Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2022 | May 31, 2022 | Sep. 30, 2021 | |
Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Mar. 31, 2022 | ||
Current Fiscal Year End Date | --03-31 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 13,660,000 | ||
Entity Public Float | $ 0 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0000864270 | ||
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 | ||
Trading Symbol | HMC/22A | ||
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 | ||
Trading Symbol | HMC/22 | ||
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 | ||
Trading Symbol | HMC/23 | ||
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 | ||
Trading Symbol | HMC/26A | ||
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 | ||
Trading Symbol | HMC/22C | ||
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 | ||
Trading Symbol | HMC/24D | ||
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 | ||
Trading Symbol | HMC/26A | ||
Security Exchange Name | NYSE | ||
0.300% Medium-Term Notes, Series A Due July 7, 2028 | |||
Entity Information [Line Items] | |||
Title of 12(b) Security | 0.300% Medium-Term Notes, Series ADue July 7, 2028 | ||
Trading Symbol | HMC/28A | ||
Security Exchange Name | NYSE | ||
1.500% Medium-Term Notes, Series A Due October 19, 2027 | |||
Entity Information [Line Items] | |||
Title of 12(b) Security | 1.500% Medium-Term Notes, Series ADue October 19, 2027 | ||
Trading Symbol | HMC/27A | ||
Security Exchange Name | NYSE |
Audit Information
Audit Information | 12 Months Ended |
Mar. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | Los Angeles, CA |
Auditor Firm ID | 185 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Assets | ||
Cash and cash equivalents | $ 2,607 | $ 1,870 |
Finance receivables, net of allowance for credit losses of $211 and $288 | 37,481 | 41,433 |
Investment in operating leases, net | 33,624 | 35,345 |
Due from Parent and affiliated companies | 62 | 194 |
Income taxes receivable | 0 | 0 |
Other assets | 1,533 | 1,042 |
Derivative instruments | 971 | 918 |
Total assets | 76,278 | 80,802 |
Liabilities and Equity | ||
Debt | 46,939 | 51,927 |
Due to Parent and affiliated companies | 125 | 106 |
Income taxes payable | 530 | 205 |
Deferred income taxes | 6,803 | 7,033 |
Other liabilities | 1,310 | 1,734 |
Derivative instruments | 1,119 | 632 |
Total liabilities | 56,826 | 61,637 |
Commitments and contingencies (Note 9) | ||
Shareholder’s equity: | ||
Common stock, $100 par value. Authorized 15,000,000 shares; issued and outstanding 13,660,000 shares as of March 31, 2022 and 2021 | 1,366 | 1,366 |
Retained earnings | 16,901 | 16,626 |
Accumulated other comprehensive loss | (38) | (44) |
Total shareholder’s equity | 18,229 | 17,948 |
Noncontrolling interest in subsidiary | 1,223 | 1,217 |
Total equity | 19,452 | 19,165 |
Total liabilities and equity | 76,278 | 80,802 |
Variable Interest Entity, Primary Beneficiary | ||
Assets | ||
Finance receivables, net of allowance for credit losses of $211 and $288 | 9,033 | 8,783 |
Investment in operating leases, net | 294 | 440 |
Other assets | 380 | 397 |
Total assets | 9,707 | 9,620 |
Liabilities and Equity | ||
Debt | 8,887 | 8,890 |
Other liabilities | 5 | 6 |
Total liabilities | $ 8,892 | $ 8,896 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses | $ 211 | $ 288 |
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 - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues: | |||
Retail | $ 1,599 | $ 1,664 | $ 1,737 |
Dealer | 67 | 107 | 222 |
Operating leases | 7,778 | 7,765 | 7,749 |
Total revenues | 9,444 | 9,536 | 9,708 |
Leased vehicle expenses | 5,630 | 5,580 | 5,693 |
Interest expense | 713 | 893 | 1,241 |
Net revenues | 3,101 | 3,063 | 2,774 |
Other income | 50 | 64 | 88 |
Total net revenues | 3,151 | 3,127 | 2,862 |
Expenses: | |||
General and administrative expenses | 479 | 471 | 498 |
Provision for credit losses | (22) | (69) | 402 |
Early termination loss on operating leases | 16 | (156) | 331 |
(Gain)/Loss on derivative instruments | 571 | (229) | 305 |
(Gain)/Loss on foreign currency revaluation of debt | (470) | 430 | (107) |
Total expenses | 574 | 447 | 1,429 |
Income before income taxes | 2,577 | 2,680 | 1,433 |
Income tax expense | 675 | 647 | 424 |
Net income | 1,902 | 2,033 | 1,009 |
Less: Net income attributable to noncontrolling interest | 134 | 121 | 97 |
Net income attributable to American Honda Finance Corporation | $ 1,768 | $ 1,912 | $ 912 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 1,902 | $ 2,033 | $ 1,009 |
Other comprehensive income/(loss): | |||
Foreign currency translation adjustment | 11 | 252 | (109) |
Comprehensive income | 1,913 | 2,285 | 900 |
Less: Comprehensive income attributable to noncontrolling interest | 139 | 242 | 45 |
Comprehensive income attributable to American Honda Finance Corporation | $ 1,774 | $ 2,043 | $ 855 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Millions | Total | Adoption of accounting standard (Note 1) | Retained earnings | Retained earnings Adoption of accounting standard (Note 1) | Accumulated other comprehensive income/(loss) | Common stock | Noncontrolling interest | Noncontrolling interest Adoption of accounting standard (Note 1) |
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] | Accounting Standards Update 2016-13 [Member] | |||||||
Net income | $ 1,009 | 912 | 97 | |||||
Other comprehensive income (loss) | (109) | (57) | (52) | |||||
Dividends declared | (605) | (605) | 0 | |||||
Ending balance at Mar. 31, 2020 | 17,563 | $ (75) | 15,395 | $ (73) | (175) | 1,366 | 977 | $ (2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 2,033 | 1,912 | 121 | |||||
Other comprehensive income (loss) | 252 | 131 | 121 | |||||
Dividends declared | (608) | (608) | 0 | |||||
Ending balance at Mar. 31, 2021 | 19,165 | 16,626 | (44) | 1,366 | 1,217 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 1,902 | 1,768 | 134 | |||||
Other comprehensive income (loss) | 11 | 6 | 5 | |||||
Dividends declared | (1,626) | (1,493) | (133) | |||||
Ending balance at Mar. 31, 2022 | $ 19,452 | $ 16,901 | $ (38) | $ 1,366 | $ 1,223 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | ||
Cash flows from operating activities: | ||||
Net income | $ 1,902 | $ 2,033 | $ 1,009 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Debt and derivative instrument valuation adjustments | (42) | (85) | 97 | |
Provision for credit losses | (22) | (69) | 402 | |
Early termination loss on operating leases | 16 | (156) | 331 | |
Depreciation on leased vehicles | 5,676 | 5,669 | 5,705 | |
Accretion of unearned subsidy income | (1,418) | (1,484) | (1,648) | |
Amortization of deferred dealer participation and other deferred costs | 375 | 367 | 367 | |
Gain on disposition of lease vehicles | (197) | (229) | (153) | |
Deferred income taxes | (232) | 427 | 209 | |
Changes in operating assets and liabilities: | ||||
Income taxes receivable/payable | 325 | 103 | 178 | |
Other assets | (558) | 38 | (36) | |
Accrued interest/discounts on debt | 15 | 32 | 32 | |
Other liabilities | (533) | 55 | (31) | |
Due to/from Parent and affiliated companies | 149 | (66) | 34 | |
Net cash provided by operating activities | 5,456 | 6,635 | 6,496 | |
Cash flows from investing activities: | ||||
Finance receivables acquired | (18,162) | (21,778) | (17,221) | |
Principal collected on finance receivables | 20,026 | 18,526 | 17,386 | |
Net change in wholesale loans | 1,942 | 1,394 | 112 | |
Purchase of operating lease vehicles | (15,278) | (16,023) | (17,775) | |
Disposal of operating lease vehicles | 11,746 | 10,128 | 10,548 | |
Cash received for unearned subsidy income | 1,054 | 1,333 | 1,134 | |
Other investing activities, net | (10) | (12) | (6) | |
Net cash provided by (used in) investing activities | 1,318 | (6,432) | (5,822) | |
Cash flows from financing activities: | ||||
Proceeds from issuance of commercial paper | 26,995 | 39,628 | 37,084 | |
Paydown of commercial paper | (30,234) | (39,665) | (37,282) | |
Proceeds from issuance of short-term debt | 350 | 414 | 629 | |
Paydown of short-term debt | (440) | (633) | (1,100) | |
Proceeds from issuance of related party debt | 0 | 1,510 | 3,004 | |
Paydown of related party debt | 0 | (2,082) | (3,193) | |
Proceeds from issuance of medium term notes and other debt | 7,087 | 11,472 | 8,633 | |
Paydown of medium term notes and other debt | (8,297) | (9,121) | (8,144) | |
Proceeds from issuance of secured debt | 5,984 | 4,737 | 6,188 | |
Paydown of secured debt | (6,005) | (5,713) | (5,187) | |
Dividends paid | (1,493) | (608) | (605) | |
Net cash (used in) provided by financing activities | (6,053) | (61) | 27 | |
Effect of exchange rate changes on cash and cash equivalents | 1 | 23 | 1 | |
Net increase in cash and cash equivalents | 722 | 165 | 702 | |
Cash and cash equivalents at beginning of year | 2,250 | 2,085 | 1,383 | |
Cash and cash equivalents at end of year | 2,972 | 2,250 | 2,085 | |
Supplemental disclosures of cash flow information: | ||||
Interest paid | 535 | 718 | 1,080 | |
Income taxes paid/(received) | 590 | 209 | (69) | |
Cash and cash equivalents | 2,607 | 1,870 | 1,503 | |
Restricted cash included in other assets | [1] | 365 | 380 | 582 |
Total cash, cash equivalents, and restricted cash | $ 2,972 | $ 2,250 | $ 2,085 | |
[1]Restricted cash balances relate primarily to securitization arrangements (Note 10). |
