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Finance Receivables
 9 Months Ended
Dec. 31, 2023
Receivables [Abstract]  
Finance Receivables Finance Receivables
Finance receivables consisted of the following:
 December 31, 2023
 RetailDealerTotal
 (U.S. dollars in millions)
Finance receivables$42,238 $3,595 $45,833 
Allowance for credit losses(336)(7)(343)
Deferred dealer participation and other deferred costs596 — 596 
Unearned subsidy income(551)— (551)
Finance receivables, net$41,947 $3,588 $45,535 
 March 31, 2023
 RetailDealerTotal
 (U.S. dollars in millions)
Finance receivables$35,110 $2,836 $37,946 
Allowance for credit losses(248)(5)(253)
Deferred dealer participation and other deferred costs472 — 472 
Unearned subsidy income(580)— (580)
Finance receivables, net$34,754 $2,831 $37,585 
 
Finance receivables include retail loans with a net carrying amount of $9.2 billion and $7.2 billion as of December 31, 2023 and March 31, 2023, respectively, which have been transferred to bankruptcy-remote Special Purpose Entities (SPEs) and are considered to be legally isolated but do not qualify for sale accounting treatment. These retail loans are restricted and serve as collateral for the payment of the related secured debt obligations. Refer to Note 9 for additional information.
Allowance for Credit Losses
The following is a summary of the activity in the allowance for credit losses of finance receivables:
 Three and nine months ended December 31, 2023
 RetailDealerTotal
 (U.S. dollars in millions)
Beginning balance as of October 1, 2023$327 $5 $332 
Provision72 2 74 
Charge-offs(87)— (87)
Recoveries24 — 24 
Effect of translation adjustment— — — 
Ending balance as of December 31, 2023$336 $7 $343 
Beginning balance as of April 1, 2023$248 $5 $253 
Provision220 2 222 
Charge-offs(202)— (202)
Recoveries70 — 70 
Effect of translation adjustment— — — 
Ending balance as of December 31, 2023$336 $7 $343 
Three and nine months ended December 31, 2022
RetailDealerTotal
(U.S. dollars in millions)
Beginning balance as of October 1, 2022$216 $5 $221 
Provision49 — 49 
Charge-offs(56)— (56)
Recoveries22 — 22 
Effect of translation adjustment— — — 
Ending balance as of December 31, 2022$231 $5 $236 
Beginning balance as of April 1, 2022$206 $5 $211 
Provision101 — 101 
Charge-offs(140) (140)
Recoveries65 — 65 
Effect of translation adjustment(1)— (1)
Ending balance as of December 31, 2022$231 $5 $236 
 
The allowance increased during the nine months ended December 31, 2023 primarily due to the expected credit losses recognized on the high volume of retail loan acquisitions during the period.
Delinquencies
Collection experience provides an indication of the credit quality of finance receivables. For retail loans, delinquencies are a good predictor of charge-offs in the near term. The likelihood of accounts charging off is significantly higher once an account becomes 60 days delinquent. Retail loans are considered delinquent if more than 10% of a scheduled payment is contractually past due on a cumulative basis. Dealer loans are considered delinquent when any payment is contractually past due. The following is an aging analysis of past due finance receivables:
30 – 59 days
past due		60 – 89 days
past due		90 days
or greater
past due		Total
past due		Current or
less than 30
days past due		Total
finance
receivables
 (U.S. dollars in millions)
December 31, 2023      
Retail loans:      
New auto$290 $81 $22 $393 $32,650 $33,043 
Used and certified auto153 46 13 212 7,664 7,876 
Motorcycle and other17 8 5 30 1,334 1,364 
Total retail loans460 135 40 635 41,648 42,283 
Dealer loans:
Wholesale flooring1 — — 1 2,380 2,381 
Commercial loans— — — — 1,214 1,214 
Total dealer loans1 — — 1 3,594 3,595 
Total finance receivables$461 $135 $40 $636 $45,242 $45,878 
March 31, 2023      
Retail loans:      
New auto$217 $44 $11 $272 $27,479 $27,751 
Used and certified auto103 25 6 134 5,870 6,004 
Motorcycle and other14 5 2 21 1,226 1,247 
Total retail loans334 74 19 427 34,575 35,002 
Dealer loans:
Wholesale flooring— — — — 1,946 1,946 
Commercial loans— — — — 890 890 
Total dealer loans— — — — 2,836 2,836 
Total finance receivables$334 $74 $19 $427 $37,411 $37,838 
 
Credit Quality Indicators
Credit losses are an expected cost of extending credit. The majority of our credit risk is with consumer financing and to a lesser extent with dealer financing. Exposure to credit risk in retail loans is managed through regular monitoring and adjusting of underwriting standards, pricing of contracts for expected losses, and focusing collection efforts to minimize losses. Exposure to credit risk for dealers is managed through ongoing reviews of their financial condition and payment performance.
Retail Loan Segment
The Company utilizes proprietary credit scoring systems to evaluate the credit risk of applicants and assign internal credit grades at origination. Factors used to develop a customer’s credit grade include the terms of the contract, the loan-to-value ratio, the customer’s debt ratios, and credit bureau attributes such as the number of trade lines, utilization ratio, and number of credit inquiries. Different scorecards are utilized depending on the type of product financed. The Company regularly reviews and analyzes the performance of the consumer-financing portfolio to ensure the effectiveness of underwriting guidelines, purchasing criteria and scorecard predictability of customers. Internal credit grades are determined only at the time of origination and are not reassessed during the life of the contract. The following describes the internal credit grade ratings.
A - Borrowers classified as very low credit risks. Based on their application and credit bureau report, they have the ability to pay and have shown a willingness to pay. Generally, A credit borrowers have an extensive credit history, an excellent payment record and extensive financial resources.

