Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2020 | Jan. 31, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-36111 | |
Entity Registrant Name | AMERICAN HONDA FINANCE CORPORATION | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 95-3472715 | |
Entity Address, Address Line One | 1919 Torrance Blvd. | |
Entity Address, City or Town | Torrance | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 90501 | |
City Area Code | 310 | |
Local Phone Number | 972-2555 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 13,660,000 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000864270 | |
Current Fiscal Year End Date | --03-31 | |
1.300% Medium-Term Notes, Series A Due March 21, 2022 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 1.300% Medium-Term Notes, Series ADue March 21, 2022 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
2.625% Medium-Term Notes, Series A Due October 14, 2022 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 2.625% Medium-Term Notes, Series ADue October 14, 2022 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
1.375% Medium-Term Notes, Series A Due November 10, 2022 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 1.375% Medium-Term Notes, Series ADue November 10, 2022 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
0.550% Medium-Term Notes, Series A Due March 17, 2023 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 0.550% Medium-Term Notes, Series ADue March 17, 2023 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
0.750% Medium-Term Notes, Series A Due January 17, 2024 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 0.750% Medium-Term Notes, Series ADue January 17, 2024 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
0.350% Medium-Term Notes, Series A Due August 26, 2022 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 0.350% Medium-Term Notes, Series ADue August 26, 2022 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
1.600% Medium-Term Notes, Series A Due April 20, 2022 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 1.600% Medium-Term Notes, Series ADue April 20, 2022 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
1.950% Medium-Term Notes, Series A Due October 18, 2024 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 1.950% Medium-Term Notes, Series ADue October 18, 2024 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE | |
0.750% Medium-Term Notes, Series A Due November 25, 2026 | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | 0.750% Medium-Term Notes, Series ADue November 25, 2026 | |
No Trading Symbol Flag | true | |
Security Exchange Name | NYSE |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 3,017 | $ 1,503 |
Finance receivables, net | 40,830 | 39,554 |
Investment in operating leases, net | 35,078 | 33,843 |
Due from Parent and affiliated companies | 126 | 93 |
Income taxes receivable | 199 | 137 |
Other assets | 1,127 | 1,378 |
Derivative instruments | 1,270 | 748 |
Total assets | 81,647 | 77,256 |
Liabilities and Equity | ||
Debt | 52,771 | 50,132 |
Due to Parent and affiliated companies | 131 | 72 |
Income taxes payable | 230 | 239 |
Deferred income taxes | 7,010 | 6,589 |
Other liabilities | 1,725 | 1,689 |
Derivative instruments | 667 | 972 |
Total liabilities | 62,534 | 59,693 |
Commitments and contingencies (Note 8) | ||
Shareholder’s equity: | ||
Common stock, $100 par value. Authorized 15,000,000 shares; issued and outstanding 13,660,000 shares as of December 31, 2020 and March 31, 2020 | 1,366 | 1,366 |
Retained earnings | 16,634 | 15,395 |
Accumulated other comprehensive loss | (60) | (175) |
Total shareholder’s equity | 17,940 | 16,586 |
Noncontrolling interest in subsidiary | 1,173 | 977 |
Total equity | 19,113 | 17,563 |
Total liabilities and equity | 81,647 | 77,256 |
Variable Interest Entity, Primary Beneficiary | ||
Assets | ||
Finance receivables, net | 8,724 | 9,645 |
Investment in operating leases, net | 465 | 493 |
Other assets | 439 | 598 |
Total assets | 9,628 | 10,736 |
Liabilities and Equity | ||
Debt | 8,813 | 9,748 |
Other liabilities | 6 | 9 |
Total liabilities | $ 8,819 | $ 9,757 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2020 | Mar. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 100 | $ 100 |
Common stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Common stock, shares issued (in shares) | 13,660,000 | 13,660,000 |
Common stock, shares outstanding (in shares) | 13,660,000 | 13,660,000 |
Consolidated Statements of Inco
Consolidated Statements of Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues: | ||||
Retail | $ 423 | $ 438 | $ 1,256 | $ 1,314 |
Dealer | 25 | 52 | 82 | 174 |
Operating leases | 1,951 | 1,952 | 5,798 | 5,782 |
Total revenues | 2,399 | 2,442 | 7,136 | 7,270 |
Leased vehicle expenses | 1,391 | 1,463 | 4,188 | 4,264 |
Interest expense | 207 | 307 | 697 | 947 |
Net revenues | 801 | 672 | 2,251 | 2,059 |
Other income, net | 17 | 24 | 46 | 67 |
Total net revenues | 818 | 696 | 2,297 | 2,126 |
Expenses: | ||||
General and administrative expenses | 116 | 124 | 344 | 369 |
Provision for credit losses | (19) | 65 | (20) | 171 |
Early termination loss on operating leases | (18) | 37 | (133) | 97 |
(Gain)/Loss on derivative instruments | (259) | (76) | (584) | 129 |
(Gain)/Loss on foreign currency revaluation of debt | 279 | 145 | 627 | (1) |
Total expenses | 99 | 295 | 234 | 765 |
Income before income taxes | 719 | 401 | 2,063 | 1,361 |
Income tax expense | 160 | 106 | 515 | 379 |
Net income | 559 | 295 | 1,548 | 982 |
Less: Net income attributable to noncontrolling interest | 34 | 27 | 93 | 87 |
Net income attributable to American Honda Finance Corporation | $ 525 | $ 268 | $ 1,455 | $ 895 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 559 | $ 295 | $ 1,548 | $ 982 |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 107 | 41 | 220 | 56 |
Comprehensive income | 666 | 336 | 1,768 | 1,038 |
Less: Comprehensive income/(loss) attributable to noncontrolling interest | 85 | 47 | 198 | 114 |
Comprehensive income attributable to American Honda Finance Corporation | $ 581 | $ 289 | $ 1,570 | $ 924 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Millions | Total | Retained earnings | Accumulated other comprehensive income/(loss) | Common stock | Noncontrolling interest | Adoption of accounting standard (Note 1) | Adoption of accounting standard (Note 1)Retained earnings | Adoption of accounting standard (Note 1)Noncontrolling interest |
Beginning Balance at Mar. 31, 2019 | $ 17,268 | $ 15,088 | $ (118) | $ 1,366 | $ 932 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 982 | 895 | 87 | |||||
Other comprehensive income (loss) | 56 | 29 | 27 | |||||
Dividends declared | (292) | (292) | ||||||
Ending Balance at Dec. 31, 2019 | 18,014 | 15,691 | (89) | 1,366 | 1,046 | |||
Beginning Balance at Mar. 31, 2019 | $ 17,268 | 15,088 | (118) | 1,366 | 932 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||
Ending Balance at Mar. 31, 2020 | $ 17,563 | 15,395 | (175) | 1,366 | 977 | $ (75) | $ (73) | $ (2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,548 | 1,455 | 93 | |||||
Other comprehensive income (loss) | 220 | 115 | 105 | |||||
Dividends declared | (143) | (143) | ||||||
Ending Balance at Dec. 31, 2020 | $ 19,113 | $ 16,634 | $ (60) | $ 1,366 | $ 1,173 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 1,548 | $ 982 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Debt and derivative instrument valuation adjustments | (180) | 60 |
Provision for credit losses | (20) | 171 |
Early termination loss on operating leases | (133) | 97 |
Depreciation on leased vehicles | 4,250 | 4,275 |
Accretion of unearned subsidy income | (1,118) | (1,255) |
Amortization of deferred dealer participation and other deferred costs | 273 | 272 |
Gain on disposition of leased vehicles | (162) | (113) |
Deferred income taxes | 409 | 273 |
Changes in operating assets and liabilities: | ||
Income taxes receivable/payable | (71) | 25 |
Other assets | 44 | 60 |
Accrued interest/discounts on debt | 34 | 37 |
Other liabilities | 7 | (31) |
Due to/from Parent and affiliated companies | 25 | 35 |
Net cash provided by operating activities | 4,906 | 4,888 |
Cash flows from investing activities: | ||
Finance receivables acquired | (16,117) | (13,678) |
Principal collected on finance receivables | 13,674 | 13,024 |
Net change in wholesale loans | 1,244 | 556 |
Purchase of operating lease vehicles | (11,963) | (14,020) |
Disposal of operating lease vehicles | 7,502 | 8,184 |
Cash received for unearned subsidy income | 945 | 913 |
Other investing activities, net | (7) | (4) |
Net cash used in investing activities | (4,722) | (5,025) |
Cash flows from financing activities: | ||
Proceeds from issuance of commercial paper | 31,037 | 24,449 |
Paydown of commercial paper | (29,821) | (24,361) |
Proceeds from issuance of short-term debt | 519 | 300 |
Paydown of short-term debt | (738) | (1,100) |
Proceeds from issuance of related party debt | 1,196 | 2,337 |
Paydown of related party debt | (1,373) | (2,526) |
Proceeds from issuance of medium-term notes and other debt | 7,817 | 5,911 |
Paydown of medium-term notes and other debt | (6,306) | (5,303) |
Proceeds from issuance of secured debt | 3,241 | 4,692 |
Paydown of secured debt | (4,281) | (3,916) |
Dividends paid | (143) | (292) |
Net cash provided by financing activities | 1,148 | 191 |
Effect of exchange rate changes on cash and cash equivalents | 22 | 2 |
Net increase in cash and cash equivalents | 1,354 | 56 |
Cash and cash equivalents and restricted cash at beginning of period | 2,085 | 1,383 |
Cash and cash equivalents and restricted cash at end of period | 3,439 | 1,439 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 461 | 689 |
Income taxes paid | 212 | 61 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Total | $ 3,439 | $ 1,439 |
Summary of Business and Signifi
Summary of Business and Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Business and Significant Accounting Policies | Summary of Business and Significant Accounting Policies Organizational Structure American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Noncontrolling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). AHM and HCI are the sole authorized distributors of Honda and Acura products, including motor vehicles, parts and accessories in the United States and Canada. Unless otherwise indicated by the context, all references to the “Company”, “we”, “us”, and “our” in this report include AHFC and its consolidated subsidiaries, and references to “AHFC” refer solely to American Honda Finance Corporation (excluding AHFC’s subsidiaries). Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim information, and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, these unaudited interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of operations, cash flows, and financial condition for the interim periods presented. Results for interim periods should not be considered indicative of results for the full year or for any other interim period. These unaudited interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements, significant accounting policies, and the other notes to the consolidated financial statements for the fiscal year ended March 31, 2020 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (SEC) on June 22, 2020. All significant intercompany balances and transactions have been eliminated upon consolidation. Recently Adopted Accounting Standards Effective April 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments on a modified retrospective basis. The amendments replace the previous incurred loss impairment methodology with a methodology that reflects lifetime expected credit losses. The adoption of ASU 2016-13 resulted in an increase to the allowance for credit loss of $101 million along with an after-tax cumulative-effect reduction to opening retained earnings and noncontrolling interest of $75 million. Comparative information has not been restated and continues to be presented under previous accounting standards. Updated significant accounting policies are presented below. Effective April 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The amendments modify the disclosure requirements on fair value measurements in Topic 820, based on Financial Accounting Standards Board (FASB) Concepts Statement, Conceptual Framework for Financial Reporting-Chapter 8: Notes to Financial Statements. Certain disclosure requirements were removed, modified and added in Topic 820. This standard did not have an impact on the consolidated financial statements. Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company is currently assessing the impact of this standard on the consolidated financial statements. The Company plans to adopt the new guidance effective April 1, 2021. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contracts or other transactions affected by reference rate reform if certain criteria are met. The guidance became effective starting March 12, 2020 and may be applied prospectively through December 31, 2022. The Company is evaluating applicable contracts and transactions to determine whether to elect the optional guidance. Significant Accounting Policies Finance Receivables Finance receivables include retail loan and dealer loan portfolio segments. The retail loan portfolio segment consists of retail installment contracts with consumers. The dealer loan portfolio segment consists of wholesale and commercial loans with dealers. Finance receivables are measured at amortized cost, less the allowance for credit losses. The amortized cost basis includes the unpaid principal balance, unearned origination fees, and deferred origination costs. Origination fees include payments received from AHM and HCI for incentive programs (refer to Note 6 regarding these related party transactions). Origination costs include payments made to dealers for rate participation and other initial direct costs (IDC). Accrued interest receivable balances are presented within other assets. Revenue on finance receivables includes contractual interest income, accretion of origination fees, and amortization of origination costs. Contractual interest income is accrued using the simple interest method. Origination fees and costs are recognized in revenue using the interest method over the contractual life of the finance receivables. The recognition of finance revenue on retail loans is discontinued when the underlying collateral is repossessed or accounts are charged off. The recognition of finance revenue on dealer loans is discontinued when they are 90 days or more past due or when it has been determined the Company will be unable to collect all principal and interest payments. Retail loans are charged off when they become 120 days past due or earlier if they have been specifically identified as uncollectible. Dealer loans are charged off when they have been individually identified as uncollectible. Charge-offs of the amortized cost basis are recognized as a reduction to the allowance for credit losses. Subsequent recoveries are credited to the allowance. Charge-offs of accrued interest receivables are reversed against finance revenue. Allowance for Credit Losses The allowance for credit losses is management’s estimate of lifetime expected credit losses on the amortized cost basis of finance receivables which is deducted from or, in the case of expected net recoveries, added to the amortized cost. The Company has elected not to measure an allowance for credit losses for accrued interest receivable. The allowance is measured on an undiscounted basis. Management evaluates the allowance, at minimum, on a quarterly basis. The retail loan portfolio segment consists of homogeneous loans with relatively small balances. The allowance for retail loans is measured on a collective basis. The Company's historical experience provides the primary basis for estimating the allowance. The modeling methodology used to estimate the allowance incorporates vintage loss and delinquency migration analysis. Retail loans are segmented into pools with similar risk characteristics. Currently, retail loans are segmented by origination quarter, internal credit grade at origination, product type, and original term. Past economic conditions and other attributes of the pools including loan-to-value ratios at loan inception are also taken into consideration when assessing historical credit loss experience. Current and forecasts of future economic factors such as unemployment rates, bankruptcies and used vehicle prices are applied in the modeling to estimate current expected credit losses. Management will also consider qualitative adjustments given the inherent uncertainty in estimating expected credit losses and the imprecision of any modeling methodology. The allowance for dealer loans is measured at the individual dealer level when they have been specifically identified as impaired. Dealer loans are considered impaired when it is probable that the Company will be unable to collect the amounts due according to the terms of the applicable contracts. The Company’s determination of whether dealer loans are impaired is based on evaluations of the dealership's payment history, financial condition, ability to perform under the terms of the loan agreements, and collateral values, as applicable. Expected credit losses on impaired dealer loans are measured based upon the specific circumstances of each dealer considering all expected sources of repayment or the fair value of the collateral if foreclosure is probable. The allowance for dealer loans that have not been specifically identified as impaired is measured collectively primarily using historical loss rates. |