Summary of Business and Signifi
Summary of Business and Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Business and Significant Accounting Policies | Summary of Business and Significant Accounting Policies 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” in this report include AHFC and its consolidated subsidiaries (refer Note 1(b) Principles of Consolidation below), and references to “AHFC” refer solely to American Honda Finance Corporation (excluding AHFC’s subsidiaries). The Company provides various forms of financing to authorized independent dealers of Honda and Acura products and their customers in the United States and Canada. The Company also finances a limited number of vehicles other than Honda and Acura products. The Company’s financing products include the following categories: Retail Loans – The Company acquires retail installment contracts from dealers who originate the contracts with consumers. Retail loans are collateralized by liens on the related vehicles or equipment. Retail loan terms range primarily from two Retail Leases – The Company acquires closed-end vehicle lease contracts between dealers and their customers. The dealer assigns all of its rights, title, and interest in the lease and motor vehicle to the Company upon acquisition. Lease terms range primarily from two Dealer Loans – The Company provides wholesale and commercial loans to dealers. Wholesale loans are used by dealers to finance the purchase of inventory. The Company retains purchase money security interest in all inventory financed; however, the Company has no right to recover a product sold to consumers in the ordinary course of business. The Company has agreements with AHM and HCI, which provide for their repurchase of new, unused, and unregistered vehicles or equipment that have been repossessed from a dealer who defaults on a wholesale loan. Commercial loans are used primarily for financing dealership property and working capital purposes. Commercial loans are generally secured by the associated properties, as well as corporate or personal guarantees from, or on behalf of, the related dealer’s principals. The Company’s finance receivables and investment in operating leases are geographically diversified throughout the United States and Canada. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated balance sheets and revenues and expenses for the applicable periods. Those estimates include, among other things, the residual value estimates of lease vehicles and estimates for the allowances for credit losses and early termination losses on operating leases. Actual results could differ significantly from these estimates. (a) Business Risks The Company’s business is substantially dependent upon the sale of Honda and Acura products. The financing business is also highly competitive. The Company’s competitors and potential competitors include national, regional, and local finance companies and other types of financial services companies, such as commercial banks, savings and loan associations, leasing companies, online banks and credit unions. The Company’s future profitability will be largely dependent upon its ability to provide cost-competitive, quality financial products and services to its customers and to the availability and cost of its capital in relation to that of its competitors. The Company’s liquidity is largely dependent on access to credit markets. The Company has been able to meet funding needs through diversified funding sources. Higher than expected credit losses and lower than anticipated lease residual values due to prolonged periods of negative economic and market conditions can adversely affect the Company’s financial position, results of operations, and related cash flows. The Company manages these risks with purchasing and residual value setting standards, collection efforts, and lease remarketing programs. Refer to Note 1( e ) for additional discussion on the allowance for credit losses and Note 1( f ) for additional discussion on the determination of lease residual values. The Company is exposed to market risks, principally interest rate and foreign currency risks, and utilizes derivative instruments to manage those risks. Although the use of derivative instruments mitigates a substantial portion of these risks, not all risk is eliminated. Refer to Note 1( l ) for additional discussion on derivative instruments. (b) Principles of Consolidation The consolidated financial statements include the accounts of AHFC and its subsidiaries. All subsidiaries are wholly-owned, except for HCFI, which is majority-owned (52.33% as of March 31, 2022 and 2021). The Company also consolidates variable interest entities (VIEs) where the Company is the primary beneficiary. All consolidated VIEs are statutory special purpose entities (SPEs) formed by the Company to accommodate securitization structures. All significant intercompany balances and transactions have been eliminated upon consolidation. (c) Comprehensive Income Comprehensive income consists of net income and the effect of foreign currency translation adjustments and is presented in the consolidated statements of comprehensive income. (d) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and short-term, highly liquid investments with original maturities of three months or less. (e) Finance Receivables and Allowance for Credit Losses 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. Retail loans are evaluated on a collective basis and grouped into pools with similar risk characteristics such as origination quarter, internal credit grade at origination, product type, and original term. The allowance for retail loans is measured using econometric regression models that correlate vintage age, credit quality, economic, and other variables to historical vintage-level credit loss performance. Statistically relevant economic factors such as unemployment rates, bankruptcies, and used vehicle price indexes are applied in the analysis of the economic environment. Current and forecasted economic conditions are applied in the models to project monthly gross loss rates in terms of origination dollars for the remaining contractual life of each vintage. Recoveries are projected as a percentage of the cumulative forecasted loss dollar of each vintage. The contractual term is the estimated lifetime of retail loans and is considered to be a reasonable and supportable forecast period of future economic conditions. Economic forecasts and macroeconomic variables are obtained from a third party economic research firm that extend through the lifetime of retail loans and converge to long-run equilibrium trends. Baseline forecasts that reflect the most likely economic future is the single economic scenario applied in the models. Qualitative adjustments may also be applied if management believes the quantitative models do not reflect the best estimate of lifetime expected credit losses. Dealer loans are evaluated on a collective basis if they have not been specifically identified as impaired. Collectively evaluated dealer loans are grouped by loan type and internal risk ratings and the allowance is measured primarily using historical loss rates. Dealer loans that have been specifically identified as impaired are excluded from the collective assessment and the allowance is measured at the individual dealer level. 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. Prior to April 1, 2020, the allowance for credit losses was management's estimate of probable losses incurred on finance receivables. The allowance was based on management's evaluation of many factors, including the Company's historical credit loss experience, the value of the underlying collateral, delinquency trends, and economic conditions. Retail loans were collectively evaluated for impairment. Dealer loans that had not been specifically identified as impaired were collectively evaluated for impairment. Dealer loans were individually evaluated for impairment when specifically identified as impaired. (f) Investment in Operating Leases and Determination of Lease Residual Values The investment in operating leases is reported at cost, less accumulated depreciation and impairment losses, and net of 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 for dealer participation. Operating lease revenue is recognized on a straight-line basis over the lease term. Operating lease revenue includes accretion of origination fees, net of dealer rate participation amortization, which are also recognized on a straight-line basis over the lease term. Operating lease vehicles are depreciated on a straight-line basis over the lease term to the lower of contract residual values or estimated end of term residual values. Adjustments to estimated end of term residual values are made prospectively on a straight-line basis over the remaining lease term. Contractual residual values of lease vehicles are determined at lease inception based on the Company's expectations of used vehicle values at the end of their lease terms. Lease customers have the option at the end of the lease term to return the vehicle to the dealer or to buy the vehicle for the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance). Returned lease vehicles can be purchased by the grounding dealer for