B - Borrowers classified as relatively low credit risks. Based on their application and credit bureau report, they have the ability to pay and have shown a willingness to pay. Generally, B credit borrowers may have one or more conditions that could reduce the internal credit score, such as a shorter credit history or a minor credit weakness.

C - Borrowers classified as moderate credit risks. Based on their application and credit bureau report, they may have limited financial resources, limited credit history, or a weakness in credit history.

D - Borrowers classified as relatively higher credit risks. Based on their application and credit bureau report, they may have very limited financial resources, very limited or no credit history, or a poor credit history.

Others - Borrowers, including businesses, without credit bureau reports.

The following table summarizes the amortized cost of retail loans by internal credit grade:
Retail loans by vintage fiscal year
20242023202220212020PriorTotal
(U.S. dollars in millions)
December 31, 2023
Credit grade A$11,327 $6,396 $4,262 $3,440 $811 $206 $26,442 
Credit grade B3,342 2,253 1,248 900 297 104 8,144 
Credit grade C2,272 1,467 852 607 247 95 5,540 
Credit grade D608 342 207 173 118 53 1,501 
Others278 159 108 67 29 15 656 
Total retail loans$17,827 $10,617 $6,677 $5,187 $1,502 $473 $42,283 
Gross charge-offs for the nine months ended December 31, 2023$24 $79 $48 $27 $15 $9 $202 


Retail loans by vintage fiscal year
20232022202120202019PriorTotal
(U.S. dollars in millions)
March 31, 2023
Credit grade A$8,332 $5,994 $5,188 $1,570 $661 $171 $21,916 
Credit grade B2,828 1,693 1,308 504 229 78 6,640 
Credit grade C1,864 1,174 887 407 189 71 4,592 
Credit grade D447 294 255 191 92 36 1,315 
Others211 146 97 50 22 13 539 
Total retail loans$13,682 $9,301 $7,735 $2,722 $1,193 $369 $35,002 
Dealer Loan Segment
The Company utilizes an internal risk rating system to evaluate dealer credit risk. Dealerships are assigned an internal risk rating based on an assessment of their financial condition and other factors. Factors including liquidity, financial strength, management effectiveness, and operating efficiency are evaluated when assessing their financial condition. Financing limits and interest rates are based upon these risk ratings. Monitoring activities including financial reviews and inventory inspections are performed more frequently for dealerships with weaker risk ratings. The financial conditions of dealerships are reviewed and their risk ratings are updated at least annually.
Dealerships have been divided into the following groups:
Group I - Dealerships in the strongest internal risk rating tier
Group II - Dealerships with internal risk ratings below the strongest tier
Group III - Dealerships with impaired loans

The following table summarizes the amortized cost of dealer loans by risk rating groups:
Commercial loans by vintage fiscal year
20242023202220212020PriorRevolving loansWholesale FlooringTotal
(U.S. dollars in millions)
December 31, 2023
Group I$147 $56 $15 $116 $45 $85 $685 $1,505 $2,654 
Group II41 3 — — — 21 — 873 938 
Group III— — — — — — — 3 3 
Total dealer loans$188 $59 $15 $116 $45 $106 $685 $2,381 $3,595 
Gross charge-offs for the nine months ended December 31, 2023$— $— $— $— $— $— $— $— $— 

Commercial loans by vintage fiscal year
20232022202120202019PriorRevolving loansWholesale FlooringTotal
(U.S. dollars in millions)
March 31, 2023
Group I$67 $10 $143 $56 $24 $89 $428 $1,223 $2,040 
Group II1 6 29 6 — 31 — 723 796 
Group III— — — — — — — — — 
Total dealer loans$68 $16 $172 $62 $24 $120 $428 $1,946 $2,836 

Loan Modifications
The contractual terms of loans may be modified when borrowers are experiencing financial difficulties in an effort to mitigate losses. There were no dealer loans that were modified for dealers experiencing financial difficulties during the nine months ended December 31, 2023. Payment deferrals are granted on retail loans, however the delays in payments are considered insignificant since the number of deferred payments are limited and interest continues to accrue during the deferral period. Starting in April 2023, the Company began granting term extensions on retail loans in the United States. Term extensions extend the maturity date of the loan which reduces the monthly payments over the remaining extended term of the loan. Term extensions do not change the contractual interest rates or reduce the outstanding principal balances. During the nine months ended December 31, 2023, term extensions were not material to the Company’s consolidated financial statement. Retail loans may also be modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code which may include interest rate adjustments, term extensions, and principal forgiveness. Retail loans modified under bankruptcy protection were not material to the Company’s consolidated financial statements during the nine months ended December 31, 2023.
Prior to the adoption of ASU 2022-02, there were no dealer loans during the fiscal year ended March 31, 2023 that were considered troubled debt restructurings. Retail loans modified under bankruptcy protection were considered troubled debt restructurings but were not material to the Company’s consolidated financial statements during the fiscal year ended March 31, 2023.