Finance Receivables
Finance Receivables | 9 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Finance Receivables | Finance Receivables Finance receivables consisted of the following: December 31, 2020 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 37,291 $ 4,278 $ 41,569 Allowance for credit losses (355) (8) (363) Deferred dealer participation and other deferred costs 437 — 437 Unearned subsidy income (813) — (813) Finance receivables, net $ 36,560 $ 4,270 $ 40,830 March 31, 2020 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 34,623 $ 5,606 $ 40,229 Allowance for credit losses (364) (6) (370) Deferred dealer participation and other deferred costs 441 — 441 Unearned subsidy income (746) — (746) Finance receivables, net $ 33,954 $ 5,600 $ 39,554 Finance receivables include retail loans with a net carrying amount of $8.7 billion and $9.6 billion as of December 31, 2020 and March 31, 2020, 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, 2020 Retail Dealer Total (U.S. dollars in millions) Beginning balance as of October 1, 2020 $ 405 $ 8 $ 413 Provision (18) (1) (19) Charge-offs (64) — (64) Recoveries 32 1 33 Effect of translation adjustment — — — Ending balance as of December 31, 2020 $ 355 $ 8 $ 363 Beginning balance $ 364 $ 6 $ 370 Cumulative effective of adopting ASU 2016-13 98 3 101 Beginning balance as of April 1, 2020 462 9 471 Provision (18) (2) (20) Charge-offs (177) (1) (178) Recoveries 87 2 89 Effect of translation adjustment 1 — 1 Ending balance as of December 31, 2020 $ 355 $ 8 $ 363 Three and nine months ended December 31, 2019 Retail Dealer Total (U.S. dollars in millions) Beginning balance as of October 1, 2019 $ 197 $ — $ 197 Provision 65 — 65 Charge-offs (86) — (86) Recoveries 23 — 23 Effect of translation adjustment — — — Ending balance as of December 31, 2019 $ 199 $ — $ 199 Beginning balance as of April 1, 2019 $ 193 $ 8 $ 201 Provision 162 9 171 Charge-offs (230) (17) (247) Recoveries 74 — 74 Effect of translation adjustment — — — Ending balance as of December 31, 2019 $ 199 $ — $ 199 The adoption of ASC 2016-13 resulted in an increase to the allowance for credit loss of $101 million, primarily for retail loans. The allowance for retail loans at the beginning of the nine months ended December 31, 2020 reflected a significant increase in expected credit losses on retail loans due to the impact of COVID-19. Government measures that were enacted in an effort to slow down and control the spread of COVID-19 have had a severe adverse impact on economic conditions, including a significant increase in unemployment. Forecasts of weaker economic factors were reflected in this estimate, including a sharp rise in unemployment rates. Net charge-offs of retail loans during the nine months ended December 31, 2020 were favorable relative to the expected credit losses for the period, which had a positive effect on the provision for credit losses. The forecasted economic factors that were applied in the modeling as of December 31, 2020 were more favorable as compared to those applied at the beginning of the period which contributed to the reduction in the allowance for retail loans. There were no modifications to the terms of dealer loan contracts that constituted troubled debt restructurings during the nine months ended December 31, 2020 and 2019. The Company generally does not grant concessions on consumer finance receivables that are considered troubled debt restructurings other than modifications of retail loans in reorganization proceedings pursuant to the U.S. Bankruptcy Code. Retail loans modified under bankruptcy protection were not material to the Company’s consolidated financial statements during the nine months ended December 31, 2020 and 2019. The Company does allow limited payment deferrals on consumer finance receivables. These payment deferrals are not treated as troubled debt restructurings since the deferrals are deemed insignificant and interest continues to accrue during the deferral period. Payment deferrals have also been granted to certain customers impacted by COVID-19 beginning in mid-March 2020. Through the end of December 2020, a cumulative total of approximately 259,000 retail loans have been granted payment deferrals. As of December 31, 2020, approximately 15,000 outstanding retail loans were still within their deferral periods. The deferral period is up to a maximum of 3 months in the United States and 4 months in Canada, generally from the date the customer was initially granted the deferral. Customers taking advantage of the deferrals are not considered delinquent during such deferral periods and therefore were not reflected in delinquency measures. 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 60 – 89 days 90 days Total Current or Total (U.S. dollars in millions) December 31, 2020 Retail loans: New auto $ 231 $ 67 $ 13 $ 311 $ 29,686 $ 29,997 Used and certified auto 89 27 5 121 5,305 5,426 Motorcycle and other 15 6 3 24 1,468 1,492 Total retail 335 100 21 456 36,459 36,915 Dealer loans: Wholesale flooring 3 — — 3 3,336 3,339 Commercial loans — — — — 939 939 Total dealer loans 3 — — 3 4,275 4,278 Total finance receivables $ 338 $ 100 $ 21 $ 459 $ 40,734 $ 41,193 March 31, 2020 Retail loans: New auto $ 222 $ 50 $ 13 $ 285 $ 27,495 $ 27,780 Used and certified auto 84 20 5 109 5,174 5,283 Motorcycle and other 12 4 2 18 1,237 1,255 Total retail 318 74 20 412 33,906 34,318 Dealer loans: Wholesale flooring 1 — — 1 4,529 4,530 Commercial loans — — — — 1,076 1,076 Total dealer loans 1 — — 1 5,605 5,606 Total finance receivables $ 319 $ 74 $ 20 $ 413 $ 39,511 $ 39,924 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. 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 2021 2020 2019 2018 2017 Prior Total (U.S. dollars in millions) Credit grade A $ 8,924 $ 6,081 $ 4,639 $ 2,404 $ 1,001 $ 211 $ 23,260 Credit grade B 2,288 1,675 1,140 745 326 95 6,269 Credit grade C 1,633 1,392 880 593 258 76 4,832 Credit grade D 489 671 401 250 111 40 1,962 Others 181 172 120 69 40 10 592 Total retail loans $ 13,515 $ 9,991 $ 7,180 $ 4,061 $ 1,736 $ 432 $ 36,915 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 2021 2020 2019 2018 2017 Prior Revolving loans Wholesale Flooring Total (U.S. dollars in millions) Group I $ 145 $ 65 $ 7 $ 44 $ 45 $ 86 $ 337 $ 1,580 $ 2,309 Group II 48 35 34 31 33 29 — 1,754 1,964 Group III — — — — — — — 5 5 Total dealer loans $ 193 $ 100 $ 41 $ 75 $ 78 $ 115 $ 337 $ 3,339 $ 4,278 |
Investment in Operating Leases
Investment in Operating Leases | 9 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Investment in Operating Leases | Investment in Operating Leases Investment in operating leases consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Operating lease vehicles $ 44,886 $ 43,624 Accumulated depreciation (8,624) (8,219) Deferred dealer participation and initial direct costs 131 131 Unearned subsidy income (1,184) (1,376) Estimated early termination losses (131) (317) Investment in operating leases, net $ 35,078 $ 33,843 Operating lease revenue consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Lease payments $ 1,715 $ 1,697 $ 5,077 $ 5,003 Subsidy income and dealer rate participation, net 225 241 677 732 Reimbursed lessor costs 11 14 44 47 Total operating lease revenue, net $ 1,951 $ 1,952 $ 5,798 $ 5,782 Leased vehicle expenses consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Depreciation expense $ 1,418 $ 1,448 $ 4,250 $ 4,275 Initial direct costs and other lessor costs 30 32 100 102 Gain on disposition of leased vehicles (1) (57) (17) (162) (113) Total leased vehicle expenses, net $ 1,391 $ 1,463 $ 4,188 $ 4,264 ________________________ (1) Included in the gain on disposition of leased vehicles are end of term charges of $10 million and $12 million for the three months ended December 31, 2020 and 2019, respectively, and $43 million and $58 million for the nine months ended December 31, 2020 and 2019, respectively. Investment in operating leases includes lease assets with a net carrying amount of $465 million and $493 million as of December 31, 2020 and March 31, 2020, respectively, which have been transferred to SPEs and are considered to be legally isolated but do not qualify for sale accounting treatment. These investments in operating leases are restricted and serve as collateral for the payment of the related secured debt obligations. Refer to Note 9 for additional information. Contractual operating lease payments due as of December 31, 2020 are summarized below. Based on the Company's experience, it is expected that a portion of the Company's operating leases will terminate prior to the scheduled lease term. The summary below should not be regarded as a forecast of future cash collections. Twelve month periods ending December 31, (U.S. dollars in millions) 2021 $ 5,865 2022 3,903 2023 1,571 2024 275 2025 62 Total $ 11,676 The Company recognized a reversal of early termination losses on operating leases of $18 million and $133 million during the three and nine months ended December 31, 2020, respectively, and recognized early termination losses of $37 million and $97 million during the three and nine months ended December 31, 2019, respectively. Actual net losses realized totaled $17 million and $37 million for the three months ended December 31, 2020 and 2019, respectively, and $53 million and $93 million for the nine months ended December 31, 2020 and 2019, respectively. The general allowance for uncollectible operating lease receivables was recorded through a reduction to revenue of $9 million for both the three months ended December 31, 2020 and 2019, and $30 million and $22 million during the nine months ended December 31, 2020 and 2019, respectively. During the nine months ended December 31, 2020, the Company considered the impact of COVID-19 on estimated residual values and determined that impairment conditions were not met. No impairment losses due to declines in estimated residual values were recognized during the three and nine months ended December 31, 2020 and 2019. |
Investment in Operating Leases | Investment in Operating Leases Investment in operating leases consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Operating lease vehicles $ 44,886 $ 43,624 Accumulated depreciation (8,624) (8,219) Deferred dealer participation and initial direct costs 131 131 Unearned subsidy income (1,184) (1,376) Estimated early termination losses (131) (317) Investment in operating leases, net $ 35,078 $ 33,843 Operating lease revenue consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Lease payments $ 1,715 $ 1,697 $ 5,077 $ 5,003 Subsidy income and dealer rate participation, net 225 241 677 732 Reimbursed lessor costs 11 14 44 47 Total operating lease revenue, net $ 1,951 $ 1,952 $ 5,798 $ 5,782 Leased vehicle expenses consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Depreciation expense $ 1,418 $ 1,448 $ 4,250 $ 4,275 Initial direct costs and other lessor costs 30 32 100 102 Gain on disposition of leased vehicles (1) (57) (17) (162) (113) Total leased vehicle expenses, net $ 1,391 $ 1,463 $ 4,188 $ 4,264 ________________________ (1) Included in the gain on disposition of leased vehicles are end of term charges of $10 million and $12 million for the three months ended December 31, 2020 and 2019, respectively, and $43 million and $58 million for the nine months ended December 31, 2020 and 2019, respectively. Investment in operating leases includes lease assets with a net carrying amount of $465 million and $493 million as of December 31, 2020 and March 31, 2020, respectively, which have been transferred to SPEs and are considered to be legally isolated but do not qualify for sale accounting treatment. These investments in operating leases are restricted and serve as collateral for the payment of the related secured debt obligations. Refer to Note 9 for additional information. Contractual operating lease payments due as of December 31, 2020 are summarized below. Based on the Company's experience, it is expected that a portion of the Company's operating leases will terminate prior to the scheduled lease term. The summary below should not be regarded as a forecast of future cash collections. Twelve month periods ending December 31, (U.S. dollars in millions) 2021 $ 5,865 2022 3,903 2023 1,571 2024 275 2025 62 Total $ 11,676 The Company recognized a reversal of early termination losses on operating leases of $18 million and $133 million during the three and nine months ended December 31, 2020, respectively, and recognized early termination losses of $37 million and $97 million during the three and nine months ended December 31, 2019, respectively. Actual net losses realized totaled $17 million and $37 million for the three months ended December 31, 2020 and 2019, respectively, and $53 million and $93 million for the nine months ended December 31, 2020 and 2019, respectively. The general allowance for uncollectible operating lease receivables was recorded through a reduction to revenue of $9 million for both the three months ended December 31, 2020 and 2019, and $30 million and $22 million during the nine months ended December 31, 2020 and 2019, respectively. During the nine months ended December 31, 2020, the Company considered the impact of COVID-19 on estimated residual values and determined that impairment conditions were not met. No impairment losses due to declines in estimated residual values were recognized during the three and nine months ended December 31, 2020 and 2019. |
Debt
Debt | 9 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company issues debt in various currencies with both floating and fixed interest rates. Outstanding debt net of discounts and fees, weighted average contractual interest rates and range of contractual interest rates were as follows: Weighted average Contractual December 31, 2020 March 31, 2020 December 31, 2020 March 31, 2020 December 31, 2020 March 31, 2020 (U.S. dollars in millions) Unsecured debt: Commercial paper $ 6,785 $ 5,490 0.37 % 1.81 % 0.25 - 0.71% 1.01 - 2.31% Related party debt 393 533 0.54 % 1.76 % 0.51 - 0.56% 1.45 - 2.06% Bank loans 4,535 4,938 1.09 % 2.16 % 0.87 - 1.44% 1.44 - 2.55% Private MTN program 500 999 3.80 % 3.84 % 3.80 - 3.80% 3.80 - 3.88% Public MTN program 28,146 25,130 1.61 % 2.07 % 0.33 - 3.63% 0.35 - 3.63% Euro MTN programme 29 28 2.23 % 2.23 % 2.23 - 2.23% 2.23 - 2.23% Other debt 3,570 3,266 2.27 % 2.47 % 0.80 - 3.44% 1.73 - 3.44% Total unsecured debt 43,958 40,384 Secured debt 8,813 9,748 1.59 % 2.25 % 0.19 - 3.30% 1.36 - 3.30% Total debt $ 52,771 $ 50,132 As of December 31, 2020, the outstanding principal balance of long-term debt with floating interest rates totaled $10.5 billion, long-term debt with fixed interest rates totaled $34.4 billion, and short-term debt with floating and fixed interest rates totaled $7.9 billion. As of March 31, 2020, the outstanding principal balance of long-term debt with floating interest rates totaled $13.0 billion, long-term debt with fixed interest rates totaled $30.0 billion, and short-term debt with floating and fixed interest rates totaled $7.3 billion. Commercial Paper As of December 31, 2020 and March 31, 2020, the Company had commercial paper programs that provide the Company with available funds of up to $9.0 billion and $8.8 billion, respectively, at prevailing market interest rates for terms up to one year. The commercial paper programs are supported by the Keep Well Agreements with HMC described in Note 6. Outstanding commercial paper averaged $5.1 billion and $5.6 billion during the nine months ended December 31, 2020 and 2019, respectively. The maximum balance outstanding at any month-end during the nine months ended December 31, 2020 and 2019 was $6.8 billion and $6.2 billion, respectively. Related Party Debt HCFI issues fixed rate short-term notes to HCI to help fund HCFI’s general corporate operations. HCFI incurred interest expense on these notes totaling $0.4 million and $3 million for the three months ended December 31, 2020 and 2019, respectively, and $2 million and $11 million for the nine months ended December 31, 2020 and 2019, respectively. Bank Loans Outstanding bank loans at December 31, 2020 were either short-term or long-term, with floating or fixed interest rates, and denominated in U.S. dollars or Canadian dollars. Outstanding bank loans have prepayment options. No outstanding bank loans as of December 31, 2020 were supported by the