the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance) or a market based price. Returned lease vehicles that are not purchased by the grounding dealers are sold through online and physical auctions. The Company is exposed to a risk of loss on the disposition of returned lease vehicles if the market values of leased vehicles at the end of their lease terms are less than their contractual residual values. Estimated end of term residual values are dependent on the expected market values of leased vehicles at the end of their lease terms and the percentage of leased vehicles expected to be returned by the lessees. Factors considered in this evaluation include, among other factors, economic conditions, external market information on new and used vehicles, historical trends, and recent auction values. The Company assesses the estimated end of term residual values at minimum on a quarterly basis. A review for impairment of the Company’s operating lease assets is performed whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Generally, an impairment condition is determined to exist if estimated undiscounted cash flows from the use and eventual disposition of the asset is lower than their carrying value. For the purposes of testing for impairment, operating lease assets are grouped at the lowest level the Company can reasonably estimate cash flows. If impairment conditions are met, impairment losses are measured by the amount carrying values exceed their fair values. A portion of the Company’s operating leases is expected to terminate prior to their scheduled maturities when lessees default on their contractual obligations. Losses are generally realized upon the disposition of the repossessed operating lease vehicles. Operating leases are collectively evaluated to determine the estimated losses incurred using modeling methodologies consistent with those used for retail loans. Estimated early termination losses are recognized as a reduction to the carrying value of operating lease assets. (g) Vehicles Held for Disposition Vehicles held for disposition consist of returned and repossessed vehicles. The vehicles are either sold at used vehicle auctions or purchased by dealers, usually within two months of return or repossession. The vehicles are valued at the lower of their carrying value or estimated fair value, less estimated disposition costs. For returned vehicles, valuation adjustments are recorded as a charge against the gain/loss on disposition of lease vehicles. Valuation adjustments made for repossessed collateral of finance receivables and operating leases are recognized as charges to the allowance for credit loss and estimated early termination losses on operating leases, respectively. (h) Vehicle Service Contract Administration AHFC performed administrative services for vehicle service contracts (VSC) issued by certain subsidiaries of AHM. AHFC received fees for performing the services when the contracts were acquired, which was recognized in other income over the lives of the underlying contracts, proportionate to the anticipated amount of service to be performed. Effective April 1, 2021, the administration of VSCs was transferred to AHM. HCFI performs marketing services for vehicle service contracts issued by HCI. HCFI receives fees as the services are performed, which is recognized in other income. (i) Securitizations and Variable Interest Entities The Company enters into securitization transactions for funding purposes. Securitization transactions involve transferring pools of retail loans and operating leases to bankruptcy-remote SPEs. The SPEs are established to accommodate securitization structures, which have the limited purpose of acquiring assets, issuing asset-backed securities, and making payments on the securities. Assets transferred to SPEs are considered legally isolated from the Company and the claims of the Company’s creditors. The Company continues to service the retail loans and operating leases transferred to the SPEs. Investors in the 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 our other subsidiaries or to other SPEs. The assets of SPEs are the only source for repayment on the notes. The Company’s securitizations are structured to provide credit enhancements to investors in notes issued by the SPEs. Credit enhancements can include the following: Subordinated certificates – securities issued by the SPEs that are retained by the Company and are subordinated in priority of payment to the notes. Overcollateralization – securitized asset balances that exceed the balance of securities issued by SPEs. Excess interest – excess interest collections to be used to cover losses on defaulted loans. Reserve funds – restricted cash accounts held by SPEs to cover shortfalls in payments of interest and principal required to be paid on the notes. Yield supplement accounts – restricted cash accounts held by SPEs to supplement interest payments on notes. The risk retention regulations in Regulation RR of the Securities Exchange Act of 1934, as amended, require the sponsor to retain an economic interest in the credit risk of the securitized assets, either directly or through one or more majority-owned affiliates. Standard risk retention options allow the sponsor to retain either an eligible vertical interest, an eligible horizontal residual interest, or a combination of both. The Company has satisfied this obligation by retaining an eligible vertical interest of an amount equal to at least 5% of the principal amount of each class of note and certificate issued for the securitization transaction that was subject to this rule but may choose to use other structures in the future. The securitization SPEs formed by the Company are 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 its 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. Consolidation of these SPEs results in the securitization transactions being accounted for as on-balance sheet secured financings. The securitized retail loans and operating leases remain on the consolidated balance sheet of the Company along with the notes issued by the SPEs. The notes are secured solely by the assets of the SPEs and not by any other assets of the Company. The assets of the SPEs are the only source of funds for repayment on the notes. Restricted cash accounts held by the SPEs can only be used to support payments on the notes. The restricted cash accounts are included in the Company’s consolidated balance sheet in other assets. The Company recognizes revenue from retail loans and operating leases and provisions for credit losses and uncollectible operating leases on the securitized assets and interest expense on the related secured debt. (j) Income Taxes The Company’s U.S. entities are included in the consolidated U.S. federal and many consolidated or combined state and local income tax returns of the Parent, though in some cases the Company files separately as required by certain state and local jurisdictions. The Company provides its share of the consolidated or combined income tax on a modified separate return basis pursuant to an intercompany income tax allocation agreement that it has entered into with the Parent. The Company files a separate California return based on California’s worldwide income and apportionment rules. To the extent the Company’s U.S. entities have taxable losses in its consolidated federal, and consolidated or combined state and local tax returns, a benefit will be recognized to the extent that it is more likely than not that these losses will be utilized by the consolidated or combined return group in the current or future year and thus would be subject to current or future reimbursement by the Parent under the terms of the intercompany income tax allocation agreement. To the extent such losses are attributable to a state where the Company files a separate return, a benefit for such losses would be recognized to the extent such losses are more likely than not to be utilized in the future. All but an insignificant amount of the federal and state taxes payable or receivable shown on the consolidated balance sheets are due to or from the Parent, pursuant to the intercompany income tax allocation agreement. The Company’s Canadian subsidiary, HCFI, files Canadian federal and provincial income tax returns based on the separate legal entity financial statements. HCFI does not file U.S. federal, state, or local income tax returns. Consequently, HCFI does not participate in the intercompany income tax allocation agreement that the Company has with the Parent. