v3.26.3
Fair Value
 9 Months Ended
Sep. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Fair Value
The following tables present the fair values of certain of the Company's assets and liabilities within the fair value hierarchy as defined in Note 1.
Recurring Fair Value Measurements – The Company’s assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):
September 30, 2026
BalanceLevel 1Level 2Level 3
Assets:
Cash equivalents$1,731,587 $1,656,800 $74,787 $— 
Marketable securities26,781 26,781 — — 
Derivative financial instruments40,482 — 40,482 — 
Investments in Retained Notes39,001 — 39,001 — 
Investments in Residual Interests7,563 — — 7,563 
$1,845,414 $1,683,581 $154,270 $7,563 
Liabilities:
Derivative financial instruments$678 $— $678 $— 
LiveWire warrants1,108 725 383 — 
$1,786 $725 $1,061 $— 
December 31, 2025
Balance Level 1Level 2Level 3
Assets:
Cash equivalents$2,693,739 $2,553,850 $139,889 $— 
Marketable securities31,513 31,513 — — 
Derivative financial instruments108,435 — 108,435 — 
Investments in Retained Notes68,130 — 68,130 — 
Investments in Residual Interests10,156 — — 10,156 
$2,911,973 $2,585,363 $316,454 $10,156 
Liabilities:
Derivative financial instruments$6,494 $— $6,494 $— 
LiveWire warrants1,901 1,244 657 — 
$8,395 $1,244 $7,151 $— 
September 30, 2025
Balance Level 1Level 2Level 3
Assets:
Cash equivalents$1,474,496 $1,244,794 $229,702 $— 
Marketable securities32,493 32,493 — — 
Derivative financial instruments116,748 — 116,748 — 
Investments in Retained Notes80,204 — 80,204 — 
Investments in Residual Interests12,086 — — 12,086 
$1,716,027 $1,277,287 $426,654 $12,086 
Liabilities:
Derivative financial instruments$7,447 $— $7,447 $— 
LiveWire warrants2,204 1,442 762 — 
$9,651 $1,442 $8,209 $— 

The following table presents the reconciliation for all Level 3 assets measured at fair value on a recurring basis (in thousands):
Investments in Residual Interests
Fair value at December 31, 2025
$10,156 
Investment Proceeds(2,419)
Realized gain reclassified from Other Comprehensive Loss to earnings41
Unrealized loss included in Other Comprehensive Loss
(215)
Fair value at September 30, 2026
$7,563 
Investments in Residual Interests
Fair value at December 31, 2024$— 
Investment Proceeds12,348
Realized loss reclassified from Other Comprehensive Loss to earnings(808)
Unrealized gain included in Other Comprehensive Loss546
Fair value at September 30, 2025$12,086 
Investments in Retained Notes and Residual Interests – As discussed in Note 10 of the Notes to Consolidated financial statements, the Company recorded investments in Retained Notes and Residual Interests in off-balance sheet VIEs. The fair value of the Retained Notes was estimated based on pricing available for transactions with similar terms and maturities (Level 2 inputs). The fair value of the Residual Interests was based on a discounted cash flow calculation using the key assumptions below (Level 3 inputs). Both investments are classified as available-for-sale (AFS) securities and, accordingly, are held at fair value remeasured through OCI in the Statement of comprehensive income.
The fair values of the Residual Interests were calculated using the following ranges of key assumptions:
September 30,
2026		December 31,
2025		September 30,
2025
Recovery rate on defaulted receivables
50.00%50.00%50.00%
Prepayment speed
1.40%1.40%1.40%
Expected cumulative lifetime losses
2.05% - 3.15%
2.01% - 3.21%
1.53% - 2.82%
Weighted-average life (in years)
0.97 - 2.24
0.96 - 2.46
0.77 - 2.53
Residual cash flows discount rate
15.00%15.00%15.00%
The weighted averages of the key assumptions utilized in calculating the current and prior period fair values of the Residual Interests were as follows:
September 30,
2026		December 31,
2025		September 30,
2025
Recovery rate on defaulted receivables
50.00%50.00%50.00%
Prepayment speed
1.40%1.40%1.40%
Expected cumulative lifetime losses
2.84%2.47%2.39%
Weighted-average life (in years)
1.731.871.90
Residual cash flows discount rate
15.00%15.00%15.00%
Additionally, the fair value assumes that the Company, as servicer, does not exercise its option to purchase the underlying receivables at the earliest distribution date on which it is permitted to do so.
The sensitivities of the fair value to immediate adverse changes in the key assumptions for the investment in Residual Interests at September 30, 2026, December 31, 2025, and September 30, 2025 were as follows (dollars in thousands):
September 30, 2026December 31, 2025September 30, 2025
Fair value of Residual Interests
$7,563 $10,156 $12,086 
Prepayment speed
Impact on fair value of a 1.5% absolute prepayment speed adverse change
$(52)$(94)$(114)
Impact on fair value of a 1.6% absolute prepayment speed adverse change
$(100)$(186)$(216)
Expected cumulative lifetime losses
Impact on fair value of a 25 bps adverse change
$(111)$(183)$(221)
Impact on fair value of a 50 bps adverse change
$(222)$(365)$(436)
Residual cash flows discount rate
Impact on fair value of a 25 bps adverse change
$(30)$(44)$(53)
Impact on fair value of a 50 bps adverse change
$(61)$(88)$(105)
The sensitivities of the fair value to immediate adverse changes in the key assumptions for the investment in Retained Notes at September 30, 2026, December 31, 2025, and September 30, 2025 were as follows (dollars in thousands):
September 30, 2026December 31, 2025September 30, 2025
Fair value of Retained Notes
$39,001 $68,130 $80,204 
Weighted-average life (in years)
1.36
1.86
1.98
Discount rate
Impact on fair value of a 50 bps adverse change
$(139)$(300)$(401)
Impact on fair value of a 100 bps adverse change
$(281)$(613)$(745)
These sensitivities are hypothetical and should not be considered to be predictive of future performance. Changes in fair value generally cannot be extrapolated because the relationship of change in assumption to change in fair value may not be linear. Also, in these tables, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated independently from any change in another assumption. In reality, changes in one factor may contribute to changes in another, which may magnify or counteract the sensitivities. Furthermore, the estimated fair values as disclosed should not be considered indicative of future earnings on these assets.