Keep Well Agreements with HMC described in Note 6. Outstanding bank loans contain certain covenants, including limitations on liens, mergers, consolidations and asset sales. Medium-Term Note (MTN) Programs Private MTN Program AHFC no longer issues MTNs under its Rule 144A Private MTN Program. AHFC has one note outstanding under the Private MTN Program as of December 31, 2020. The note is long-term, with a fixed interest rate and a maturity date of September 20, 2021, and denominated in U.S. dollars. Notes under this program were issued pursuant to the terms of an issuing and paying agency agreement which contains certain covenants, including negative pledge provisions. Public MTN Program In August 2019, AHFC renewed its Public MTN program by filing a registration statement with the SEC under which it may issue from time to time up to $30.0 billion aggregate principal amount of Public MTNs pursuant to the Public MTN program. The aggregate principal amount of MTNs offered under this program may be increased from time to time. Notes outstanding under the Public MTN program as of December 31, 2020 were long-term, with either fixed or floating interest rates, and denominated in U.S. dollars, Euro or Sterling. Notes under this program are issued pursuant to an indenture which contains certain covenants, including negative pledge provisions and limitations on mergers, consolidations and asset sales. Euro MTN Programme The Euro MTN Programme was retired in August 2014. AHFC has one note outstanding under this program as of December 31, 2020. The note has a maturity date of February 21, 2023, a fixed interest rate and is not listed on the Luxembourg Stock Exchange. The note was issued pursuant to the terms of an agency agreement which contains certain covenants, including negative pledge provisions. The MTN programs are supported by the Keep Well Agreement with HMC described in Note 6. Other Debt The outstanding balances as of December 31, 2020 consisted of private placement debt issued by HCFI which are long-term, with either fixed or floating interest rates, and denominated in Canadian dollars. Private placement debt is supported by the Keep Well Agreement with HMC described in Note 6. The notes are issued pursuant to the terms of an indenture which contain certain covenants, including negative pledge provisions. Secured Debt The Company issues notes through financing transactions that are secured by assets held by issuing SPEs. Notes outstanding as of December 31, 2020 were long-term and short-term with either fixed or floating interest rates, and denominated in U.S. dollars or Canadian dollars. Repayment of the notes is dependent on the performance of the underlying retail loans and operating leases. Refer to Note 9 for additional information on the Company’s secured financing transactions. Credit Agreements Syndicated Bank Credit Facilities AHFC maintains a $7.0 billion syndicated bank credit facility that includes a $3.5 billion credit agreement, which expires on February 26, 2021, a $2.1 billion credit agreement, which expires on February 28, 2023, and a $1.4 billion credit agreement, which expires on February 28, 2025. As of December 31, 2020, no amounts were drawn upon under the AHFC credit agreements. AHFC intends to renew or replace these credit agreements prior to or on their respective expiration dates. HCFI maintains a $1.6 billion syndicated bank credit facility which provides that HCFI may borrow up to $786 million on a one-year revolving basis and up to $786 million on a five-year revolving basis. The one-year tranche of the credit agreement expires on March 25, 2021 and the five-year tranche of the credit agreement expires on March 25, 2025. As of December 31, 2020, no amounts were drawn upon under the HCFI credit agreement. HCFI intends to renew or replace the credit agreement prior to or on the expiration date of each respective tranche. The credit agreements contain customary covenants, including limitations on liens, mergers, consolidations and asset sales and affiliate transactions. Loans, if any, under the credit agreements will be supported by the Keep Well Agreement described in Note 6. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The notional balances and fair values of the Company’s derivatives are presented below. The derivative instruments are presented on a gross basis in the Company’s consolidated balance sheets. Refer to Note 13 regarding the valuation of derivative instruments. December 31, 2020 March 31, 2020 Notional Assets Liabilities Notional Assets Liabilities (U.S. dollars in millions) Interest rate swaps $ 63,047 $ 683 $ 641 $ 57,379 $ 704 $ 830 Cross currency swaps 6,303 587 26 4,001 44 142 Gross derivative assets/liabilities 1,270 667 748 972 Collateral posted/held 41 12 45 9 Counterparty netting adjustment (630) (630) (764) (764) Net derivative assets/liabilities $ 681 $ 49 $ 29 $ 217 The income statement impact of derivative instruments is presented below. There were no derivative instruments designated as part of a hedge accounting relationship during the periods presented. Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Interest rate swaps $ (20) $ (17) $ (35) $ (62) Cross currency swaps 279 93 619 (67) Total gain/(loss) on derivative instruments $ 259 $ 76 $ 584 $ (129) The fair value of derivative instruments is subject to the fluctuations in market interest rates and foreign currency exchange rates. Since the Company has elected not to apply hedge accounting, the volatility in the changes in fair value of these derivative instruments is recognized in earnings. All settlements of derivative instruments are presented within cash flows from operating activities in the consolidated statements of cash flows. These derivative instruments also contain an element of credit risk in the event the counterparties are unable to meet the terms of the agreements. However, the Company minimizes the risk exposure by limiting the counterparties to major financial institutions that meet established credit guidelines. In the event of default, all counterparties are subject to legally enforceable master netting agreements. In Canada, HCFI is a party to reciprocal credit support agreements that require posting of cash collateral to mitigate counterparty credit risk on derivative positions. Posted collateral is recognized in other assets and held collateral is recognized in other liabilities. |
Transactions Involving Related
Transactions Involving Related Parties | 9 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Transactions Involving Related Parties | Transactions Involving Related Parties The following tables summarize the income statement and balance sheet impact of transactions with the Parent and affiliated companies: Three months ended December 31, Nine months ended December 31, Income Statement 2020 2019 2020 2019 (U.S. dollars in millions) Revenue: Subsidy income $ 372 $ 404 $ 1,112 $ 1,249 Interest expense: Related party debt — 3 2 11 Other income, net: VSC administration fees 26 27 79 82 Support Service Fee (11) (9) (34) (27) General and administrative expenses: Support Compensation Agreement fees 18 17 53 51 Benefit plan expenses 2 2 6 7 Shared services 17 17 52 52 Lease expense 1 — 1 — Balance Sheet December 31, 2020 March 31, 2020 (U.S. dollars in millions) Assets : Finance receivables, net: Unearned subsidy income $ (803) $ (738) Investment in operating leases, net: Unearned subsidy income (1,180) (1,372) Due from Parent and affiliated companies 126 93 Liabilities: Debt: Related party debt $ 393 $ 533 Due to Parent and affiliated companies 131 72 Other liabilities: Accrued interest expense — 1 Unearned VSC administrative fees 339 363 Accrued benefit expenses 59 69 Operating lease liabilities 21 — Support Agreements HMC and AHFC are parties to a Keep Well Agreement, effective as of September 9, 2005. This Keep Well Agreement provides that HMC will (1) maintain (directly or indirectly) at least 80% ownership in AHFC’s voting stock and not pledge (directly or indirectly), or in any way encumber or otherwise dispose of, any such stock of AHFC that it is required to hold (or permit any of HMC’s subsidiaries to do so), (2) cause AHFC to have a positive consolidated tangible net worth with tangible net worth defined as (a) stockholder’s equity less (b) any intangible assets, determined on a consolidated basis in accordance with GAAP, and (3) ensure that AHFC has sufficient liquidity to meet its payment obligations for debt HMC has confirmed in writing is covered by this Keep Well Agreement, in accordance with its terms, or where necessary make available to AHFC, or HMC shall procure for AHFC, sufficient funds to enable AHFC to meet such obligations in accordance with such terms. This Keep Well Agreement is not a guarantee by HMC. HMC and HCFI are parties to a Keep Well Agreement effective as of September 26, 2005. This Keep Well Agreement provides that HMC will (1) maintain (directly or indirectly) at least 80% ownership in HCFI’s voting stock and not pledge (directly or indirectly), or in any way encumber or otherwise dispose of, any such stock of HCFI that it is required to hold (or permit any of HMC’s subsidiaries to do so), (2) cause HCFI to have a positive consolidated tangible net worth with tangible net worth defined as (a) stockholder’s equity less (b) any intangible assets, determined on a consolidated basis in accordance with generally accepted accounting principles in Canada, and (3) ensure that HCFI has sufficient liquidity to meet its payment obligations for debt HMC has confirmed in writing is covered by this Keep Well Agreement, in accordance with its terms, or where necessary make available to HCFI, or HMC shall procure for HCFI, sufficient funds to enable HCFI to meet such obligations in accordance with such terms. This Keep Well Agreement is not a guarantee by HMC. Debt programs supported by the Keep Well Agreements consist of the Company’s commercial paper programs, Private MTN Program, Public MTN Program, Euro MTN Programme, and HCFI’s private placement debt and loans, if any, under AHFC's syndicated bank credit facilities. In connection with the above agreements, AHFC and HCFI have entered into separate Support Compensation Agreements, where each has agreed to pay HMC a quarterly fee based on the amount of outstanding debt that benefit from the Keep Well Agreements. Support Compensation Agreement fees are recognized in general and administrative expenses. Incentive Financing Programs The Company receives subsidy payments from AHM and HCI, which supplement the revenues on financing products offered under incentive programs. Subsidy payments received on retail loans and leases are deferred and recognized as revenue over the term of the related contracts. The unearned balance is recognized as reductions to the carrying value of finance receivables and investment in operating leases. Subsidy payments on dealer loans are received as earned. Related Party Debt HCFI issues short-term notes to HCI to fund HCFI’s general corporate operations. Interest rates are based on prevailing rates of debt with comparable terms. Refer to Note 4 for additional information. Vehicle Service Contract (VSC) Administration AHFC performs administrative services for VSCs issued by certain subsidiaries of AHM. AHFC’s performance obligations for the services are satisfied over the term of the underlying contracts and revenue is recognized proportionate to the anticipated amount of services to be performed. Contract terms range between two four Unearned VSC administration fees represent AHFC’s contract liabilities and are included in other liabilities (Note 11). VSC administration income is recognized in other income, net (Note 12). HCFI receives fees for marketing VSCs issued by HCI. These fees are also recognized in other income, net. AHFC pays fees to AHM for services provided in support of AHFC’s performance of VSC administrative services. The support fees are recognized as an expense within other income, net (Note 12). Shared Services The Company shares certain common expenditures with AHM, HCI, and other related parties including information technology services and facilities. The allocated costs for shared services are included in general and administrative expenses. Benefit Plans The Company participates in various employee benefit plans that are sponsored by AHM and HCI. The allocated benefit plan expenses are included in general and administrative expenses. Income taxes The Company’s U.S. income taxes are recognized on a modified separate return basis pursuant to an intercompany income tax allocation agreement with AHM. Income tax related items are not included in the tables above. Refer to Note 7 for additional information. Other AHM periodically sponsors programs that allow lessees to terminate their lease contracts prior to the contractual maturity date. AHM compensates the Company for rental payments that were waived under these programs. During the three months ended December 31, 2020 and 2019, the Company recognized $2 million and $3 million, respectively, and during the nine months ended December 31, 2020 and 2019, the Company recognized $7 million and $9 million, respectively, under these programs which were reflected as proceeds on the disposition of the returned lease vehicles. The majority of the amounts due from the Parent and affiliated companies at December 31, 2020 and March 31, 2020 related to incentive financing program subsidies. The majority of the amounts due to the Parent and affiliated companies at December 31, 2020 and March 31, 2020 related to wholesale flooring payable to the Parent. These receivable and payable accounts are non-interest-bearing and short-term in nature and are expected to be settled in the normal course of business. Effective October 1, 2020, AHFC leases certain premises from its parent, AHM. In July 2020 and August 2019, AHFC declared and paid cash dividends of $143 million and $292 million, respectively, to its parent, AHM. |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective tax rate was 22.3% and 26.4% for the three months ended December 31, 2020 and 2019, respectively, and 25.0% and 27.8% for the nine months ended December 31, 2020 and 2019, respectively. The decrease in the comparable effective tax rate for the three months and nine months ended December 31, 2020 was primarily due to changes in the U.S. state jurisdictional mix and non-recurring unrecognized tax benefits. The Company does not provide for income taxes on its share of the undistributed earnings of HCFI which are intended to be indefinitely reinvested outside the United States. At December 31, 2020, $1 billion of accumulated undistributed earnings of HCFI were intended to be so reinvested. If the undistributed earnings as of December 31, 2020 were distributed, the tax liability associated with these earnings would be $57 million, inclusive of currency translation adjustments. During the quarter ended December 31, 2020, the Company reduced previously unrecognized tax benefits as a result of a change in the tax accounting method filed with the Internal Revenue Service to change the timing of certain income recognition. This reduction had no material net impact on the Company's total tax expense for the period. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which provides economic relief in response to the coronavirus pandemic. The CARES Act, among other things, includes provisions to allow certain net operating losses to be carried-back up to five years, to increase interest deduction limitations, and to make technical corrections to tax depreciation methods for qualified improvement property. On December 27, 2020, the U.S. government enacted the Consolidated Appropriations Act (CAA), which provides additional economic relief in response to the ongoing coronavirus pandemic. During the period ended December 31, 2020, additional U.S. states enacted legislation to respond to various provisions of the CARES Act. The Company evaluated the impact of new tax laws according to the Company’s modified separate return basis pursuant to an intercompany income tax allocation agreement with the Parent, and concluded there was no material impact on the Company’s December 31, 2020 income tax accounts. As of December 31, 2020, the Company is subject to examination in various U.S. tax jurisdictions for returns filed for the taxable years ended March 31, 2008 through 2020. The Company’s Canadian subsidiary, HCFI, is subject to examination for returns filed for the taxable years ended March 31, 2014 through 2020, federally, and returns filed for the taxable years ended March 31, 2008 through 2020, except for 2011 and 2012, provincially. The Company believes appropriate provisions have been made for all outstanding issues for all open years. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases certain premises and equipment through operating leases. AHFC leases its premises and equipment from third parties and HCFI leases its premises from HCI. Effective October 1, 2020, AHFC leases certain premises from its parent, AHM. Many of the Company's leases contain renewal options, and generally have no residual value guarantees or material covenants. When it is reasonably certain that the Company will exercise the option to renew a lease, the Company will include the renewal option in the evaluation of the lease term. The Company has elected not to recognize right-of-use assets or lease liabilities for leases with a lease term of less than one year. As most of the Company's leases do not provide an implicit rate, the incremental borrowing rate is used in determining the present value of lease payments. The right-of-use assets in operating lease arrangements are reported in other assets on the Company's consolidated balance sheets. Operating lease liabilities are reported in other liabilities on the Company's consolidated balance sheets. At December 31, 2020, maturities of operating lease liabilities were as follows: Twelve month periods ending December 31, (U.S. dollars in millions) 2021 $ 9 2022 8 2023 7 2024 6 2025 5 Thereafter 8 Total undiscounted future lease obligations 43 Less: imputed interest (4) Operating lease liabilities $ 39 Lease expense under operating leases was $2 million and $3 million for the three months ended December 31, 2020 and 2019, respectively, and $7 million and $8 million for the nine months ended December 31, 2020 and 2019, respectively. Rent expense is included within general and administrative expenses. As of December 31, 2020, the weighted average remaining lease term for operating leases was 5.7 years and the weighted average remaining discount rate for operating leases was 2.86% . Revolving Lines of Credit to Dealerships The Company extends commercial revolving lines of credit to dealerships to support their business activities including facilities refurbishment and general working capital requirements. The amounts borrowed are generally secured by the assets of the borrowing entity. The unused balance of commercial revolving lines of credit was $532 million as of December 31, 2020. The Company also has commitments to finance the construction of auto dealership facilities. The remaining unfunded balance for these construction loans was $5 million as of December 31, 2020. Legal Proceedings and Regulatory Matters The Company establishes accruals for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. When able, the Company will determine estimates of reasonably possible loss or range of loss, whether in excess of any related accrued liability or where there is no accrued liability. Given the inherent uncertainty associated with legal matters, the actual costs of resolving legal claims and associated costs of defense may be substantially higher or lower than the amounts for which accruals have been established. |
Securitizations and Variable In
Securitizations and Variable Interest Entities (VIE) | 9 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Securitizations and Variable Interest Entities (VIE) | Securitizations and Variable Interest Entities (VIE) The Company utilizes SPEs for its asset-backed securitizations and these SPEs are considered VIEs, which are required to be consolidated by their primary beneficiary. The Company is considered to be the primary beneficiary of these SPEs due to (i) the power to direct the activities of the SPEs that most significantly impact the SPEs’ economic performance through the Company's role as servicer, and (ii) the obligation to absorb losses or the right to receive residual returns that could potentially be significant to the SPEs through the subordinated certificates and residual interest retained. The debt securities issued by the SPEs to third-party investors along with the assets of the SPEs are included in the Company’s consolidated financial statements. During the nine months ended December 31, 2020 and 2019, the Company issued notes through asset-backed securitizations, which were accounted for as secured financing transactions totaling $3.3 billion and $4.7 billion, respectively. The notes were secured by assets with an initial balance of $3.5 billion and $5.2 billion, respectively. The table below presents the carrying amounts of assets and liabilities of consolidated SPEs as they are reported in the Company’s consolidated balance sheets. All amounts exclude intercompany balances, which have been eliminated upon consolidation. Investors in notes issued by a SPE only have recourse to the assets of such SPE and do not have recourse to the assets of AHFC, HCFI, or its other subsidiaries or to other SPEs. The assets of SPEs are the only source of funds for repayment on the notes. December 31, 2020 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 8,724 $ 421 $ 15 $ 8,440 $ 4 Operating lease securitizations 465 1 2 373 2 Total $ 9,189 $ 422 $ 17 $ 8,813 $ 6 March 31, 2020 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 9,645 $ 581 $ 16 $ 9,345 $ 7 Operating lease securitizations 493 1 — 403 2 Total $ 10,138 $ 582 $ 16 $ 9,748 $ 9 ________________________ (1) Included with other assets in the Company’s consolidated balance sheets (Note 10). In their role as servicers, AHFC and HCFI collect payments on the underlying securitized assets on behalf of the SPEs. Cash collected during a calendar month is required to be remitted to the SPEs in the following month. AHFC and HCFI are not restricted from using the cash collected for their general purposes prior to the remittance to the SPEs. As of December 31, 2020 and March 31, 2020, AHFC and HCFI had combined cash collections of $536 million and $468 million, respectively, which were required to be remitted to the SPEs. |
Other Assets
Other Assets | 9 Months Ended |
Dec. 31, 2020 | |
Other Assets [Abstract] | |
Other Assets | Other Assets Other assets consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Interest receivable and other assets $ 103 $ 107 Vehicles held for disposition 152 228 Other receivables 212 172 Deferred expense 96 105 Software, net of accumulated amortization of $165 and $156 as of December 31, 2020 and March 31, 2020, respectively 24 23 Property and equipment, net of accumulated depreciation of $19 and $23 as of December 31, 2020 and March 31, 2020, respectively 2 4 Restricted cash 422 582 Operating lease assets 36 48 Like-kind exchange assets 68 91 Other miscellaneous assets 12 18 Total $ 1,127 $ 1,378 Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets, which range from three |
Other Liabilities
Other Liabilities | 9 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities Other liabilities consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Dealer payables $ 147 $ 68 Accrued interest expense 173 138 Accounts payable and accrued expenses 429 408 Lease security deposits 82 84 Unearned VSC administrative fees (Note 6) 339 363 Unearned income, operating leases 335 358 Operating lease liabilities 39 55 Uncertain tax positions 160 195 Other liabilities 21 20 Total $ 1,725 $ 1,689 |
Other Income, net
Other Income, net | 9 Months Ended |
Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Other Income, net | Other Income, net Other income consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) VSC administration fees (Note 6) $ 26 $ 27 $ 79 $ 82 Other, net (9) (3) (33) (15) Total $ 17 $ 24 $ 46 $ 67 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Nonperformance risk is also required to be reflected in the fair value measurement, including an entity’s own credit standing when measuring the fair value of a liability. Recurring Fair Value Measurements The following tables summarize the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis: December 31, 2020 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 683 $ — $ 683 Cross currency swaps — 587 — 587 Total assets $ — $ 1,270 $ — $ 1,270 Liabilities: Derivative instruments: Interest rate swaps $ — $ 641 $ — $ 641 Cross currency swaps — 26 — 26 Total liabilities $ — $ 667 $ — $ 667 March 31, 2020 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 704 $ — $ 704 Cross currency swaps — 44 — 44 Total assets $ — $ 748 $ — $ 748 Liabilities: Derivative instruments: Interest rate swaps $ — $ 830 $ — $ 830 Cross currency swaps — 142 — 142 Total liabilities $ — $ 972 $ — $ 972 The valuation techniques used in measuring assets and liabilities at fair value on a recurring basis are described below: Derivative Instruments The Company’s derivatives are transacted in over-the-counter markets and quoted market prices are not readily available. The Company uses third-party developed valuation models to value derivative instruments. These models estimate fair values using discounted cash flow modeling techniques, which utilize the contractual terms of the derivative instruments and market-based inputs, including interest rates and foreign exchange rates. Discount rates incorporate counterparty and HMC specific credit default spreads to reflect nonperformance risk. The Company’s derivative instruments are classified as Level 2 since all significant inputs are observable and do not require management judgment. There were no transfers between fair value hierarchy levels during the nine months ended December 31, 2020 and 2019. Refer to Note 5 for additional information on derivative instruments. Nonrecurring Fair Value Measurements The following tables summarize nonrecurring fair value measurements recognized for assets still held at the end of the reporting periods presented: Level 1 Level 2 Level 3 Total Lower-of-cost (U.S. dollars in millions) December 31, 2020 Vehicles held for disposition $ — $ — $ 81 $ 81 $ 19 December 31, 2019 Vehicles held for disposition $ — $ — $ 138 $ 138 $ 32 The following describes the methodologies and assumptions used in nonrecurring fair value measurements, which relate to the application of lower of cost or fair value accounting on long-lived assets. Vehicles Held for Disposition Vehicles held for disposition consist of returned and repossessed vehicles. They are valued at the lower of their carrying value or estimated fair value, less estimated disposition costs. The fair value is based on current average selling prices of like vehicles at wholesale used vehicle auctions. Fair Value of Financial Instruments The following tables summarize the carrying values and fair values of the Company’s financial instruments except for those measured at fair value on a recurring basis. Certain financial instruments and all nonfinancial assets and liabilities are excluded from fair value disclosure requirements including the Company’s investment in operating leases. December 31, 2020 Carrying Fair value value Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 3,017 $ 3,017 $ — $ — $ 3,017 Dealer loans, net 4,270 — — 4,110 4,110 Retail loans, net 36,560 — — 37,538 37,538 Restricted cash 422 422 — — 422 Liabilities: Commercial paper $ 6,785 $ — $ 6,785 $ — $ 6,785 Related party debt 393 — 393 — 393 Bank loans 4,535 — 4,576 — 4,576 Medium-term note programs 28,675 — 29,557 — 29,557 Other debt 3,570 — 3,705 — 3,705 Secured debt 8,813 — 8,922 — 8,922 March 31, 2020 Carrying Fair value value Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 1,503 $ 1,503 $ — $ — $ 1,503 Dealer loans, net 5,600 — — 5,136 5,136 Retail loans, net 33,954 — — 34,441 34,441 Restricted cash 582 582 — — 582 Liabilities: Commercial paper $ 5,490 $ — $ 5,488 $ — $ 5,488 Related party debt 533 — 533 — 533 Bank loans 4,938 — 4,780 — 4,780 Medium-term note programs 26,157 — 25,740 — 25,740 Other debt 3,266 — 3,232 — 3,232 Secured debt 9,748 — 9,794 — 9,794 Fair value information presented in the tables above is based on information available at December 31, 2020 and March 31, 2020. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been updated since those dates, and therefore, the current estimates of fair value at dates subsequent to those dates may differ significantly from the amounts presented herein. |
Segment Information
Segment Information | 9 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company’s reportable segments are based on the two geographic regions where operating results are measured and evaluated by management: the United States and Canada. Segment performance is evaluated using an internal measurement basis, which differs from the Company’s consolidated results prepared in accordance with GAAP. Segment performance is evaluated on a pre-tax basis before the effect of valuation adjustments on derivative instruments and revaluations of foreign currency denominated debt. Since the Company does not elect to apply hedge accounting, the impact to earnings resulting from these valuation adjustments as reported under GAAP is not representative of segment performance as evaluated by management. Realized gains and losses on derivative instruments, net of realized gains and losses on foreign currency denominated debt, are included in the measure of net revenues when evaluating segment performance. No adjustments are made to segment performance to allocate any revenues or expenses. Financing products offered throughout the United States and Canada are substantially similar. Segment revenues from the various financing products are reported on the same basis as GAAP consolidated results. Financial information for the three and nine months ended December 31, 2020 and 2019 is summarized in the following tables: United Canada Valuation Consolidated (U.S. dollars in millions) Three months ended December 31, 2020 Revenues: Retail $ 373 $ 50 $ — $ 423 Dealer 22 3 — 25 Operating leases 1,612 339 — 1,951 Total revenues 2,007 392 — 2,399 Leased vehicle expenses 1,137 254 — 1,391 Interest expenses 177 30 — 207 Realized (gains)/losses on derivatives and foreign 67 11 (78) — Net revenues 626 97 78 801 Other income, net 13 4 — 17 Total net revenues 639 101 78 818 Expenses: General and administrative expenses 103 13 — 116 Provision for credit losses (19) — — (19) Early termination loss on operating leases (16) (2) — (18) (Gain)/Loss on derivative instruments — — (259) (259) (Gain)/Loss on foreign currency revaluation of debt — — 279 279 Income before income taxes $ 571 $ 90 $ 58 $ 719 Nine months ended December 31, 2020 Revenues: Retail $ 1,113 $ 143 $ — $ 1,256 Dealer 72 10 — 82 Operating leases 4,806 992 — 5,798 Total revenues 5,991 1,145 — 7,136 Leased vehicle expenses 3,435 753 — 4,188 Interest expenses 604 93 — 697 Realized (gains)/losses on derivatives and foreign 192 31 (223) — Net revenues 1,760 268 223 2,251 Other income, net 35 11 — 46 Total net revenues 1,795 279 223 2,297 Expenses: General and administrative expenses 305 39 — 344 Provision for credit losses (17) (3) — (20) Early termination loss on operating leases (133) — — (133) (Gain)/Loss on derivative instruments — — (584) (584) (Gain)/Loss on foreign currency revaluation of debt — — 627 627 Income before income taxes $ 1,640 $ 243 $ 180 $ 2,063 December 31, 2020 Finance receivables, net $ 36,388 $ 4,442 $ — $ 40,830 Investment in operating leases, net 29,698 5,380 — 35,078 Total assets 71,343 10,304 — 81,647 United Canada Valuation Consolidated (U.S. dollars in millions) Three months ended December 31, 2019 Revenues: Retail $ 386 $ 52 $ — $ 438 Dealer 46 6 — 52 Operating leases 1,609 343 — 1,952 Total revenues 2,041 401 — 2,442 Leased vehicle expenses 1,199 264 — 1,463 Interest expense 262 45 — 307 Realized (gains)/losses on derivatives and foreign 33 — (33) — Net revenues 547 92 33 672 Other income, net 21 3 — 24 Total net revenues 568 95 33 696 Expenses: General and administrative expenses 110 14 — 124 Provision for credit losses 63 2 — 65 Early termination loss on operating leases 37 — — 37 (Gain)/Loss on derivative instruments — — (76) (76) (Gain)/Loss on foreign currency revaluation of debt — — 145 145 Income before income taxes $ 358 $ 79 $ (36) $ 401 Nine months ended December 31, 2019 Revenues: Retail $ 1,158 $ 156 $ — $ 1,314 Dealer 156 18 — 174 Operating leases 4,769 1,013 — 5,782 Total revenues 6,083 1,187 — 7,270 Leased vehicle expenses 3,493 771 — 4,264 Interest expense 812 135 — 947 Realized (gains)/losses on derivatives and foreign 71 (3) (68) — Net revenues 1,707 284 68 2,059 Other income, net 58 9 — 67 Total net revenues 1,765 293 68 2,126 Expenses: General and administrative expenses 325 44 — 369 Provision for credit losses 167 4 — 171 Early termination loss on operating leases 96 1 — 97 (Gain)/Loss on derivative instruments — — 129 129 (Gain)/Loss on foreign currency revaluation of debt — — (1) (1) Income before income taxes $ 1,177 $ 244 $ (60) $ 1,361 December 31, 2019 Finance receivables, net $ 35,980 $ 4,515 $ — $ 40,495 Investment in operating leases, net 28,914 5,522 — 34,436 Total assets 67,762 10,168 — 77,930 |
Summary of Business and Signi_2