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income during the period in which the enactment date occurs. A valuation allowance is provided to offset deferred tax assets if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In addition, tax benefits related to positions considered uncertain are recognized only if, based on the technical merits of the issue, the Company believes that it is more likely than not to sustain the position and then at the largest amount that is greater than 50% likely to be realized upon settlement. (k) Foreign Currency Translation Upon consolidation, the assets and liabilities of HCFI are translated at year-end exchange rates, and the revenues and expenses are translated at the average rates of exchange during the respective years. The resulting translation adjustment is included in other comprehensive income and the cumulative translation adjustment is reported as a separate component of equity in accumulated other comprehensive income and noncontrolling interest. Foreign currency denominated debt is translated at year-end exchange rates, and the foreign currency transaction gains and losses are recognized through earnings. (l) Derivative Instruments The Company utilizes derivative instruments to manage exposures to interest rate and foreign currency risks. The Company’s assets consist primarily of fixed rate receivables and operating lease assets. The Company’s liabilities consist of both floating and fixed rate debt, denominated in various currencies. Interest rate and basis swaps are used to match the interest rate characteristics of the Company’s assets and debt. Currency swaps are used to manage currency risk exposure on foreign currency denominated debt. Derivative instruments are not used for trading or any other speculative purposes. All derivative financial instruments are recorded on the consolidated balance sheets at fair value. The Company elects to present derivative instruments in the Company’s consolidated balance sheets on a gross basis rather than on a net basis by counterparty. Refer to Note 5 for additional information. Except in very limited circumstances involving counterparties with consolidated securitization SPEs, AHFC generally has not entered into credit support (collateral) agreements with its counterparties. Changes in the fair value of derivatives are recognized in earnings in the period of the change. In Canada, HCFI is a party to credit support agreements that require posting of cash collateral to mitigate credit risk on derivative positions. (m) 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. Effective April 1, 2021, the Company adopted 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 adoption of this standard did not have a material impact on the consolidated financial statements. (n) Recently Issued Accounting Standards In March 2022, the Financial Accounting Standards Board issued ASU 2022-02, Financial Instruments—Credit Losses (Topic326): Troubled Debt Restructurings and Vintage Disclosures |
Finance Receivables
Finance Receivables | 12 Months Ended |
Mar. 31, 2022 | |
Receivables [Abstract] | |
Finance Receivables | Finance Receivables Finance receivables consisted of the following: March 31, 2022 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 36,028 $ 2,066 $ 38,094 Allowance for credit losses (206) (5) (211) Deferred dealer participation and other deferred costs 390 — 390 Unearned subsidy income (792) — (792) Finance receivables, net $ 35,420 $ 2,061 $ 37,481 March 31, 2021 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 38,102 $ 4,085 $ 42,187 Allowance for credit losses (280) (8) (288) Deferred dealer participation and other deferred costs 434 — 434 Unearned subsidy income (900) — (900) Finance receivables, net $ 37,356 $ 4,077 $ 41,433 Finance receivables include retail loans with a net carrying amount of $9.0 billion and $8.8 billion as of March 31, 2022 and 2021, respectively, which have been transferred to bankruptcy-remote 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 10 for additional information. Allowance for Credit Losses The following is a summary of the activity in the allowance for credit losses of finance receivables: Year ended March 31, 2022 Retail Dealer Total (U.S. dollars in millions) Beginning balance $ 280 $ 8 $ 288 Provision (19) (3) (22) Charge-offs (145) — (145) Recoveries 90 — 90 Effect of translation adjustment — — — Ending balance $ 206 $ 5 $ 211 Year ended March 31, 2021 Retail Dealer Total (U.S. dollars in millions) 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 (67) (2) (69) Charge-offs (232) (1) (233) Recoveries 116 2 118 Effect of translation adjustment 1 — 1 Ending balance $ 280 $ 8 $ 288 Year ended March 31, 2020 Retail Dealer Total (U.S. dollars in millions) Beginning balance $ 193 $ 8 $ 201 Provision 388 14 402 Charge-offs (317) (17) (334) Recoveries 100 1 101 Effect of translation adjustment — — — Ending balance $ 364 $ 6 $ 370 The allowance declined during the fiscal year ended March 31, 2022 reflecting a reduction in expected credit losses due to favorable revisions to forecasted economic factors including forecasted personal bankruptcy rates and better than expected net charge-offs during the period. There were no modifications to the terms of dealer loan contracts that constituted troubled debt restructurings during the fiscal years ended March 31, 2022, 2021 and 2020. 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 fiscal years ended March 31, 2022, 2021 and 2020. 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 were granted to certain customers impacted by the COVID-19 pandemic beginning in mid-March 2020 through the end of March 2021. Customers taking advantage of the deferrals were 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) March 31, 2022 Retail loans: New auto $ 194 $ 50 $ 11 $ 255 $ 29,297 $ 29,552 Used and certified auto 78 22 5 105 4,615 4,720 Motorcycle and other 13 4 2 19 1,335 1,354 Total retail 285 76 18 379 35,247 35,626 Dealer loans: Wholesale flooring — — — — 1,266 1,266 Commercial loans — — — — 800 800 Total dealer loans — — — — 2,066 2,066 Total finance receivables $ 285 $ 76 $ 18 $ 379 $ 37,313 $ 37,692 March 31, 2021 Retail loans: New auto $ 145 $ 33 $ 7 $ 185 $ 30,715 $ 30,900 Used and certified auto 50 12 3 65 5,202 5,267 Motorcycle and other 10 3 2 15 1,454 1,469 Total retail 205 48 12 265 37,371 37,636 Dealer loans: Wholesale flooring 1 — — 1 3,205 3,206 Commercial loans — — — — 879 879 Total dealer loans 1 — — 1 4,084 4,085 Total finance receivables $ 206 $ 48 $ 12 $ 266 $ 41,455 $ 41,721 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 year 2022 2021 2020 2019 2018 Prior Total March 31, 2022 (U.S. dollars in millions) Credit grade A $ 8,849 $ 8,065 $ 3,073 $ 1,912 $ 727 $ 169 $ 22,795 Credit grade B 2,433 2,010 898 525 271 74 6,211 Credit grade C 1,713 1,409 718 405 228 64 4,537 Credit grade D 451 418 341 188 100 33 1,531 Others 214 153 91 56 25 13 552 Total retail loans $ 13,660 $ 12,055 $ 5,121 $ 3,086 $ 1,351 $ 353 $ 35,626 Retail loans by vintage year 2021 2020 2019 2018 2017 Prior Total March 31, 2021 (U.S. dollars in millions) Credit grade A $ 11,763 $ 5,384 $ 3,965 $ 1,982 $ 728 $ 136 $ 23,958 Credit grade B 2,898 1,508 996 629 255 60 6,346 Credit grade C 2,081 1,245 767 504 206 47 4,850 Credit grade D 628 598 349 212 90 27 1,904 Others 223 153 105 58 32 7 578 Total retail loans $ 17,593 $ 8,888 $ 6,182 $ 3,385 $ 1,311 $ 277 $ 37,636 Dealer Loan Portfolio 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 2022 2021 2020 2019 2018 Prior Revolving loans Wholesale Flooring Total March 31, 2022 (U.S. dollars in millions) Group I $ 11 $ 207 $ 56 $ 18 $ 32 $ 99 $ 317 $ 671 $ 1,411 Group II 6 3 7 17 22 5 — 595 655 Group III — — — — — — — — — Total dealer loans $ 17 $ 210 $ 63 $ 35 $ 54 $ 104 $ 317 $ 1,266 $ 2,066 Commercial loans by vintage fiscal year 2021 2020 2019 2018 2017 Prior Revolving loans Wholesale Flooring Total March 31, 2021 (U.S. dollars in millions) Group I $ 155 $ 57 $ — $ 43 $ 44 $ 88 $ 283 $ 1,491 $ 2,161 Group II 92 25 40 30 9 13 — 1,715 1,924 Group III — — — — — — — — — Total dealer loans $ 247 $ 82 $ 40 $ 73 $ 53 $ 101 $ 283 $ 3,206 $ 4,085 |
Investment in Operating Leases
Investment in Operating Leases | 12 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Investment in Operating Leases | Investment in Operating Leases Investment in operating leases consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Operating lease vehicles $ 42,990 $ 45,153 Accumulated depreciation (8,529) (8,726) Deferred dealer participation and initial direct costs 114 130 Unearned subsidy income (869) (1,123) Estimated early termination losses (82) (89) Investment in operating leases, net $ 33,624 $ 35,345 Operating lease revenue consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Lease payments $ 6,913 $ 6,808 $ 6,713 Subsidy income and dealer rate participation, net 798 894 968 Reimbursed lessor costs 67 63 68 Total operating lease revenue, net $ 7,778 $ 7,765 $ 7,749 Leased vehicle expenses consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Depreciation expense $ 5,676 $ 5,669 $ 5,705 Initial direct costs and other lessor costs 151 140 141 Gain on disposition of leased vehicles (1) (197) (229) (153) Total leased vehicle expenses, net $ 5,630 $ 5,580 $ 5,693 ________________________ (1) Included in the gain on disposition of leased vehicles are end of term charges of $17 million, $54 million, and $73 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. Investment in operating leases includes lease assets with a net carrying amount of $294 million and $440 million as of March 31, 2022 and 2021, 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 10 for additional information. Contractual operating lease payments due as of March 31, 2022 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. Year ending March 31, (U.S. dollars in millions) 2023 $ 5,459 2024 3,536 2025 1,170 2026 230 2027 56 Total $ 10,451 The Company recognized early termination losses on operating leases of $16 million, a reversal of early termination losses on operating leases of $156 million, and early termination losses on operating leases of $331 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. Net realized losses for the fiscal years ended March 31, 2022, 2021 and 2020 totaled $23 million, $72 million, and $129 million, respectively. The general allowance for uncollectible operating lease receivables was recorded through a reduction to revenue of $2 million, $31 million and $28 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. |