The table below summarizes the unrealized positions for Residual Interests and Retained Notes (in thousands):
September 30, 2026
Amortized Cost
Unrealized Losses
Fair Value
Residual Interests
$7,670 $(107)$7,563 
Retained Notes
39,294 (293)39,001 
Total Beneficial Interests
$46,964 $(400)$46,564 
December 31, 2025
Amortized Cost
Unrealized Gains
Fair Value
Residual Interests
$10,109 $47 $10,156 
Retained Notes
68,001 129 68,130 
Total Beneficial Interests
$78,110 $176 $78,286 
September 30, 2025
Amortized Cost
Unrealized Gains
Fair Value
Residual Interests
$11,540 $546 $12,086 
Retained Notes
80,032 172 80,204 
Total Beneficial Interests
$91,572 $718 $92,290 
The table below provides information regarding certain cash flows received from and paid to all motorcycle loan off-balance sheet securitized trusts during the nine months ended September 30, 2026 (in thousands):
Servicing, late, and ancillary fees received
$11,199 
Collection of retained securitization beneficial interests
$32,115 
Nonrecurring Fair Value Measurements – Repossessed inventory was $5.5 million, $4.2 million and $38.0 million as of September 30, 2026, December 31, 2025 and September 30, 2025, respectively. The fair value adjustment to the repossessed inventory was a decrease of $1.9 million and an increase of $2.5 million as of September 30, 2026 and December 31, 2025, respectively. There was not a fair value adjustment as of September 30, 2025 as the associated repossessed inventory was considered held for sale. Fair value is estimated using Level 2 inputs based on the recent market values of repossessed inventory.
Fair Value of Financial Instruments Measured at Cost – The carrying value of the Company's Cash and cash equivalents and Restricted cash approximates their fair values. The fair value and carrying value of the Company’s remaining financial instruments that are measured at cost or amortized cost were as follows (in thousands):
September 30, 2026December 31, 2025September 30, 2025
Fair ValueCarrying ValueFair ValueCarrying ValueFair ValueCarrying Value
Assets:
Finance receivables held for sale, net$417,412 $417,696 $268,111 $264,238 $4,090,641 $4,080,885 
Finance receivables held for investment, net (a)
$2,194,736 $2,173,206 $1,665,453 $1,653,372 $1,841,091 $1,824,360 
Liabilities:
Deposits, net$543,023 $537,413 $537,136 $536,644 $555,311 $554,468 
Debt:
Unsecured commercial paper$470,420 $470,420 $497,776 $497,776 $684,741 $684,741 
Asset-backed U.S. commercial paper conduit facility$242,575 $242,575 $— $— $399,502 $399,502 
Asset-backed Canadian commercial paper conduit facility$— $— $— $— $49,642 $49,642 
Asset-backed securitization debt$— $— $— $— $63,107 $62,635 
Medium-term notes$1,313,432 $1,329,066 $2,195,390 $2,171,963 $3,308,179 $3,219,793 
Term loans
$— $— $— $— $448,261 $448,261 
Senior notes$198,090 $297,374 $241,057 $297,278 $241,899 $297,247 
(a)Excludes the $26.9 million, $47.6 million, and $59.1 million estimated recovery balances included in the allowance for credit losses as of September 30, 2026, December 31, 2025, and September 30, 2025 respectively.
Finance Receivables held for sale, net - The carrying value of retail finance receivables held for sale is the lower of amortized cost or fair value. The fair value of finance receivables held for sale was based on the estimated selling price of the receivables (Level 2 inputs).
Finance Receivables held for investment, net – The carrying value of retail and wholesale finance receivables held for investment is amortized cost less an allowance for credit losses. The fair value of retail finance receivables is generally calculated by discounting future cash flows using an estimated discount rate that reflects current credit, interest rate and prepayment risks associated with similar types of instruments. Fair value is determined based on Level 3 inputs. The amortized cost basis of wholesale finance receivables approximates fair value because they are generally either short-term or have interest rates that adjust with changes in market interest rates.
Deposits, net – The carrying value of deposits is amortized cost, net of fees. The fair value of deposits is estimated based upon rates currently available for deposits with similar terms and maturities. Fair value is calculated using Level 3 inputs.
Debt – The carrying value of debt is generally cost, net of unamortized discounts and debt issuance costs. The fair value of unsecured commercial paper is calculated using Level 2 inputs and approximates carrying value due to its short maturity. The fair value of debt provided under the term loan, U.S. Conduit Facility and the Canadian Conduit Facility is calculated using Level 2 inputs and approximates carrying value since the interest rates charged under the facilities are tied directly to market rates and fluctuate as market rates change. The fair values of the medium-term notes and senior notes are estimated based upon rates currently available for debt with similar terms and remaining maturities (Level 2 inputs). The fair value of the fixed-rate debt related to on-balance sheet asset-backed securitization transactions is estimated based on pricing currently available for transactions with similar terms and maturities (Level 2 inputs). The fair value of the floating-rate debt related to on-balance sheet asset-backed securitization transactions is calculated using Level 2 inputs and approximates carrying value since the interest rates charged are tied directly to market rates and fluctuate as market rates change.