Summary of Business and Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organizational Structure | Organizational Structure American Honda Finance Corporation (AHFC) is a wholly-owned subsidiary of American Honda Motor Co., Inc. (AHM or the Parent). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Noncontrolling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co., Ltd. (HMC). AHM and HCI are the sole authorized distributors of Honda and Acura products, including motor vehicles, parts and accessories in the United States and Canada. Unless otherwise indicated by the context, all references to the “Company”, “we”, “us”, and “our” in this report include AHFC and its consolidated subsidiaries, and references to “AHFC” refer solely to American Honda Finance Corporation (excluding AHFC’s subsidiaries). |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim information, and instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, these unaudited interim financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of operations, cash flows, and financial condition for the interim periods presented. Results for interim periods should not be considered indicative of results for the full year or for any other interim period. These unaudited interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements, significant accounting policies, and the other notes to the consolidated financial statements for the fiscal year ended March 31, 2020 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (SEC) on June 22, 2020. All significant intercompany balances and transactions have been eliminated upon consolidation. |
Recently Adopted Accounting Standards and Recently Issued Accounting Standards | Recently Adopted Accounting Standards Effective April 1, 2020, the Company adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments on a modified retrospective basis. The amendments replace the previous incurred loss impairment methodology with a methodology that reflects lifetime expected credit losses. The adoption of ASU 2016-13 resulted in an increase to the allowance for credit loss of $101 million along with an after-tax cumulative-effect reduction to opening retained earnings and noncontrolling interest of $75 million. Comparative information has not been restated and continues to be presented under previous accounting standards. Updated significant accounting policies are presented below. Effective April 1, 2020, the Company adopted ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The amendments modify the disclosure requirements on fair value measurements in Topic 820, based on Financial Accounting Standards Board (FASB) Concepts Statement, Conceptual Framework for Financial Reporting-Chapter 8: Notes to Financial Statements. Certain disclosure requirements were removed, modified and added in Topic 820. This standard did not have an impact on the consolidated financial statements. Recently Issued Accounting Standards In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company is currently assessing the impact of this standard on the consolidated financial statements. The Company plans to adopt the new guidance effective April 1, 2021. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . An update was also issued expanding the scope of this guidance. The guidance provides optional expedients and exceptions for applying GAAP to contracts or other transactions affected by reference rate reform if certain criteria are met. The guidance became effective starting March 12, 2020 and may be applied prospectively through December 31, 2022. The Company is evaluating applicable contracts and transactions to determine whether to elect the optional guidance. Significant Accounting Policies Finance Receivables Finance receivables include retail loan and dealer loan portfolio segments. The retail loan portfolio segment consists of retail installment contracts with consumers. The dealer loan portfolio segment consists of wholesale and commercial loans with dealers. Finance receivables are measured at amortized cost, less the allowance for credit losses. The amortized cost basis includes the unpaid principal balance, unearned origination fees, and deferred origination costs. Origination fees include payments received from AHM and HCI for incentive programs (refer to Note 6 regarding these related party transactions). Origination costs include payments made to dealers for rate participation and other initial direct costs (IDC). Accrued interest receivable balances are presented within other assets. Revenue on finance receivables includes contractual interest income, accretion of origination fees, and amortization of origination costs. Contractual interest income is accrued using the simple interest method. Origination fees and costs are recognized in revenue using the interest method over the contractual life of the finance receivables. The recognition of finance revenue on retail loans is discontinued when the underlying collateral is repossessed or accounts are charged off. The recognition of finance revenue on dealer loans is discontinued when they are 90 days or more past due or when it has been determined the Company will be unable to collect all principal and interest payments. Retail loans are charged off when they become 120 days past due or earlier if they have been specifically identified as uncollectible. Dealer loans are charged off when they have been individually identified as uncollectible. Charge-offs of the amortized cost basis are recognized as a reduction to the allowance for credit losses. Subsequent recoveries are credited to the allowance. Charge-offs of accrued interest receivables are reversed against finance revenue. Allowance for Credit Losses The allowance for credit losses is management’s estimate of lifetime expected credit losses on the amortized cost basis of finance receivables which is deducted from or, in the case of expected net recoveries, added to the amortized cost. The Company has elected not to measure an allowance for credit losses for accrued interest receivable. The allowance is measured on an undiscounted basis. Management evaluates the allowance, at minimum, on a quarterly basis. The retail loan portfolio segment consists of homogeneous loans with relatively small balances. The allowance for retail loans is measured on a collective basis. The Company's historical experience provides the primary basis for estimating the allowance. The modeling methodology used to estimate the allowance incorporates vintage loss and delinquency migration analysis. Retail loans are segmented into pools with similar risk characteristics. Currently, retail loans are segmented by origination quarter, internal credit grade at origination, product type, and original term. Past economic conditions and other attributes of the pools including loan-to-value ratios at loan inception are also taken into consideration when assessing historical credit loss experience. Current and forecasts of future economic factors such as unemployment rates, bankruptcies and used vehicle prices are applied in the modeling to estimate current expected credit losses. Management will also consider qualitative adjustments given the inherent uncertainty in estimating expected credit losses and the imprecision of any modeling methodology. The allowance for dealer loans is measured at the individual dealer level when they have been specifically identified as impaired. Dealer loans are considered impaired when it is probable that the Company will be unable to collect the amounts due according to the terms of the applicable contracts. The Company’s determination of whether dealer loans are impaired is based on evaluations of the dealership's payment history, financial condition, ability to perform under the terms of the loan agreements, and collateral values, as applicable. Expected credit losses on impaired dealer loans are measured based upon the specific circumstances of each dealer considering all expected sources of repayment or the fair value of the collateral if foreclosure is probable. The allowance for dealer loans that have not been specifically identified as impaired is measured collectively primarily using historical loss rates. |
Finance Receivables (Tables)
Finance Receivables (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Summary of Finance Receivables | Finance receivables consisted of the following: December 31, 2020 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 37,291 $ 4,278 $ 41,569 Allowance for credit losses (355) (8) (363) Deferred dealer participation and other deferred costs 437 — 437 Unearned subsidy income (813) — (813) Finance receivables, net $ 36,560 $ 4,270 $ 40,830 March 31, 2020 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 34,623 $ 5,606 $ 40,229 Allowance for credit losses (364) (6) (370) Deferred dealer participation and other deferred costs 441 — 441 Unearned subsidy income (746) — (746) Finance receivables, net $ 33,954 $ 5,600 $ 39,554 |
Summary of Activity in Allowance for Credit Losses of Finance Receivables | The following is a summary of the activity in the allowance for credit losses of finance receivables: Three and nine months ended December 31, 2020 Retail Dealer Total (U.S. dollars in millions) Beginning balance as of October 1, 2020 $ 405 $ 8 $ 413 Provision (18) (1) (19) Charge-offs (64) — (64) Recoveries 32 1 33 Effect of translation adjustment — — — Ending balance as of December 31, 2020 $ 355 $ 8 $ 363 Beginning balance $ 364 $ 6 $ 370 Cumulative effective of adopting ASU 2016-13 98 3 101 Beginning balance as of April 1, 2020 462 9 471 Provision (18) (2) (20) Charge-offs (177) (1) (178) Recoveries 87 2 89 Effect of translation adjustment 1 — 1 Ending balance as of December 31, 2020 $ 355 $ 8 $ 363 Three and nine months ended December 31, 2019 Retail Dealer Total (U.S. dollars in millions) Beginning balance as of October 1, 2019 $ 197 $ — $ 197 Provision 65 — 65 Charge-offs (86) — (86) Recoveries 23 — 23 Effect of translation adjustment — — — Ending balance as of December 31, 2019 $ 199 $ — $ 199 Beginning balance as of April 1, 2019 $ 193 $ 8 $ 201 Provision 162 9 171 Charge-offs (230) (17) (247) Recoveries 74 — 74 Effect of translation adjustment — — — Ending balance as of December 31, 2019 $ 199 $ — $ 199 |
Summary of Aging Analysis of Past Due Finance Receivables | The following is an aging analysis of past due finance receivables: 30 – 59 days 60 – 89 days 90 days Total Current or Total (U.S. dollars in millions) December 31, 2020 Retail loans: New auto $ 231 $ 67 $ 13 $ 311 $ 29,686 $ 29,997 Used and certified auto 89 27 5 121 5,305 5,426 Motorcycle and other 15 6 3 24 1,468 1,492 Total retail 335 100 21 456 36,459 36,915 Dealer loans: Wholesale flooring 3 — — 3 3,336 3,339 Commercial loans — — — — 939 939 Total dealer loans 3 — — 3 4,275 4,278 Total finance receivables $ 338 $ 100 $ 21 $ 459 $ 40,734 $ 41,193 March 31, 2020 Retail loans: New auto $ 222 $ 50 $ 13 $ 285 $ 27,495 $ 27,780 Used and certified auto 84 20 5 109 5,174 5,283 Motorcycle and other 12 4 2 18 1,237 1,255 Total retail 318 74 20 412 33,906 34,318 Dealer loans: Wholesale flooring 1 — — 1 4,529 4,530 Commercial loans — — — — 1,076 1,076 Total dealer loans 1 — — 1 5,605 5,606 Total finance receivables $ 319 $ 74 $ 20 $ 413 $ 39,511 $ 39,924 |
Summary of Portfolio of Retail Loans and Dealer Loans Leases by Credit Quality Indicator | The following table summarizes the amortized cost of retail loans by internal credit grade: Retail loans by vintage fiscal year 2021 2020 2019 2018 2017 Prior Total (U.S. dollars in millions) Credit grade A $ 8,924 $ 6,081 $ 4,639 $ 2,404 $ 1,001 $ 211 $ 23,260 Credit grade B 2,288 1,675 1,140 745 326 95 6,269 Credit grade C 1,633 1,392 880 593 258 76 4,832 Credit grade D 489 671 401 250 111 40 1,962 Others 181 172 120 69 40 10 592 Total retail loans $ 13,515 $ 9,991 $ 7,180 $ 4,061 $ 1,736 $ 432 $ 36,915 The following table summarizes the amortized cost of dealer loans by risk rating groups: Commercial loans by vintage fiscal year 2021 2020 2019 2018 2017 Prior Revolving loans Wholesale Flooring Total (U.S. dollars in millions) Group I $ 145 $ 65 $ 7 $ 44 $ 45 $ 86 $ 337 $ 1,580 $ 2,309 Group II 48 35 34 31 33 29 — 1,754 1,964 Group III — — — — — — — 5 5 Total dealer loans $ 193 $ 100 $ 41 $ 75 $ 78 $ 115 $ 337 $ 3,339 $ 4,278 |
Investment in Operating Leases
Investment in Operating Leases (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Schedule of Investment in Operating Leases | Investment in operating leases consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Operating lease vehicles $ 44,886 $ 43,624 Accumulated depreciation (8,624) (8,219) Deferred dealer participation and initial direct costs 131 131 Unearned subsidy income (1,184) (1,376) Estimated early termination losses (131) (317) Investment in operating leases, net $ 35,078 $ 33,843 |
Schedule of Operating Lease Revenue | Operating lease revenue consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Lease payments $ 1,715 $ 1,697 $ 5,077 $ 5,003 Subsidy income and dealer rate participation, net 225 241 677 732 Reimbursed lessor costs 11 14 44 47 Total operating lease revenue, net $ 1,951 $ 1,952 $ 5,798 $ 5,782 |
Schedule of Operating Lease Expense | Leased vehicle expenses consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Depreciation expense $ 1,418 $ 1,448 $ 4,250 $ 4,275 Initial direct costs and other lessor costs 30 32 100 102 Gain on disposition of leased vehicles (1) (57) (17) (162) (113) Total leased vehicle expenses, net $ 1,391 $ 1,463 $ 4,188 $ 4,264 ________________________ (1) Included in the gain on disposition of leased vehicles are end of term charges of $10 million and $12 million for the three months ended December 31, 2020 and 2019, respectively, and $43 million and $58 million for the nine months ended December 31, 2020 and 2019, respectively. |
Schedule of Contractual Operating Lease Payments | Contractual operating lease payments due as of December 31, 2020 are summarized below. Based on the Company's experience, it is expected that a portion of the Company's operating leases will terminate prior to the scheduled lease term. The summary below should not be regarded as a forecast of future cash collections. Twelve month periods ending December 31, (U.S. dollars in millions) 2021 $ 5,865 2022 3,903 2023 1,571 2024 275 2025 62 Total $ 11,676 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt, Weighted Average Contractual Interest Rates and Range of Contractual Interest Rates | The Company issues debt in various currencies with both floating and fixed interest rates. Outstanding debt net of discounts and fees, weighted average contractual interest rates and range of contractual interest rates were as follows: Weighted average Contractual December 31, 2020 March 31, 2020 December 31, 2020 March 31, 2020 December 31, 2020 March 31, 2020 (U.S. dollars in millions) Unsecured debt: Commercial paper $ 6,785 $ 5,490 0.37 % 1.81 % 0.25 - 0.71% 1.01 - 2.31% Related party debt 393 533 0.54 % 1.76 % 0.51 - 0.56% 1.45 - 2.06% Bank loans 4,535 4,938 1.09 % 2.16 % 0.87 - 1.44% 1.44 - 2.55% Private MTN program 500 999 3.80 % 3.84 % 3.80 - 3.80% 3.80 - 3.88% Public MTN program 28,146 25,130 1.61 % 2.07 % 0.33 - 3.63% 0.35 - 3.63% Euro MTN programme 29 28 2.23 % 2.23 % 2.23 - 2.23% 2.23 - 2.23% Other debt 3,570 3,266 2.27 % 2.47 % 0.80 - 3.44% 1.73 - 3.44% Total unsecured debt 43,958 40,384 Secured debt 8,813 9,748 1.59 % 2.25 % 0.19 - 3.30% 1.36 - 3.30% Total debt $ 52,771 $ 50,132 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Notional Balances and Fair Values of Derivatives | The notional balances and fair values of the Company’s derivatives are presented below. The derivative instruments are presented on a gross basis in the Company’s consolidated balance sheets. Refer to Note 13 regarding the valuation of derivative instruments. December 31, 2020 March 31, 2020 Notional Assets Liabilities Notional Assets Liabilities (U.S. dollars in millions) Interest rate swaps $ 63,047 $ 683 $ 641 $ 57,379 $ 704 $ 830 Cross currency swaps 6,303 587 26 4,001 44 142 Gross derivative assets/liabilities 1,270 667 748 972 Collateral posted/held 41 12 45 9 Counterparty netting adjustment (630) (630) (764) (764) Net derivative assets/liabilities $ 681 $ 49 $ 29 $ 217 |
Income Statement Impact of Derivative Instruments | The income statement impact of derivative instruments is presented below. There were no derivative instruments designated as part of a hedge accounting relationship during the periods presented. Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) Interest rate swaps $ (20) $ (17) $ (35) $ (62) Cross currency swaps 279 93 619 (67) Total gain/(loss) on derivative instruments $ 259 $ 76 $ 584 $ (129) |
Transactions Involving Relate_2