Investment in Operating Leases | Investment in Operating Leases Investment in operating leases consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Operating lease vehicles $ 42,990 $ 45,153 Accumulated depreciation (8,529) (8,726) Deferred dealer participation and initial direct costs 114 130 Unearned subsidy income (869) (1,123) Estimated early termination losses (82) (89) Investment in operating leases, net $ 33,624 $ 35,345 Operating lease revenue consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Lease payments $ 6,913 $ 6,808 $ 6,713 Subsidy income and dealer rate participation, net 798 894 968 Reimbursed lessor costs 67 63 68 Total operating lease revenue, net $ 7,778 $ 7,765 $ 7,749 Leased vehicle expenses consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Depreciation expense $ 5,676 $ 5,669 $ 5,705 Initial direct costs and other lessor costs 151 140 141 Gain on disposition of leased vehicles (1) (197) (229) (153) Total leased vehicle expenses, net $ 5,630 $ 5,580 $ 5,693 ________________________ (1) Included in the gain on disposition of leased vehicles are end of term charges of $17 million, $54 million, and $73 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. Investment in operating leases includes lease assets with a net carrying amount of $294 million and $440 million as of March 31, 2022 and 2021, 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 10 for additional information. Contractual operating lease payments due as of March 31, 2022 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. Year ending March 31, (U.S. dollars in millions) 2023 $ 5,459 2024 3,536 2025 1,170 2026 230 2027 56 Total $ 10,451 The Company recognized early termination losses on operating leases of $16 million, a reversal of early termination losses on operating leases of $156 million, and early termination losses on operating leases of $331 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. Net realized losses for the fiscal years ended March 31, 2022, 2021 and 2020 totaled $23 million, $72 million, and $129 million, respectively. The general allowance for uncollectible operating lease receivables was recorded through a reduction to revenue of $2 million, $31 million and $28 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. |
Debt
Debt | 12 Months Ended |
Mar. 31, 2022 | |
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 March 31, March 31, March 31, 2022 2021 2022 2021 2022 2021 (U.S. dollars in millions) Unsecured debt: Commercial paper $ 2,307 $ 5,542 0.74 % 0.31 % 0.33 - 1.21% 0.20 - 0.67% Bank loans 3,108 4,052 1.52 % 1.01 % 0.94 - 2.01% 0.56 - 1.29% Private MTN program — 500 — % 3.80 % — - —% 3.80 - 3.80% Public MTN program 28,659 28,943 1.53 % 1.53 % 0.30 - 3.63% 0.33 - 3.63% Euro MTN programme 25 27 2.23 % 2.23 % 2.23 - 2.23% 2.23 - 2.23% Other debt 3,952 3,973 2.20 % 2.11 % 1.05 - 3.44% 0.53 - 3.44% Total unsecured debt 38,051 43,037 Secured debt 8,888 8,890 0.93 % 1.34 % 0.14 - 3.30% 0.12 - 3.30% Total debt $ 46,939 $ 51,927 As of March 31, 2022, the outstanding principal balance of long-term debt with floating interest rates totaled $5.9 billion, long-term debt with fixed interest rates totaled $37.9 billion, and short-term debt with floating and fixed interest rates totaled $3.1 billion. As of March 31, 2021, the outstanding principal balance of long-term debt with floating interest rates totaled $9.9 billion, long-term debt with fixed interest rates totaled $35.6 billion, and short-term debt with floating and fixed interest rates totaled $6.4 billion. The Company’s secured debt is amortizing, and unsecured debt is non-amortizing. Scheduled and projected maturities of the Company’s debt at March 31, 2022 are summarized below: 2023 2024 2025 2026 2027 Thereafter Total (U.S. dollars in millions) Unsecured debt: Commercial paper $ 2,309 $ — $ — $ — $ — $ — $ 2,309 Bank loans 1,770 200 480 — 660 — 3,110 Public MTN program 7,878 7,203 5,357 1,500 2,407 4,380 28,725 Euro MTN programme 25 — — — — — 25 Other debt 1,119 640 600 799 320 480 3,958 Total unsecured debt 13,101 8,043 6,437 2,299 3,387 4,860 38,127 Secured debt (1) 4,881 2,666 1,207 147 — — 8,901 Total debt (2) $ 17,982 $ 10,709 $ 7,644 $ 2,446 $ 3,387 $ 4,860 $ 47,028 Unamortized discounts/fees (89) Total debt, net $ 46,939 ________________________ (1) Projected repayment schedule of secured debt. Reflects payment performance assumptions on underlying assets. (2) Principal amounts. Commercial Paper As of March 31, 2022 and 2021, the Company had commercial paper programs that provide the Company with available funds of up to $9.0 billion, 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 $4.9 billion and $5.3 billion during the fiscal year ended March 31, 2022 and 2021, respectively. The maximum balance outstanding at any month-end was $6.7 billion and $6.8 billion during the fiscal year ended March 31, 2022 and 2021, respectively. Bank Loans Outstanding bank loans at March 31, 2022 and 2021 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 March 31, 2022 and 2021 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. The last remaining note under the Private MTN Program matured on September 20, 2021. 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 March 31, 2022 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 March 31, 2022. 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 March 31, 2022 and 2021 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 March 31, 2022 and 2021 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 10 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 24, 2023, a $2.1 billion credit agreement, which expires on February 25, 2025, and a $1.4 billion credit agreement, which expires on February 25, 2027. As of March 31, 2022, 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 that includes a $800 million credit agreement, which expires on March 25, 2023 and a $800 million credit agreement, which expires on March 25, 2027. As of March 31, 2022, no amounts were drawn upon under the HCFI credit agreement. HCFI intends to renew or replace the credit agreement prior to or on the respective expiration date of each 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. Other Credit Agreements |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments 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. 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 14 regarding the valuation of derivative instruments. March 31, 2022 2021 Notional Assets Liabilities Notional Assets Liabilities (U.S. dollars in millions) Interest rate swaps $ 61,941 $ 931 $ 683 $ 64,088 $ 545 $ 586 Cross currency swaps 7,920 40 436 6,303 373 46 Gross derivative assets/liabilities 971 1,119 918 632 Collateral posted/held 5 28 37 5 Counterparty netting adjustment (804) (804) (591) (591) Net derivative assets/liabilities $ 172 $ 343 $ 364 $ 46 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. Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Interest rate swaps $ 140 $ (148) $ (127) Cross currency swaps (711) 377 (178) Total gain/(loss) on derivative instruments $ (571) $ 229 $ (305) |
Transactions Involving Related
Transactions Involving Related Parties | 12 Months Ended |
Mar. 31, 2022 | |
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: Years ended March 31, Income Statement 2022 2021 2020 (U.S. dollars in millions) Revenue: Subsidy income $ 1,410 $ 1,476 $ 1,639 Interest expense: Related party debt — 2 14 Other income, net: VSC administration fees 3 106 109 Support Service Fee — (45) (36) General and administrative expenses: Support Compensation Agreement fees 76 72 68 Benefit plan expenses 8 9 10 Shared services 72 69 70 Lease expense 4 2 — March 31, Balance Sheet 2022 2021 (U.S. dollars in millions) Assets : Finance receivables, net: Unearned subsidy income $ (783) $ (891) Investment in operating leases, net: Unearned subsidy income (867) (1,120) Due from Parent and affiliated companies 62 194 Liabilities: Due to Parent and affiliated companies 125 106 Other liabilities: Accrued interest expense — — Unearned VSC administrative fees — 333 Accrued benefit expenses 63 60 Dividend Payable 133 — Operating lease liabilities 15 17 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, 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. Refer to Notes 1( e ) and 1( f ) for additional information. Related Party Debt HCFI no longer issues short-term notes to HCI to fund HCFI’s general corporate operations and had paid the remaining balance as of March 31, 2021. Interest rates were based on prevailing rates of debt with comparable terms. Vehicle Service Contract (VSC) Administration AHFC performed administrative services for VSCs issued by certain subsidiaries of AHM. AHFC’s performance obligations for the services were satisfied over the term of the underlying contracts and revenue was recognized proportionate to the anticipated amount of services to be performed. Contract terms ranged between two four Unearned VSC administration fees represented AHFC’s contract liabilities and were included in other liabilities (Note 12). VSC administration income was recognized in other income, net (Note 13). HCFI receives fees for marketing VSCs issued by HCI. These fees are also recognized in other income, net. Refer to Note 1( h ) for additional information. AHFC paid fees to AHM for services provided in support of AHFC’s performance of VSC administrative services. The support fees were recognized as an expense within other income, net (Note 13). 