—	$	312,659	$	6,681,106
Wholesale	1,002,584		3,463		718		1,080		526		5,787		1,008,371
	$	7,371,031	$	182,215	$	69,975	$	65,730	$	526	$	318,446	$	7,689,477

	June 30, 2024
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Still Accruing		Greater Than 90 Days Past Due and Not Accruing		Total Past Due		Total Finance Receivables
Retail	$	6,753,883	$	148,590	$	49,790	$	41,667	$	—	$	240,047	$	6,993,930
Wholesale	1,417,053		715		219		68		96		1,098		1,418,151
	$	8,170,936	$	149,305	$	50,009	$	41,735	$	96	$	241,145	$	8,412,081