Transactions Involving Related Parties (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Summary of Income Statement and Balance Sheet Impact of Transactions with Parent and Affiliated Companies | The following tables summarize the income statement and balance sheet impact of transactions with the Parent and affiliated companies: Three months ended December 31, Nine months ended December 31, Income Statement 2020 2019 2020 2019 (U.S. dollars in millions) Revenue: Subsidy income $ 372 $ 404 $ 1,112 $ 1,249 Interest expense: Related party debt — 3 2 11 Other income, net: VSC administration fees 26 27 79 82 Support Service Fee (11) (9) (34) (27) General and administrative expenses: Support Compensation Agreement fees 18 17 53 51 Benefit plan expenses 2 2 6 7 Shared services 17 17 52 52 Lease expense 1 — 1 — Balance Sheet December 31, 2020 March 31, 2020 (U.S. dollars in millions) Assets : Finance receivables, net: Unearned subsidy income $ (803) $ (738) Investment in operating leases, net: Unearned subsidy income (1,180) (1,372) Due from Parent and affiliated companies 126 93 Liabilities: Debt: Related party debt $ 393 $ 533 Due to Parent and affiliated companies 131 72 Other liabilities: Accrued interest expense — 1 Unearned VSC administrative fees 339 363 Accrued benefit expenses 59 69 Operating lease liabilities 21 — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | At December 31, 2020, maturities of operating lease liabilities were as follows: Twelve month periods ending December 31, (U.S. dollars in millions) 2021 $ 9 2022 8 2023 7 2024 6 2025 5 Thereafter 8 Total undiscounted future lease obligations 43 Less: imputed interest (4) Operating lease liabilities $ 39 |
Securitizations and Variable _2
Securitizations and Variable Interest Entities (VIE) (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Carrying Amounts of Assets and Liabilities of Consolidated Securitization Trusts | The table below presents the carrying amounts of assets and liabilities of consolidated SPEs as they are reported in the Company’s consolidated balance sheets. All amounts exclude intercompany balances, which have been eliminated upon consolidation. Investors in notes issued by a SPE only have recourse to the assets of such SPE and do not have recourse to the assets of AHFC, HCFI, or its other subsidiaries or to other SPEs. The assets of SPEs are the only source of funds for repayment on the notes. December 31, 2020 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 8,724 $ 421 $ 15 $ 8,440 $ 4 Operating lease securitizations 465 1 2 373 2 Total $ 9,189 $ 422 $ 17 $ 8,813 $ 6 March 31, 2020 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 9,645 $ 581 $ 16 $ 9,345 $ 7 Operating lease securitizations 493 1 — 403 2 Total $ 10,138 $ 582 $ 16 $ 9,748 $ 9 ________________________ (1) Included with other assets in the Company’s consolidated balance sheets (Note 10). |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Other Assets [Abstract] | |
Schedule of Other Assets | Other assets consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Interest receivable and other assets $ 103 $ 107 Vehicles held for disposition 152 228 Other receivables 212 172 Deferred expense 96 105 Software, net of accumulated amortization of $165 and $156 as of December 31, 2020 and March 31, 2020, respectively 24 23 Property and equipment, net of accumulated depreciation of $19 and $23 as of December 31, 2020 and March 31, 2020, respectively 2 4 Restricted cash 422 582 Operating lease assets 36 48 Like-kind exchange assets 68 91 Other miscellaneous assets 12 18 Total $ 1,127 $ 1,378 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Components of Other Liabilities | Other liabilities consisted of the following: December 31, 2020 March 31, 2020 (U.S. dollars in millions) Dealer payables $ 147 $ 68 Accrued interest expense 173 138 Accounts payable and accrued expenses 429 408 Lease security deposits 82 84 Unearned VSC administrative fees (Note 6) 339 363 Unearned income, operating leases 335 358 Operating lease liabilities 39 55 Uncertain tax positions 160 195 Other liabilities 21 20 Total $ 1,725 $ 1,689 |
Other Income, net (Tables)
Other Income, net (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Other Income and Expenses [Abstract] | |
Components of Other Income | Other income consisted of the following: Three months ended December 31, Nine months ended December 31, 2020 2019 2020 2019 (U.S. dollars in millions) VSC administration fees (Note 6) $ 26 $ 27 $ 79 $ 82 Other, net (9) (3) (33) (15) Total $ 17 $ 24 $ 46 $ 67 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value Hierarchy of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables summarize the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis: December 31, 2020 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 683 $ — $ 683 Cross currency swaps — 587 — 587 Total assets $ — $ 1,270 $ — $ 1,270 Liabilities: Derivative instruments: Interest rate swaps $ — $ 641 $ — $ 641 Cross currency swaps — 26 — 26 Total liabilities $ — $ 667 $ — $ 667 March 31, 2020 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 704 $ — $ 704 Cross currency swaps — 44 — 44 Total assets $ — $ 748 $ — $ 748 Liabilities: Derivative instruments: Interest rate swaps $ — $ 830 $ — $ 830 Cross currency swaps — 142 — 142 Total liabilities $ — $ 972 $ — $ 972 |
Summary of Nonrecurring Fair Value Measurements Recognized for Assets | The following tables summarize nonrecurring fair value measurements recognized for assets still held at the end of the reporting periods presented: Level 1 Level 2 Level 3 Total Lower-of-cost (U.S. dollars in millions) December 31, 2020 Vehicles held for disposition $ — $ — $ 81 $ 81 $ 19 December 31, 2019 Vehicles held for disposition $ — $ — $ 138 $ 138 $ 32 |
Summary of Carrying Values and Fair Values of Financial Instruments Except for those Measured at Fair Value on a Recurring Basis | The following tables summarize the carrying values and fair values of the Company’s financial instruments except for those measured at fair value on a recurring basis. Certain financial instruments and all nonfinancial assets and liabilities are excluded from fair value disclosure requirements including the Company’s investment in operating leases. December 31, 2020 Carrying Fair value value Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 3,017 $ 3,017 $ — $ — $ 3,017 Dealer loans, net 4,270 — — 4,110 4,110 Retail loans, net 36,560 — — 37,538 37,538 Restricted cash 422 422 — — 422 Liabilities: Commercial paper $ 6,785 $ — $ 6,785 $ — $ 6,785 Related party debt 393 — 393 — 393 Bank loans 4,535 — 4,576 — 4,576 Medium-term note programs 28,675 — 29,557 — 29,557 Other debt 3,570 — 3,705 — 3,705 Secured debt 8,813 — 8,922 — 8,922 March 31, 2020 Carrying Fair value value Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 1,503 $ 1,503 $ — $ — $ 1,503 Dealer loans, net 5,600 — — 5,136 5,136 Retail loans, net 33,954 — — 34,441 34,441 Restricted cash 582 582 — — 582 Liabilities: Commercial paper $ 5,490 $ — $ 5,488 $ — $ 5,488 Related party debt 533 — 533 — 533 Bank loans 4,938 — 4,780 — 4,780 Medium-term note programs 26,157 — 25,740 — 25,740 Other debt 3,266 — 3,232 — 3,232 Secured debt 9,748 — 9,794 — 9,794 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Financial Information by Segment | Financial information for the three and nine months ended December 31, 2020 and 2019 is summarized in the following tables: United Canada Valuation Consolidated (U.S. dollars in millions) Three months ended December 31, 2020 Revenues: Retail $ 373 $ 50 $ — $ 423 Dealer 22 3 — 25 Operating leases 1,612 339 — 1,951 Total revenues 2,007 392 — 2,399 Leased vehicle expenses 1,137 254 — 1,391 Interest expenses 177 30 — 207 Realized (gains)/losses on derivatives and foreign 67 11 (78) — Net revenues 626 97 78 801 Other income, net 13 4 — 17 Total net revenues 639 101 78 818 Expenses: General and administrative expenses 103 13 — 116 Provision for credit losses (19) — — (19) Early termination loss on operating leases (16) (2) — (18) (Gain)/Loss on derivative instruments — — (259) (259) (Gain)/Loss on foreign currency revaluation of debt — — 279 279 Income before income taxes $ 571 $ 90 $ 58 $ 719 Nine months ended December 31, 2020 Revenues: Retail $ 1,113 $ 143 $ — $ 1,256 Dealer 72 10 — 82 Operating leases 4,806 992 — 5,798 Total revenues 5,991 1,145 — 7,136 Leased vehicle expenses 3,435 753 — 4,188 Interest expenses 604 93 — 697 Realized (gains)/losses on derivatives and foreign 192 31 (223) — Net revenues 1,760 268 223 2,251 Other income, net 35 11 — 46 Total net revenues 1,795 279 223 2,297 Expenses: General and administrative expenses 305 39 — 344 Provision for credit losses (17) (3) — (20) Early termination loss on operating leases (133) — — (133) (Gain)/Loss on derivative instruments — — (584) (584) (Gain)/Loss on foreign currency revaluation of debt — — 627 627 Income before income taxes $ 1,640 $ 243 $ 180 $ 2,063 December 31, 2020 Finance receivables, net $ 36,388 $ 4,442 $ — $ 40,830 Investment in operating leases, net 29,698 5,380 — 35,078 Total assets 71,343 10,304 — 81,647 United Canada Valuation Consolidated (U.S. dollars in millions) Three months ended December 31, 2019 Revenues: Retail $ 386 $ 52 $ — $ 438 Dealer 46 6 — 52 Operating leases 1,609 343 — 1,952 Total revenues 2,041 401 — 2,442 Leased vehicle expenses 1,199 264 — 1,463 Interest expense 262 45 — 307 Realized (gains)/losses on derivatives and foreign 33 — (33) — Net revenues 547 92 33 672 Other income, net 21 3 — 24 Total net revenues 568 95 33 696 Expenses: General and administrative expenses 110 14 — 124 Provision for credit losses 63 2 — 65 Early termination loss on operating leases 37 — — 37 (Gain)/Loss on derivative instruments — — (76) (76) (Gain)/Loss on foreign currency revaluation of debt — — 145 145 Income before income taxes $ 358 $ 79 $ (36) $ 401 Nine months ended December 31, 2019 Revenues: Retail $ 1,158 $ 156 $ — $ 1,314 Dealer 156 18 — 174 Operating leases 4,769 1,013 — 5,782 Total revenues 6,083 1,187 — 7,270 Leased vehicle expenses 3,493 771 — 4,264 Interest expense 812 135 — 947 Realized (gains)/losses on derivatives and foreign 71 (3) (68) — Net revenues 1,707 284 68 2,059 Other income, net 58 9 — 67 Total net revenues 1,765 293 68 2,126 Expenses: General and administrative expenses 325 44 — 369 Provision for credit losses 167 4 — 171 Early termination loss on operating leases 96 1 — 97 (Gain)/Loss on derivative instruments — — 129 129 (Gain)/Loss on foreign currency revaluation of debt — — (1) (1) Income before income taxes $ 1,177 $ 244 $ (60) $ 1,361 December 31, 2019 Finance receivables, net $ 35,980 $ 4,515 $ — $ 40,495 Investment in operating leases, net 28,914 5,522 — 34,436 Total assets 67,762 10,168 — 77,930 |
Summary of Business and Signi_3
Summary of Business and Significant Accounting Policies - Narrative (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 | Apr. 01, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 |
Lessee, Lease, Description [Line Items] | |||||||
Increase in allowance for credit losses | $ 363 | $ 413 | $ 370 | $ 199 | $ 197 | $ 201 | |
Reduction to equity | (19,113) | (17,563) | (18,014) | (17,268) | |||
Retained earnings | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Reduction to equity | (16,634) | (15,395) | (15,691) | (15,088) | |||
Noncontrolling interest | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Reduction to equity | $ (1,173) | (977) | $ (1,046) | $ (932) | |||
Cumulative effective of adopting ASU 2016-13 | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Increase in allowance for credit losses | $ 101 | 101 | |||||
Reduction to equity | 75 | ||||||
Cumulative effective of adopting ASU 2016-13 | Retained earnings | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Reduction to equity | 75 | 73 | |||||
Cumulative effective of adopting ASU 2016-13 | Noncontrolling interest | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Reduction to equity | $ 75 | $ 2 |
Finance Receivables - Summary o
Finance Receivables - Summary of Finance Receivables (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Finance receivables | $ 41,569 | $ 40,229 | ||||
Allowance for credit losses | (363) | $ (413) | (370) | $ (199) | $ (197) | $ (201) |
Deferred dealer participation and other deferred costs | 437 | 441 | ||||
Unearned subsidy income | (813) | (746) | ||||
Finance receivables, net | 40,830 | 39,554 | 40,495 | |||
Retail | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Finance receivables | 37,291 | 34,623 | ||||
Allowance for credit losses | (355) | (405) | (364) | (199) | (197) | (193) |
Deferred dealer participation and other deferred costs | 437 | 441 | ||||
Unearned subsidy income | (813) | (746) | ||||
Finance receivables, net | 36,560 | 33,954 | ||||
Dealer | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Finance receivables | 4,278 | 5,606 | ||||
Allowance for credit losses | (8) | $ (8) | (6) | $ 0 | $ 0 | $ (8) |
Deferred dealer participation and other deferred costs | 0 | 0 | ||||
Unearned subsidy income | 0 | 0 | ||||
Finance receivables, net | $ 4,270 | $ 5,600 |
Finance Receivables - Narrative
Finance Receivables - Narrative (Detail) loan in Thousands | 9 Months Ended | ||||||
Dec. 31, 2020USD ($)loan | Sep. 30, 2020USD ($) | Apr. 01, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Finance receivables, net | $ 40,830,000,000 | $ 39,554,000,000 | $ 40,495,000,000 | ||||
Increase in allowance for credit losses | $ 363,000,000 | $ 413,000,000 | 370,000,000 | 199,000,000 | $ 197,000,000 | $ 201,000,000 | |
United States | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Maximum payment deferral period | 3 months | ||||||
Canada | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Maximum payment deferral period | 4 months | ||||||
Cumulative effective of adopting ASU 2016-13 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Increase in allowance for credit losses | $ 101,000,000 | 101,000,000 | |||||
Retail loans | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Finance receivables, net | $ 36,560,000,000 | 33,954,000,000 | |||||
Increase in allowance for credit losses | $ 355,000,000 | 405,000,000 | 364,000,000 | 199,000,000 | 197,000,000 | 193,000,000 | |
Number of retail loans granted payment deferrals | loan | 259 | ||||||
Number of outstanding loans within deferral period | loan | 15 | ||||||
Retail loans | Cumulative effective of adopting ASU 2016-13 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Increase in allowance for credit losses | 98,000,000 | ||||||
Dealer loans | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Finance receivables, net | $ 4,270,000,000 | 5,600,000,000 | |||||
Increase in allowance for credit losses | 8,000,000 | $ 8,000,000 | 6,000,000 | 0 | $ 0 | $ 8,000,000 | |
Dealer loans modified as troubled debt restructurings | 0 | $ 0 | |||||
Dealer loans | Cumulative effective of adopting ASU 2016-13 | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Increase in allowance for credit losses | 3,000,000 | ||||||
Collateral Pledged | Retail loans | |||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||
Finance receivables, net | $ 8,700,000,000 | $ 9,600,000,000 |
Finance Receivables - Summary_2
Finance Receivables - Summary of Activity in Allowance for Credit Losses of Finance Receivables (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | $ 413 | $ 197 | $ 370 | $ 201 |
Provision | (19) | 65 | (20) | 171 |
Charge-offs | (64) | (86) | (178) | (247) |
Recoveries | 33 | 23 | 89 | 74 |
Effect of translation adjustment | 0 | 0 | 1 | 0 |
Ending balance | 363 | 199 | 363 | 199 |
Retail | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 405 | 197 | 364 | 193 |
Provision | (18) | 65 | (18) | 162 |
Charge-offs | (64) | (86) | (177) | (230) |
Recoveries | 32 | 23 | 87 | 74 |
Effect of translation adjustment | 0 | 0 | 1 | 0 |
Ending balance | 355 | 199 | 355 | 199 |
Dealer | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 8 | 0 | 6 | 8 |
Provision | (1) | 0 | (2) | 9 |
Charge-offs | 0 | 0 | (1) | (17) |
Recoveries | 1 | 0 | 2 | 0 |
Effect of translation adjustment | 0 | 0 | 0 | 0 |
Ending balance | $ 8 | $ 0 | 8 | $ 0 |
Cumulative effective of adopting ASU 2016-13 | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 101 | |||
Cumulative effective of adopting ASU 2016-13 | Retail | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 98 | |||
Cumulative effective of adopting ASU 2016-13 | Dealer | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 3 | |||
Adjusted balance | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 471 | |||
Adjusted balance | Retail | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | 462 | |||
Adjusted balance | Dealer | ||||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Beginning balance | $ 9 |
Finance Receivables - Summary_3
Finance Receivables - Summary of Aging Analysis of Past Due Finance Receivables (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Financing Receivable, Past Due [Line Items] | ||
Total past due | $ 459 | $ 413 |
Current or less than 30 days past due | 40,734 | 39,511 |
Total finance receivables | 41,193 | 39,924 |
Retail loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 456 | 412 |
Current or less than 30 days past due | 36,459 | 33,906 |
Total finance receivables | 36,915 | 34,318 |
Retail loans | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 311 | 285 |
Current or less than 30 days past due | 29,686 | 27,495 |
Total finance receivables | 29,997 | 27,780 |
Retail loans | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 121 | 109 |
Current or less than 30 days past due | 5,305 | 5,174 |