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. Refer to Note 8 for additional information. 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 Notes 1( j ) and 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 fiscal years ended March 31, 2022 and 2021, the Company recognized less than $1 million and $8 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 March 31, 2022 and 2021 related to incentive financing program subsidies. The majority of the amounts due to the Parent and affiliated companies at March 31, 2022 and 2021 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. AHFC leases its premises from its parent, AHM. AHFC declared and paid semi-annual cash dividends to its parent, AHM, of $491 million and $1.0 billion during the fiscal year ended March 31, 2022, $143 million and $465 million during the fiscal year ended March 31, 2021, and $292 million and $313 million during the fiscal year ended March 31, 2020. HCFI declared cash dividends to AHFC and HCI on March 22, 2022 of $146 million and $133 million which were paid on April 21, 2022. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act primarily provided for a reduction of the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018. The Company has elected not to record deferred taxes for a Global Intangible Low-Taxed Income (GILTI) related book-tax differences and will treat taxes due on further U.S. inclusions in taxable income related to GILTI as a current period expense when incurred. The Company’s consolidated income tax expense/(benefit) was computed on a modified separate return basis pursuant to the intercompany tax allocation agreement with the Parent and consisted of the following: Current Deferred Total (U.S. dollars in millions) Year ended March 31, 2022 Federal $ 643 $ (205) $ 438 State and local 220 (84) 136 Foreign 44 57 101 Total $ 907 $ (232) $ 675 Year ended March 31, 2021 Federal $ 36 $ 378 $ 414 State and local 146 (5) 141 Foreign 38 54 92 Total $ 220 $ 427 $ 647 Year ended March 31, 2020 Federal $ (46) $ 333 $ 287 State and local 231 (166) 65 Foreign 30 42 72 Total $ 215 $ 209 $ 424 For the fiscal year ended March 31, 2022, the allocation of federal current and deferred tax expense reflects the impact of the microchip shortage and the elimination of like-kind exchange for personal property under the Tax Act on reversing taxable temporary differences related to lease acquisitions. For the fiscal years ended March 31, 2021 and 2020, the allocation of federal current and deferred tax expense reflects primarily the impact of accelerated federal tax depreciation offset by the elimination of like-kind exchange for personal property due to the Tax Act. Income tax expense differs from the expected income taxes by applying the statutory federal corporate rate of 21% to income before income taxes as follows: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Computed “expected” income taxes $ 541 $ 563 $ 301 Foreign tax rate differential 21 19 14 State and local income taxes, net of federal income tax benefit 111 112 62 Change in estimated state tax rate, net of federal income tax benefit (15) (6) (16) Change in unrecognized tax benefit 5 (47) 64 Other 12 6 (1) Income tax expense $ 675 $ 647 $ 424 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below: March 31, 2022 2021 (U.S. dollars in millions) Deferred tax assets: State income tax $ 151 $ 163 Receivable allowance 85 111 Accrued postretirement 13 12 State loss carryforwards 33 36 Income tax credits — 80 Derivatives 1 — Other assets 66 67 Total gross deferred tax assets 349 469 Less valuation allowance — — Net deferred tax assets 349 469 Deferred tax liabilities: HCFI leases 522 466 AHFC leases 6,563 6,950 Other 67 86 Total gross deferred tax liabilities 7,152 7,502 Net deferred tax liabilities $ 6,803 $ 7,033 The decrease in the net deferred tax liability is mainly due to the impact of the microchip shortage and the elimination of like-kind exchange for personal property under the Tax Act on reversing taxable temporary differences related to lease acquisitions. The effect of translating HCFI’s net deferred tax liabilities to U.S. dollars upon consolidation resulted in an increase of $2 million, an increase of $41 million, and a decrease of $19 million during the fiscal years ended March 31, 2022, 2021, and 2020, respectively. The translation adjustments have been recognized as a component of other comprehensive income. Exception to Recognition of Deferred Tax Liabilities 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 March 31, 2022, $1.1 billion of accumulated undistributed earnings of HCFI were intended to be so reinvested. If the undistributed earnings as of March 31, 2022 were to be distributed, the tax liability associated with these indefinitely reinvested earnings would be $59 million, inclusive of currency translation adjustments. Tax Attributes Included in the Company’s deferred tax assets are net operating loss (NOL) carryforwards with tax benefits resulting from operating losses incurred in various states in which the Company files tax returns in the amounts of $33 million, $36 million, and $48 million at March 31, 2022, 2021, and 2020, respectively. The expiration, if applicable, of these NOL carryforwards varies based on the statutes of each of the applicable states through March 31, 2040. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Balance, beginning of year $ 95 $ 169 $ 86 Additions for current year tax positions — — — Additions for prior year tax positions — — 98 Reductions for prior year tax positions (14) (21) (15) Settlements — (4) — Reductions related to a lapse in the statute of limitations — (49) — Foreign currency translation — — — Balance, end of year $ 81 $ 95 $ 169 Included in the balance of unrecognized tax benefits at March 31, 2022, 2021 and 2020 are $80 million, $94 million and $166 million, net of the federal benefit of state taxes, respectively, the recognition of which would affect the Company’s effective tax rate in future periods. Although it is reasonably possible that the total amounts of unrecognized tax benefits could change within the next twelve months, the Company does not believe such change would be significant. As a result of the above unrecognized tax benefits and various favorable uncertain positions, the Company has recorded a net liability for uncertain tax positions, inclusive of interest and penalties of $94 million and $103 million as of March 31, 2022 and 2021, respectively (Note 12). The Company recognizes income tax-related interest income, interest expense and penalties as a component of income tax expense. The Company recognized interest expense of $4 million during the fiscal year ended March 31, 2022, and interest income of $20 million and interest expense of $25 million during the fiscal years ended March 31, 2021 and 2020, respectively. As of March 31, 2022, 2021 and 2020, the Company’s consolidated balance sheets reflect accrued interest payable of $20 million, $16 million, and $36 million, respectively. As of March 31, 2022, the Company is subject to examination for U.S. federal returns filed for the taxable years ended March 31, 2014 through 2021, and returns filed for the taxable years ended March 31, 2008 through 2021 in various U.S. states. The Company’s Canadian subsidiary, HCFI, is subject to examination for returns filed for the taxable years ended March 31, 2015 through 2021 federally, and returns filed for the taxable years ended March 31, 2008 through 2021, except for 2011 through 2014, provincially. The Company believes appropriate provision has been made for all outstanding issues for all open years. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans The Company participates in certain retirement and other postretirement benefit plans sponsored by AHM and HCI (collectively referred to as the Sponsors). The Company participates in defined benefit retirement plans (the Pension Plans) maintained by the Sponsors. The names of the Pension Plans maintained by AHM are the Honda Retirement Plan and the Honda Pension Equalization Plan. The name of the Pension Plan maintained by HCI is the Pension Plan for Associates of Honda Canada Inc. Employees who commenced service after September 3, 2013 are not eligible to participate in the Pension Plans maintained by AHM. Under the amendments to the Pension Plan maintained by HCI, employees who commenced service after January 1, 2014 are not eligible to participate in HCI's Pension Plan. The Company pays for its share of the Pension Plan costs allocated by the Sponsors. The Pension Plans’ expense, included in general and administrative expenses, was $5 million for the fiscal year ended March 31, 2022, $21 million for the fiscal year ended March 31, 2021 and $6 million for the fiscal year ended March 31, 2020. The Company participates in defined contribution savings plans (the Savings Plans) maintained by the Sponsors. Participants in these plans make contributions subject to Internal Revenue Service or Canada Revenue Agency limits. General and administrative expenses include the Company's portion of contributions to the Savings Plans of $8 million for the fiscal years ended March 31, 2022, 2021, and 2020. The Company participates in other postretirement plans maintained by the Sponsors primarily to provide certain healthcare benefits for retired employees. Substantially all employees become eligible for these benefits if they have met certain age and service requirements at retirement. The Company's expense for the postretirement plans included in the general and administrative expenses was $3 million for the fiscal year ended March 31, 2022, a benefit for the postretirement plans of $12 million for the fiscal year ended March 31, 2021 and an expense of $4 million for the fiscal years ended March 31, 2020. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2022 | |