Total finance receivables | 5,426 | 5,283 |
Retail loans | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 24 | 18 |
Current or less than 30 days past due | 1,468 | 1,237 |
Total finance receivables | 1,492 | 1,255 |
Dealer loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 3 | 1 |
Current or less than 30 days past due | 4,275 | 5,605 |
Total finance receivables | 4,278 | 5,606 |
Dealer loans | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 3 | 1 |
Current or less than 30 days past due | 3,336 | 4,529 |
Total finance receivables | 3,339 | 4,530 |
Dealer loans | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
Current or less than 30 days past due | 939 | 1,076 |
Total finance receivables | 939 | 1,076 |
30 – 59 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 338 | 319 |
30 – 59 days past due | Retail loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 335 | 318 |
30 – 59 days past due | Retail loans | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 231 | 222 |
30 – 59 days past due | Retail loans | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 89 | 84 |
30 – 59 days past due | Retail loans | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 15 | 12 |
30 – 59 days past due | Dealer loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 3 | 1 |
30 – 59 days past due | Dealer loans | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 3 | 1 |
30 – 59 days past due | Dealer loans | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
60 – 89 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 100 | 74 |
60 – 89 days past due | Retail loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 100 | 74 |
60 – 89 days past due | Retail loans | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 67 | 50 |
60 – 89 days past due | Retail loans | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 27 | 20 |
60 – 89 days past due | Retail loans | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 6 | 4 |
60 – 89 days past due | Dealer loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
60 – 89 days past due | Dealer loans | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
60 – 89 days past due | Dealer loans | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
90 days or greater past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 21 | 20 |
90 days or greater past due | Retail loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 21 | 20 |
90 days or greater past due | Retail loans | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 13 | 13 |
90 days or greater past due | Retail loans | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 5 | 5 |
90 days or greater past due | Retail loans | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 3 | 2 |
90 days or greater past due | Dealer loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
90 days or greater past due | Dealer loans | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | 0 | 0 |
90 days or greater past due | Dealer loans | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total past due | $ 0 | $ 0 |
Finance Receivables - Summary_4
Finance Receivables - Summary of Loans by Internal Credit Grade (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | $ 41,569 | $ 40,229 |
Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Total | 37,291 | $ 34,623 |
Performing | Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2021 | 13,515 | |
2020 | 9,991 | |
2019 | 7,180 | |
2018 | 4,061 | |
2017 | 1,736 | |
Prior | 432 | |
Total | 36,915 | |
Credit grade A | Performing | Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2021 | 8,924 | |
2020 | 6,081 | |
2019 | 4,639 | |
2018 | 2,404 | |
2017 | 1,001 | |
Prior | 211 | |
Total | 23,260 | |
Credit grade B | Performing | Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2021 | 2,288 | |
2020 | 1,675 | |
2019 | 1,140 | |
2018 | 745 | |
2017 | 326 | |
Prior | 95 | |
Total | 6,269 | |
Credit grade C | Performing | Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2021 | 1,633 | |
2020 | 1,392 | |
2019 | 880 | |
2018 | 593 | |
2017 | 258 | |
Prior | 76 | |
Total | 4,832 | |
Credit grade D | Performing | Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2021 | 489 | |
2020 | 671 | |
2019 | 401 | |
2018 | 250 | |
2017 | 111 | |
Prior | 40 | |
Total | 1,962 | |
Others | Performing | Retail loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
2021 | 181 | |
2020 | 172 | |
2019 | 120 | |
2018 | 69 | |
2017 | 40 | |
Prior | 10 | |
Total | $ 592 |
Finance Receivables - Summary_5
Finance Receivables - Summary of Loans by Risk Rate Grouping (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | $ 41,569 | $ 40,229 |
Dealer loans | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 4,278 | $ 5,606 |
Dealer loans | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 4,278 | |
Dealer loans | Group I | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 2,309 | |
Dealer loans | Group II | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 1,964 | |
Dealer loans | Group III | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 5 | |
Dealer loans | Commercial loans | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2021 | 193 | |
2020 | 100 | |
2019 | 41 | |
2018 | 75 | |
2017 | 78 | |
Prior | 115 | |
Revolving loans | 337 | |
Dealer loans | Commercial loans | Group I | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2021 | 145 | |
2020 | 65 | |
2019 | 7 | |
2018 | 44 | |
2017 | 45 | |
Prior | 86 | |
Revolving loans | 337 | |
Dealer loans | Commercial loans | Group II | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2021 | 48 | |
2020 | 35 | |
2019 | 34 | |
2018 | 31 | |
2017 | 33 | |
Prior | 29 | |
Revolving loans | 0 | |
Dealer loans | Commercial loans | Group III | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
2021 | 0 | |
2020 | 0 | |
2019 | 0 | |
2018 | 0 | |
2017 | 0 | |
Prior | 0 | |
Revolving loans | 0 | |
Dealer loans | Wholesale flooring | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 3,339 | |
Dealer loans | Wholesale flooring | Group I | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 1,580 | |
Dealer loans | Wholesale flooring | Group II | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | 1,754 | |
Dealer loans | Wholesale flooring | Group III | Performing | ||
Financing Receivable, Credit Quality Indicator [Line Items] | ||
Total | $ 5 |
Investment in Operating Lease_2
Investment in Operating Leases - Schedule of Investment in Operating Leases (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Lessor, Lease, Description [Line Items] | |||
Investment in operating leases, net | $ 35,078 | $ 33,843 | $ 34,436 |
Assets Leased to Others | |||
Lessor, Lease, Description [Line Items] | |||
Operating lease vehicles | 44,886 | 43,624 | |
Accumulated depreciation | (8,624) | (8,219) | |
Deferred dealer participation and initial direct costs | 131 | 131 | |
Unearned subsidy income | (1,184) | (1,376) | |
Estimated early termination losses | (131) | (317) | |
Investment in operating leases, net | $ 35,078 | $ 33,843 |
Investment in Operating Lease_3
Investment in Operating Leases - Schedule of Operating Lease Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||||
Lease payments | $ 1,715 | $ 1,697 | $ 5,077 | $ 5,003 |
Subsidy income and dealer rate participation, net | 225 | 241 | 677 | 732 |
Reimbursed lessor costs | 11 | 14 | 44 | 47 |
Total operating lease revenue, net | $ 1,951 | $ 1,952 | $ 5,798 | $ 5,782 |
Investment in Operating Lease_4
Investment in Operating Leases - Schedule of Leased Vehicle Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Lessor Disclosure [Abstract] | ||||
Total leased vehicle expenses, net | $ 2 | $ 3 | $ 7 | $ 8 |
End of term charges included in gain or loss on disposition of vehicles | 10 | 12 | 43 | 58 |
Assets Leased to Others | ||||
Lessor Disclosure [Abstract] | ||||
Depreciation expense | 1,418 | 1,448 | 4,250 | 4,275 |
Initial direct costs and other lessor costs | 30 | 32 | 100 | 102 |
Gain on disposition of leased vehicles | (57) | (17) | (162) | (113) |
Total leased vehicle expenses, net | $ 1,391 | $ 1,463 | $ 4,188 | $ 4,264 |
Investment in Operating Lease_5
Investment in Operating Leases - Narrative (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2020 | |
Variable Interest Entity [Line Items] | |||||
Investment in operating leases, net | $ 35,078,000,000 | $ 34,436,000,000 | $ 35,078,000,000 | $ 34,436,000,000 | $ 33,843,000,000 |
Termination losses (reversal) due to lessee defaults | (18,000,000) | 37,000,000 | (133,000,000) | 97,000,000 | |
Actual early termination net losses realized on operating leases | 17,000,000 | 37,000,000 | 53,000,000 | 93,000,000 | |
Provision for credit losses on operating leases | 9,000,000 | 9,000,000 | 30,000,000 | 22,000,000 | |
Impairment losses | 0 | $ 0 | 0 | $ 0 | |
Collateral Pledged | |||||
Variable Interest Entity [Line Items] | |||||
Investment in operating leases, net | $ 465,000,000 | $ 465,000,000 | $ 493,000,000 |
Investment in Operating Lease_6
Investment in Operating Leases - Schedule of Contractual Operating Lease Payments (Details) $ in Millions | Dec. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 5,865 |
2022 | 3,903 |
2023 | 1,571 |
2024 | 275 |
2025 | 62 |
Total | $ 11,676 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt Net of Discounts and Fees, Weighted Average Contractual Interest Rates and Range of Contractual Interest Rates (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Debt Instrument [Line Items] | ||
Unsecured debt | $ 43,958 | $ 40,384 |
Secured debt | 8,813 | 9,748 |
Total debt | 52,771 | 50,132 |
Commercial paper | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 6,785 | $ 5,490 |
Weighted average contractual interest rate (percentage) | 0.37% | 1.81% |
Commercial paper | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.25% | 1.01% |
Commercial paper | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.71% | 2.31% |
Related party debt | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 393 | $ 533 |
Weighted average contractual interest rate (percentage) | 0.54% | 1.76% |
Related party debt | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.51% | 1.45% |
Related party debt | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.56% | 2.06% |
Bank loans | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 4,535 | $ 4,938 |
Weighted average contractual interest rate (percentage) | 1.09% | 2.16% |
Bank loans | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.87% | 1.44% |
Bank loans | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 1.44% | 2.55% |
Private MTN program | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 500 | $ 999 |
Weighted average contractual interest rate (percentage) | 3.80% | 3.84% |
Private MTN program | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.80% | 3.80% |
Private MTN program | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.80% | 3.88% |
Public MTN program | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 28,146 | $ 25,130 |
Weighted average contractual interest rate (percentage) | 1.61% | 2.07% |
Public MTN program | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.33% | 0.35% |
Public MTN program | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.63% | 3.63% |
Euro MTN programme | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 29 | $ 28 |
Weighted average contractual interest rate (percentage) | 2.23% | 2.23% |
Euro MTN programme | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 2.23% | 2.23% |
Euro MTN programme | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 2.23% | 2.23% |
Other debt | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 3,570 | $ 3,266 |
Weighted average contractual interest rate (percentage) | 2.27% | 2.47% |
Other debt | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.80% | 1.73% |
Other debt | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.44% | 3.44% |
Secured debt | ||
Debt Instrument [Line Items] | ||
Secured debt | $ 8,813 | $ 9,748 |
Weighted average contractual interest rate (percentage) | 1.59% | 2.25% |
Secured debt | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.19% | 1.36% |
Secured debt | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.30% | 3.30% |
Debt - Narrative (Detail)
Debt - Narrative (Detail) | 3 Months Ended | 9 Months Ended | ||||
Dec. 31, 2020USD ($)note | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)note | Dec. 31, 2019USD ($) | Mar. 31, 2020USD ($) | Aug. 31, 2019USD ($) | |
Debt Instrument [Line Items] | ||||||
Outstanding principal balance of long-term debt with floating interest rates | $ 10,500,000,000 | $ 10,500,000,000 | $ 13,000,000,000 | |||
Outstanding principal balance of long-term debt with fixed interest rates | 34,400,000,000 | 34,400,000,000 | 30,000,000,000 | |||
Short-term debt | 7,900,000,000 | 7,900,000,000 | 7,300,000,000 | |||
AHFC | Other Credit Agreements | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 1,000,000,000 | 1,000,000,000 | ||||
Line of credit facility outstanding amount | 0 | 0 | ||||
AHFC | Syndicated Bank Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 7,000,000,000 | 7,000,000,000 | ||||
Line of credit facility outstanding amount | 0 | 0 | ||||
AHFC | Syndicated Bank Credit Facilities With 364 Day Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 3,500,000,000 | 3,500,000,000 | ||||
AHFC | Syndicated Bank Credit Facilities With Three Year Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 2,100,000,000 | 2,100,000,000 | ||||
AHFC | Syndicated Bank Credit Facilities With Five Year Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 1,400,000,000 | 1,400,000,000 | ||||
HCFI | ||||||
Debt Instrument [Line Items] | ||||||
Related party interest expense incurred | 400,000 | $ 3,000,000 | 2,000,000 | $ 11,000,000 | ||
HCFI | Syndicated Bank Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 1,600,000,000 | 1,600,000,000 | ||||
Line of credit facility outstanding amount | 0 | 0 | ||||
HCFI | Syndicated Bank Credit Facilities With One Year Revolving Term | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 786,000,000 | $ 786,000,000 | ||||
Debt instrument, term | 1 year | |||||
HCFI | Syndicated Bank Credit Facilities With Five Year Revolving Term | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | 786,000,000 | $ 786,000,000 | ||||
Debt instrument, term | 5 years | |||||
Commercial paper | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | $ 9,000,000,000 | $ 9,000,000,000 | $ 8,800,000,000 | |||
Average outstanding balance | 5,100,000,000 | 5,600,000,000 | ||||
Commercial paper | AHFC | Other Credit Agreements | ||||||
Debt Instrument [Line Items] | ||||||
Line of credit facility, maximum month-end outstanding amount | $ 6,800,000,000 | $ 6,200,000,000 | ||||
Private MTN program | ||||||
Debt Instrument [Line Items] | ||||||
Number of notes outstanding | note | 1 | 1 | ||||
Public MTN program | ||||||
Debt Instrument [Line Items] | ||||||
Maximum funds available | $ 30,000,000,000 | |||||
Euro MTN programme | ||||||
Debt Instrument [Line Items] | ||||||
Number of notes outstanding | note | 1 | 1 |
Derivative Instruments - Notion
Derivative Instruments - Notional Balances and Fair Values of Derivatives (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Derivatives, Fair Value [Line Items] | ||
Assets | $ 1,270 | $ 748 |
Collateral posted/held | 41 | 45 |
Counterparty netting adjustment | (630) | (764) |
Net derivative assets | 681 | 29 |
Liabilities | 667 | 972 |
Collateral posted/held | 12 | 9 |
Counterparty netting adjustment | (630) | (764) |
Net derivative liabilities | 49 | 217 |
Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Notional balances | 63,047 | 57,379 |
Assets | 683 | 704 |
Liabilities | 641 | 830 |
Cross currency swaps | ||
Derivatives, Fair Value [Line Items] | ||
Notional balances | 6,303 | 4,001 |
Assets | 587 | 44 |
Liabilities | $ 26 | $ 142 |
Derivative Instruments - Income
Derivative Instruments - Income Statement Impact of Derivative Instruments (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total gain/(loss) on derivative instruments | $ 259 | $ 76 | $ 584 | $ (129) |
Interest rate swaps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total gain/(loss) on derivative instruments | (20) | (17) | (35) | (62) |
Cross currency swaps | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Total gain/(loss) on derivative instruments | $ 279 | $ 93 | $ 619 | $ (67) |
Transactions Involving Relate_3
Transactions Involving Related Parties - Summary of Income Statement Impact of Transactions with Parent and Affiliated Companies (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
General and administrative expenses: | ||||
Lease expense | $ 2 | $ 3 | $ 7 | $ 8 |
Affiliated Entity | ||||
Revenue: | ||||
Subsidy income | 372 | 404 | 1,112 | 1,249 |
Interest expense: | ||||
Related party debt | 0 | 3 | 2 | 11 |
Other income, net: | ||||
VSC administration fees | 26 | 27 | 79 | 82 |
Support Service Fee | (11) | (9) | (34) | (27) |
General and administrative expenses: | ||||
Support Compensation Agreement fees | 18 | 17 | 53 | 51 |