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 AHM and third parties and HCFI leases its premises from HCI. 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. In November 2020, the Company finalized plans to consolidate its nine regional offices in the United States into three service centers located in California, Texas, and Georgia. The consolidation is taking place in stages. As of March 31, 2022, the Company has a total of six remaining offices and expects to complete the consolidation into three service centers in the spring of 2023. Operating lease liabilities are reported in other liabilities on the Company's consolidated balance sheets. At March 31, 2022, maturities of operating lease liabilities were as follows: Year ending March 31: (U.S. dollars in millions) 2023 $ 10 2024 8 2025 7 2026 8 2027 8 Thereafter 24 Total undiscounted future lease obligations 65 Less: imputed interest (8) Operating lease liabilities $ 57 Lease expense under operating leases was $11 million for the fiscal year ended March 31, 2022, and $10 million for both the fiscal years ended March 31, 2021 and 2020. Rent expense is included within general and administrative expenses. As of March 31, 2022, the weighted average remaining lease term for operating leases was 7.9 years and the weighted average remaining discount rate for operating leases was 2.88% . 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 $680 million as of March 31, 2022. 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 March 31, 2022. 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. The Company is involved, in the ordinary course of business, in various legal proceedings including claims of individual customers and purported class action lawsuits. Certain of these actions are similar to suits filed against other financial institutions and captive finance companies. Most of these proceedings concern customer allegations of wrongful repossession or defamation of credit. Based on available information and established accruals, management does not believe it is reasonably possible that the results of these proceedings, in the aggregate, will have a material adverse effect on the Company’s consolidated financial statements. |
Securitizations and Variable In
Securitizations and Variable Interest Entities (VIE) | 12 Months Ended |
Mar. 31, 2022 | |
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 fiscal years ended March 31, 2022 and 2021, the Company issued notes through asset-backed securitizations, which were accounted for as secured financing transactions totaling $6.0 billion and $4.8 billion, respectively. The notes were secured by assets with an initial balance of $6.5 billion and $5.1 billion, for the fiscal years ended March 31, 2022 and 2021, 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. March 31, 2022 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 9,033 $ 364 $ 14 $ 8,682 $ 3 Operating lease securitizations 294 1 1 205 2 Total $ 9,327 $ 365 $ 15 $ 8,887 $ 5 March 31, 2021 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 8,783 $ 378 $ 16 $ 8,540 $ 4 Operating lease securitizations 440 2 1 350 2 Total $ 9,223 $ 380 $ 17 $ 8,890 $ 6 ________________________ (1) Included with other assets in the Company’s consolidated balance sheets (Note 11). 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 March 31, 2022 and 2021, AHFC and HCFI had combined cash collections of $529 million and $581 million, respectively, which were required to be remitted to the SPEs. |
Other Assets
Other Assets | 12 Months Ended |
Mar. 31, 2022 | |
Other Assets [Abstract] | |
Other Assets | Other Assets Other assets consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Interest receivable and other assets $ 82 $ 92 Vehicles held for disposition 51 94 Other receivables 93 194 Deferred expense 3 93 Software, net of accumulated amortization of $173 and $168 as of March 31, 2022, and 2021, respectively 22 24 Property and equipment, net of accumulated depreciation of $16 and $19 as of March 31, 2022, and 2021, respectively 5 3 Restricted cash 365 380 Operating lease assets 51 62 Like-kind exchange assets 851 89 Other miscellaneous assets 10 11 Total $ 1,533 $ 1,042 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 | 12 Months Ended |
Mar. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Other Liabilities Other liabilities consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Dealer payables $ 99 $ 175 Accrued interest expense 136 138 Accounts payable and accrued expenses 368 484 Lease security deposits 72 81 Unearned VSC administrative fees (Note 6) — 333 Unearned income, operating leases 317 340 Operating lease liabilities 57 65 Uncertain tax positions 94 103 Dividend payable 133 — Other liabilities 34 15 Total $ 1,310 $ 1,734 |
Other Income, net
Other Income, net | 12 Months Ended |
Mar. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Other Income, net | Other Income, net Other income consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) VSC administration (Note 6) $ 3 $ 106 $ 109 Other, net 47 (42) (21) Total $ 50 $ 64 $ 88 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Mar. 31, 2022 | |
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: March 31, 2022 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 931 $ — $ 931 Cross currency swaps — 40 — 40 Total assets $ — $ 971 $ — $ 971 Liabilities: Derivative instruments: Interest rate swaps $ — $ 683 $ — $ 683 Cross currency swaps — 436 — 436 Total liabilities $ — $ 1,119 $ — $ 1,119 March 31, 2021 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 545 $ — $ 545 Cross currency swaps — 373 — 373 Total assets $ — $ 918 $ — $ 918 Liabilities: Derivative instruments: Interest rate swaps $ — $ 586 $ — 586 Cross currency swaps — 46 — 46 Total liabilities $ — $ 632 $ — $ 632 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 fiscal years ended March 31, 2022 and 2021. Refer to Notes 1( l ) and 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) March 31, 2022 Vehicles held for disposition $ — $ — $ 26 $ 26 $ 5 March 31, 2021 Vehicles held for disposition $ — $ — $ 50 $ 50 $ 13 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. March 31, 2022 Fair value Carrying Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 2,607 $ 2,607 $ — $ — $ 2,607 Dealer loans, net 2,061 — — 1,859 1,859 Retail loans, net 35,420 — — 35,161 35,161 Restricted cash 365 365 — — 365 Liabilities: Commercial paper $ 2,307 $ — $ 2,306 $ — $ 2,306 Bank loans 3,108 — 3,110 — 3,110 Medium term note programs 28,684 — 28,055 — 28,055 Other debt 3,952 — 3,828 — 3,828 Secured debt 8,888 — 8,762 — 8,762 March 31, 2021 Fair value Carrying Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 1,870 $ 1,870 $ — $ — $ 1,870 Dealer loans, net 4,077 — — 3,936 3,936 Retail loans, net 37,356 — — 38,284 38,284 Restricted cash 380 380 — — 380 Liabilities: Commercial paper $ 5,542 $ — $ 5,543 $ — $ 5,543 Bank loans 4,052 — 4,085 — 4,085 Medium term note programs 29,470 — 30,069 — 30,069 Other debt 3,973 — 4,066 — 4,066 Secured debt 8,890 — 8,968 — 8,968 Fair value information presented in the tables above is based on information available at March 31, 2022 and 2021. 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 | 12 Months Ended |
Mar. 31, 2022 | |