Benefit plan expenses | 2 | 2 | 6 | 7 |
Shared services | 17 | 17 | 52 | 52 |
Lease expense | $ 1 | $ 0 | $ 1 | $ 0 |
Transactions Involving Relate_4
Transactions Involving Related Parties - Summary of Balance Sheet Impact of Transactions with Parent and Affiliated Companies (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Investment in operating leases, net: | ||
Due from Parent and affiliated companies | $ 126 | $ 93 |
Debt: | ||
Related party debt | 393 | 533 |
Due to Parent and affiliated companies | 131 | 72 |
Other liabilities: | ||
Operating lease liabilities | 39 | 55 |
Affiliated Entity | ||
Finance receivables, net: | ||
Unearned subsidy income | (803) | (738) |
Investment in operating leases, net: | ||
Unearned subsidy income | (1,180) | (1,372) |
Due from Parent and affiliated companies | 126 | 93 |
Debt: | ||
Related party debt | 393 | 533 |
Due to Parent and affiliated companies | 131 | 72 |
Other liabilities: | ||
Accrued interest expense | 0 | 1 |
Unearned VSC administrative fees | 339 | 363 |
Accrued benefit expenses | 59 | 69 |
Operating lease liabilities | $ 21 | $ 0 |
Transactions Involving Relate_5
Transactions Involving Related Parties - Narrative (Detail) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2020 | Aug. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | ||||||
Declared and paid cash dividend | $ 143 | $ 292 | ||||
AHFC | Minimum | ||||||
Related Party Transaction [Line Items] | ||||||
Vehicle service contract terms | 2 years | |||||
Majority of vehicle service contract terms | 4 years | |||||
AHFC | Maximum | ||||||
Related Party Transaction [Line Items] | ||||||
Vehicle service contract terms | 9 years | |||||
Majority of vehicle service contract terms | 8 years | |||||
AHFC | Honda Motor Co., Ltd. | ||||||
Related Party Transaction [Line Items] | ||||||
Honda Motor Company required ownership interest (percentage) | 80.00% | 80.00% | ||||
HCFI | Honda Motor Co., Ltd. | ||||||
Related Party Transaction [Line Items] | ||||||
Honda Motor Company required ownership interest (percentage) | 80.00% | 80.00% | ||||
AHM | ||||||
Related Party Transaction [Line Items] | ||||||
Compensating funds from parent for waived rental payments of returned lease vehicles | $ 2 | $ 3 | $ 7 | $ 9 | ||
Declared and paid cash dividend | $ 143 | $ 292 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate (percentage) | 22.30% | 26.40% | 25.00% | 27.80% |
Accumulated undistributed earnings of HCFI | $ 1,000 | $ 1,000 | ||
Unrecognized deferred tax liability from undistributed foreign earnings | $ 57 | $ 57 |
Commitments and Contingencies -
Commitments and Contingencies - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
2021 | $ 9 | |
2022 | 8 | |
2023 | 7 | |
2024 | 6 | |
2025 | 5 | |
Thereafter | 8 | |
Total undiscounted future lease obligations | 43 | |
Less: imputed interest | (4) | |
Operating lease liabilities | $ 39 | $ 55 |
Commitments and Contingencies_2
Commitments and Contingencies - Narrative (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020USD ($)demand | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)demand | Dec. 31, 2019USD ($) | |
Commitments And Contingencies Disclosure [Line Items] | ||||
Lease expense under operating leases | $ 2 | $ 3 | $ 7 | $ 8 |
Operating lease, weighted average remaining lease term | 5 years 8 months 12 days | 5 years 8 months 12 days | ||
Operating lease, weighted average discount rate (percentage) | 2.86% | 2.86% | ||
Number of civil investigative demands | demand | 2 | 2 | ||
Revolving lines of credit | ||||
Commitments And Contingencies Disclosure [Line Items] | ||||
Unused balance of commercial revolving lines of credit | $ 532 | $ 532 | ||
Construction of auto dealership facilities | ||||
Commitments And Contingencies Disclosure [Line Items] | ||||
Remaining unfunded balance for construction loans | $ 5 | $ 5 |
Securitizations and Variable _3
Securitizations and Variable Interest Entities (VIE) - Narrative (Detail) - USD ($) $ in Millions | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Asset-backed securitization notes issued during period | $ 3,300 | $ 4,700 | |
Initial receivable principal balance underlying asset-backed securitization notes issued during period | 3,500 | $ 5,200 | |
Cash to be remitted to trusts | $ 536 | $ 468 |
Securitizations and Variable _4
Securitizations and Variable Interest Entities (VIE) - Schedule of Carrying Amounts of Assets and Liabilities of Consolidated Securitization Trusts (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | [1] | |
Assets | |||||
Restricted cash | $ 422 | [1] | $ 582 | $ 602 | |
Other | 12 | 18 | |||
Liabilities | |||||
Secured debt | 8,813 | 9,748 | |||
Other | 1,725 | 1,689 | |||
Variable Interest Entity, Primary Beneficiary | |||||
Assets | |||||
Securitized assets | 9,189 | 10,138 | |||
Restricted cash | 422 | 582 | |||
Other | 17 | 16 | |||
Liabilities | |||||
Secured debt | 8,813 | 9,748 | |||
Other | 6 | 9 | |||
Variable Interest Entity, Primary Beneficiary | Retail loan securitizations | |||||
Assets | |||||
Securitized assets | 8,724 | 9,645 | |||
Restricted cash | 421 | 581 | |||
Other | 15 | 16 | |||
Liabilities | |||||
Secured debt | 8,440 | 9,345 | |||
Other | 4 | 7 | |||
Variable Interest Entity, Primary Beneficiary | Operating lease securitizations | |||||
Assets | |||||
Securitized assets | 465 | 493 | |||
Restricted cash | 1 | 1 | |||
Other | 2 | 0 | |||
Liabilities | |||||
Secured debt | 373 | 403 | |||
Other | $ 2 | $ 2 | |||
[1] | Restricted cash balances relate primarily to securitization arrangements (Note 9). |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | [1] | |
Other Assets [Abstract] | |||||
Interest receivable and other assets | $ 103 | $ 107 | |||
Vehicles held for disposition | 152 | 228 | |||
Other receivables | 212 | 172 | |||
Deferred expense | 96 | 105 | |||
Software, net of accumulated amortization of $165 and $156 as of December 31, 2020 and March 31, 2020, respectively | 24 | 23 | |||
Property and equipment, net of accumulated depreciation of $19 and $23 as of December 31, 2020 and March 31, 2020, respectively | 2 | 4 | |||
Restricted cash | 422 | [1] | 582 | $ 602 | |
Operating lease assets | 36 | 48 | |||
Like-kind exchange assets | 68 | 91 | |||
Other miscellaneous assets | 12 | 18 | |||
Total | $ 1,127 | $ 1,378 | |||
[1] | Restricted cash balances relate primarily to securitization arrangements (Note 9). |
Other Assets - Schedule of Ot_2
Other Assets - Schedule of Other Assets (Parenthesis) (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Other Assets [Abstract] | ||
Software, accumulated amortization | $ 165 | $ 156 |
Property and equipment, accumulated depreciation | $ 19 | $ 23 |
Other Assets - Narrative (Detai
Other Assets - Narrative (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
General and administrative expenses | ||||
Other Assets [Line Items] | ||||
Depreciation and amortization expense | $ 3 | $ 2 | $ 8 | $ 8 |
Minimum | ||||
Other Assets [Line Items] | ||||
Assets estimated useful life | 3 years | |||
Maximum | ||||
Other Assets [Line Items] | ||||
Assets estimated useful life | 5 years |
Other Liabilities - Components
Other Liabilities - Components of Other Liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Other Liabilities [Line Items] | ||
Dealer payables | $ 147 | $ 68 |
Accrued interest expense | 173 | 138 |
Accounts payable and accrued expenses | 429 | 408 |
Lease security deposits | 82 | 84 |
Unearned income, operating leases | 335 | 358 |
Operating lease liabilities | 39 | 55 |
Uncertain tax positions | 160 | 195 |
Other liabilities | 21 | 20 |
Total | 1,725 | 1,689 |
Affiliated Entity | ||
Other Liabilities [Line Items] | ||
Unearned VSC administrative fees | 339 | 363 |
Operating lease liabilities | $ 21 | $ 0 |
Other Income, net - Components
Other Income, net - Components of Other Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | |
Other Income (Expense), Net [Line Items] | ||||
Other, net | $ (9) | $ (3) | $ (33) | $ (15) |
Total | 17 | 24 | 46 | 67 |
Affiliated Entity | ||||
Other Income (Expense), Net [Line Items] | ||||
VSC administration fees (Note 6) | $ 26 | $ 27 | $ 79 | $ 82 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value Hierarchy of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 |
Derivative instruments: | ||
Assets: | $ 1,270 | $ 748 |
Liabilities: | 667 | 972 |
Interest rate swaps | ||
Derivative instruments: | ||
Assets: | 683 | 704 |
Liabilities: | 641 | 830 |
Cross currency swaps | ||
Derivative instruments: | ||
Assets: | 587 | 44 |
Liabilities: | 26 | 142 |
Level 1 | ||
Derivative instruments: | ||
Assets: | 0 | 0 |
Liabilities: | 0 | 0 |
Level 1 | Interest rate swaps | ||
Derivative instruments: | ||
Assets: | 0 | 0 |
Liabilities: | 0 | 0 |
Level 1 | Cross currency swaps | ||
Derivative instruments: | ||
Assets: | 0 | 0 |
Liabilities: | 0 | 0 |
Level 2 | ||
Derivative instruments: | ||
Assets: | 1,270 | 748 |
Liabilities: | 667 | 972 |
Level 2 | Interest rate swaps | ||
Derivative instruments: | ||
Assets: | 683 | 704 |
Liabilities: | 641 | 830 |
Level 2 | Cross currency swaps | ||
Derivative instruments: | ||
Assets: | 587 | 44 |
Liabilities: | 26 | 142 |
Level 3 | ||
Derivative instruments: | ||
Assets: | 0 | 0 |
Liabilities: | 0 | 0 |
Level 3 | Interest rate swaps | ||
Derivative instruments: | ||
Assets: | 0 | 0 |
Liabilities: | 0 | 0 |
Level 3 | Cross currency swaps | ||
Derivative instruments: | ||
Assets: | 0 | 0 |
Liabilities: | $ 0 | $ 0 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Nonrecurring Fair Value Measurements (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | $ 81 | $ 138 |
Lower-of-cost or fair value adjustment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | 19 | 32 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | $ 81 | $ 138 |
Fair Value Measurements - Sum_3
Fair Value Measurements - Summary of Carrying Values and Fair Values of Financial Instruments Except for those Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Millions | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||
Assets | |||||
Cash and cash equivalents | $ 3,017 | $ 1,503 | $ 837 | ||
Dealer loans, net | 4,270 | 5,600 | |||
Retail loans, net | 36,560 | 33,954 | |||
Restricted cash | 422 | [1] | 582 | $ 602 | [1] |
Liabilities | |||||
Commercial paper | 6,785 | 5,490 | |||
Related party debt | 393 | 533 | |||
Bank loans | 4,535 | 4,938 | |||
Medium-term note programs | 28,675 | 26,157 | |||
Other debt | 3,570 | 3,266 | |||
Secured debt | 8,813 | 9,748 | |||
Fair value | |||||
Assets | |||||
Cash and cash equivalents | 3,017 | 1,503 | |||
Dealer loans, net | 4,110 | 5,136 | |||
Retail loans, net | 37,538 | 34,441 | |||
Restricted cash | 422 | 582 | |||
Liabilities | |||||
Commercial paper | 6,785 | 5,488 | |||
Related party debt | 393 | 533 | |||
Bank loans | 4,576 | 4,780 | |||
Medium-term note programs | 29,557 | 25,740 | |||
Other debt | 3,705 | 3,232 | |||
Secured debt | 8,922 | 9,794 | |||
Fair value | Level 1 | |||||
Assets | |||||
Cash and cash equivalents | 3,017 | 1,503 | |||
Dealer loans, net | 0 | 0 | |||
Retail loans, net | 0 | 0 | |||
Restricted cash | 422 | 582 | |||
Liabilities | |||||
Commercial paper | 0 | 0 | |||
Related party debt | 0 | 0 | |||
Bank loans | 0 | 0 | |||
Medium-term note programs | 0 | 0 | |||
Other debt | 0 | 0 | |||
Secured debt | 0 | 0 | |||
Fair value | Level 2 | |||||
Assets | |||||
Cash and cash equivalents | 0 | 0 | |||
Dealer loans, net | 0 | 0 | |||
Retail loans, net | 0 | 0 | |||
Restricted cash | 0 | 0 | |||
Liabilities | |||||
Commercial paper | 6,785 | 5,488 | |||
Related party debt | 393 | 533 | |||
Bank loans | 4,576 | 4,780 | |||
Medium-term note programs | 29,557 | 25,740 | |||
Other debt | 3,705 | 3,232 | |||
Secured debt | 8,922 | 9,794 | |||
Fair value | Level 3 | |||||
Assets | |||||
Cash and cash equivalents | 0 | 0 | |||
Dealer loans, net | 4,110 | 5,136 | |||
Retail loans, net | 37,538 | 34,441 | |||
Restricted cash | 0 | 0 | |||
Liabilities | |||||
Commercial paper | 0 | 0 | |||
Related party debt | 0 | 0 | |||
Bank loans | 0 | 0 | |||
Medium-term note programs | 0 | 0 | |||
Other debt | 0 | 0 | |||
Secured debt | $ 0 | $ 0 | |||
[1] | Restricted cash balances relate primarily to securitization arrangements (Note 9). |
Segment Information - Financial
Segment Information - Financial Information for Reportable Segments (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2020USD ($)reportable_segment | Dec. 31, 2019USD ($) | Mar. 31, 2020USD ($) | |
Number of reportable segments | |||||
Number of reportable segments | reportable_segment | 2 | ||||
Revenues: | |||||
Retail | $ 423 | $ 438 | $ 1,256 | $ 1,314 | |
Dealer | 25 | 52 | 82 | 174 | |
Operating leases | 1,951 | 1,952 | 5,798 | 5,782 | |
Total revenues | 2,399 | 2,442 | 7,136 | 7,270 | |
Leased vehicle expenses | 1,391 | 1,463 | 4,188 | 4,264 | |
Interest expense | 207 | 307 | 697 | 947 | |
Realized (gains)/losses on derivatives and foreign currency denominated debt | 0 | 0 | 0 | 0 | |
Net revenues | 801 | 672 | 2,251 | 2,059 | |
Other income, net | 17 | 24 | 46 | 67 | |
Total net revenues | 818 | 696 | 2,297 | 2,126 | |
Expenses: | |||||
General and administrative expenses | 116 | 124 | 344 | 369 | |
Provision for credit losses | (19) | 65 | (20) | 171 | |
Early termination loss on operating leases | (18) | 37 | (133) | 97 | |
(Gain)/Loss on derivative instruments | (259) | (76) | (584) | 129 | |
(Gain)/Loss on foreign currency revaluation of debt | 279 | 145 | 627 | (1) | |
Income before income taxes | 719 | 401 | 2,063 | 1,361 | |
Assets | |||||
Finance receivables, net | 40,830 | 40,495 | 40,830 | 40,495 | $ 39,554 |
Investment in operating leases, net | 35,078 | 34,436 | 35,078 | 34,436 | 33,843 |
Total assets | 81,647 | 77,930 | 81,647 | 77,930 | $ 77,256 |
Valuation adjustments and reclassifications | |||||
Revenues: | |||||
Retail | 0 | 0 | 0 | 0 | |
Dealer | 0 | 0 | 0 | 0 | |
Operating leases | 0 | 0 | 0 | 0 | |
Total revenues | 0 | 0 | 0 | 0 | |
Leased vehicle expenses | 0 | 0 | 0 | 0 | |
Interest expense | 0 | 0 | 0 | 0 | |
Realized (gains)/losses on derivatives and foreign currency denominated debt | (78) | (33) | (223) | (68) | |
Net revenues | 78 | 33 | 223 | 68 | |
Other income, net | 0 | 0 | 0 | 0 | |
Total net revenues | 78 | 33 | 223 | 68 | |
Expenses: | |||||
General and administrative expenses | 0 | 0 | 0 | 0 | |
Early termination loss on operating leases | 0 | 0 | 0 | 0 | |
(Gain)/Loss on derivative instruments | (259) | (76) | (584) | 129 | |
(Gain)/Loss on foreign currency revaluation of debt | 279 | 145 | 627 | (1) | |
Income before income taxes | 58 | (36) | 180 | (60) | |
Assets | |||||
Finance receivables, net | 0 | 0 | 0 | 0 | |
Investment in operating leases, net | 0 | 0 | 0 | 0 | |
Total assets | 0 | 0 | 0 | 0 | |
United States | Operating Segments | |||||
Revenues: | |||||
Retail | 373 | 386 | 1,113 | 1,158 | |
Dealer | 22 | 46 | 72 | 156 | |
Operating leases | 1,612 | 1,609 | 4,806 | 4,769 | |
Total revenues | 2,007 | 2,041 | 5,991 | 6,083 | |
Leased vehicle expenses | 1,137 | 1,199 | 3,435 | 3,493 | |
Interest expense | 177 | 262 | 604 | 812 | |
Realized (gains)/losses on derivatives and foreign currency denominated debt | 67 | 33 | 192 | 71 | |
Net revenues | 626 | 547 | 1,760 | 1,707 | |
Other income, net | 13 | 21 | 35 | 58 | |
Total net revenues | 639 | 568 | 1,795 | 1,765 | |
Expenses: | |||||
General and administrative expenses | 103 | 110 | 305 | 325 | |
Provision for credit losses | (19) | 63 | (17) | 167 | |
Early termination loss on operating leases | (16) | 37 | (133) | 96 | |
(Gain)/Loss on derivative instruments | 0 | 0 | 0 | 0 | |
(Gain)/Loss on foreign currency revaluation of debt | 0 | 0 | 0 | 0 | |
Income before income taxes | 571 | 358 | 1,640 | 1,177 | |
Assets | |||||
Finance receivables, net | 36,388 | 35,980 | 36,388 | 35,980 | |
Investment in operating leases, net | 29,698 | 28,914 | 29,698 | 28,914 | |
Total assets | 71,343 | 67,762 | 71,343 | 67,762 | |
Canada | Operating Segments | |||||
Revenues: | |||||
Retail | 50 | 52 | 143 | 156 | |
Dealer | 3 | 6 | 10 | 18 | |
Operating leases | 339 | 343 | 992 | 1,013 | |
Total revenues | 392 | 401 | 1,145 | 1,187 | |
Leased vehicle expenses | 254 | 264 | 753 | 771 | |
Interest expense | 30 | 45 | 93 | 135 | |
Realized (gains)/losses on derivatives and foreign currency denominated debt | 11 | 0 | 31 | (3) | |
Net revenues | 97 | 92 | 268 | 284 | |
Other income, net | 4 | 3 | 11 | 9 | |
Total net revenues | 101 | 95 | 279 | 293 | |
Expenses: | |||||
General and administrative expenses | 13 | 14 | 39 | 44 | |
Provision for credit losses | 0 | 2 | (3) | 4 | |
Early termination loss on operating leases | (2) | 0 | 0 | 1 | |
(Gain)/Loss on derivative instruments | 0 | 0 | 0 | 0 | |
(Gain)/Loss on foreign currency revaluation of debt | 0 | 0 | 0 | 0 | |
Income before income taxes | 90 | 79 | 243 | 244 | |
Assets | |||||
Finance receivables, net | 4,442 | 4,515 | 4,442 | 4,515 | |
Investment in operating leases, net | 5,380 | 5,522 | 5,380 | 5,522 | |
Total assets | $ 10,304 | $ 10,168 | $ 10,304 | $ 10,168 |