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 Company’s reportable segments for the fiscal years ended or at March 31 is summarized in the following tables: United Canada Valuation Consolidated (U.S. dollars in millions) Year ended March 31, 2022 Revenues: Retail $ 1,414 $ 185 $ — $ 1,599 Dealer 58 9 — 67 Operating leases 6,489 1,289 — 7,778 Total revenues 7,961 1,483 — 9,444 Leased vehicle expenses 4,655 975 — 5,630 Interest expense 604 109 — 713 Realized (gains)/losses on derivatives and foreign currency denominated debt 121 22 (143) — Net revenues 2,581 377 143 3,101 Other income 36 14 — 50 Total net revenues 2,617 391 143 3,151 Expenses: General and administrative expenses 423 56 — 479 Provision for credit losses (22) — — (22) Early termination loss on operating leases 16 — — 16 Loss on derivative instruments — — 571 571 Gain on foreign currency revaluation of debt — — (470) (470) Income before income taxes $ 2,200 $ 335 $ 42 $ 2,577 March 31, 2022 Finance receivables, net $ 33,320 $ 4,161 $ — $ 37,481 Investment in operating leases, net 28,691 4,933 — 33,624 Total assets 66,877 9,401 — 76,278 United Canada Valuation Consolidated (U.S. dollars in millions) Year ended March 31, 2021 Revenues: Retail $ 1,474 $ 190 $ — $ 1,664 Dealer 94 13 — 107 Operating leases 6,437 1,328 — 7,765 Total revenues 8,005 1,531 — 9,536 Leased vehicle expenses 4,576 1,004 — 5,580 Interest expense 772 121 — 893 Realized (gains)/losses on derivatives and foreign currency denominated debt 247 39 (286) — Net revenues 2,410 367 286 3,063 Other income 51 13 — 64 Total net revenues 2,461 380 286 3,127 Expenses: General and administrative expenses 418 53 — 471 Provision for credit losses (65) (4) — (69) Early termination loss on operating leases (157) 1 — (156) Gain on derivative instruments — — (229) (229) Loss on foreign currency revaluation of debt — — 430 430 Income before income taxes $ 2,265 $ 330 $ 85 $ 2,680 March 31, 2021 Finance receivables, net $ 36,905 $ 4,528 $ — $ 41,433 Investment in operating leases, net 30,036 5,309 — 35,345 Total assets 70,590 10,212 — 80,802 United Canada Valuation Consolidated (U.S. dollars in millions) Year ended March 31, 2020 Revenues: Retail $ 1,533 $ 204 $ — $ 1,737 Dealer 198 24 — 222 Operating leases 6,402 1,347 — 7,749 Total revenues 8,133 1,575 — 9,708 Leased vehicle expenses 4,667 1,026 — 5,693 Interest expense 1,063 178 — 1,241 Realized (gains)/losses on derivatives and foreign currency denominated debt 106 (4) (102) — Net revenues 2,297 375 102 2,774 Other income 77 11 — 88 Total net revenues 2,374 386 102 2,862 Expenses: General and administrative expenses 439 59 — 498 Provision for credit losses 393 9 — 402 Early termination loss on operating leases 327 4 — 331 Loss on derivative instruments — — 305 305 Gain on foreign currency revaluation of debt — — (107) (107) Income before income taxes $ 1,215 $ 314 $ (96) $ 1,433 March 31, 2020 Finance receivables, net $ 35,381 $ 4,173 $ — $ 39,554 Investment in operating leases, net 28,809 5,034 — 33,843 Total assets 67,566 9,690 — 77,256 |
Summary of Business and Signi_2
Summary of Business and Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 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” in this report include AHFC and its consolidated subsidiaries (refer Note 1(b) Principles of Consolidation below), and references to “AHFC” refer solely to American Honda Finance Corporation (excluding AHFC’s subsidiaries). The Company provides various forms of financing to authorized independent dealers of Honda and Acura products and their customers in the United States and Canada. The Company also finances a limited number of vehicles other than Honda and Acura products. The Company’s financing products include the following categories: Retail Loans – The Company acquires retail installment contracts from dealers who originate the contracts with consumers. Retail loans are collateralized by liens on the related vehicles or equipment. Retail loan terms range primarily from two Retail Leases – The Company acquires closed-end vehicle lease contracts between dealers and their customers. The dealer assigns all of its rights, title, and interest in the lease and motor vehicle to the Company upon acquisition. Lease terms range primarily from two Dealer Loans – The Company provides wholesale and commercial loans to dealers. Wholesale loans are used by dealers to finance the purchase of inventory. The Company retains purchase money security interest in all inventory financed; however, the Company has no right to recover a product sold to consumers in the ordinary course of business. The Company has agreements with AHM and HCI, which provide for their repurchase of new, unused, and unregistered vehicles or equipment that have been repossessed from a dealer who defaults on a wholesale loan. Commercial loans are used primarily for financing dealership property and working capital purposes. Commercial loans are generally secured by the associated properties, as well as corporate or personal guarantees from, or on behalf of, the related dealer’s principals. The Company’s finance receivables and investment in operating leases are geographically diversified throughout the United States and Canada. |
Use of Estimates | The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated balance sheets and revenues and expenses for the applicable periods. Those estimates include, among other things, the residual value estimates of lease vehicles and estimates for the allowances for credit losses and early termination losses on operating leases. Actual results could differ significantly from these estimates. |
Business Risks | Business RisksThe Company’s business is substantially dependent upon the sale of Honda and Acura products. The financing business is also highly competitive. The Company’s competitors and potential competitors include national, regional, and local finance companies and other types of financial services companies, such as commercial banks, savings and loan associations, leasing companies, online banks and credit unions. The Company’s future profitability will be largely dependent upon its ability to provide cost-competitive, quality financial products and services to its customers and to the availability and cost of its capital in relation to that of its competitors. The Company’s liquidity is largely dependent on access to credit markets. The Company has been able to meet funding needs through diversified funding sources. Higher than expected credit losses and lower than anticipated lease residual values due to prolonged periods of negative economic and market conditions can adversely affect the Company’s financial position, results of operations, and related cash flows. The Company manages these risks with purchasing and residual value setting standards, collection efforts, and lease remarketing programs. Refer to Note 1( e ) for additional discussion on the allowance for credit losses and Note 1( f ) for additional discussion on the determination of lease residual values. The Company is exposed to market risks, principally interest rate and foreign currency risks, and utilizes derivative instruments to manage those risks. Although the use of derivative instruments mitigates a substantial portion of these risks, not all risk is eliminated. Refer to Note 1( l ) for additional discussion on derivative instruments. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of AHFC and its subsidiaries. All subsidiaries are wholly-owned, except for HCFI, which is majority-owned (52.33% as of March 31, 2022 and 2021). The Company also consolidates variable interest entities (VIEs) where the Company is the primary beneficiary. All consolidated VIEs are statutory special purpose entities (SPEs) formed by the Company to accommodate securitization structures. All significant intercompany balances and transactions have been eliminated upon consolidation. |
Comprehensive Income | Comprehensive IncomeComprehensive income consists of net income and the effect of foreign currency translation adjustments and is presented in the consolidated statements of comprehensive income. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents include cash on hand and short-term, highly liquid investments with original maturities of three months or less. |
Finance Receivables | 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. |
Allowance for Credit Losses | 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. Retail loans are evaluated on a collective basis and grouped into pools with similar risk characteristics such as origination quarter, internal credit grade at origination, product type, and original term. The allowance for retail loans is measured using econometric regression models that correlate vintage age, credit quality, economic, and other variables to historical vintage-level credit loss performance. Statistically relevant economic factors such as unemployment rates, bankruptcies, and used vehicle price indexes are applied in the analysis of the economic environment. Current and forecasted economic conditions are applied in the models to project monthly gross loss rates in terms of origination dollars for the remaining contractual life of each vintage. Recoveries are projected as a percentage of the cumulative forecasted loss dollar of each vintage. The contractual term is the estimated lifetime of retail loans and is considered to be a reasonable and supportable forecast period of future economic conditions. Economic forecasts and macroeconomic variables are obtained from a third party economic research firm that extend through the lifetime of retail loans and converge to long-run equilibrium trends. Baseline forecasts that reflect the most likely economic future is the single economic scenario applied in the models. Qualitative adjustments may also be applied if management believes the quantitative models do not reflect the best estimate of lifetime expected credit losses. Dealer loans are evaluated on a collective basis if they have not been specifically identified as impaired. Collectively evaluated dealer loans are grouped by loan type and internal risk ratings and the allowance is measured primarily using historical loss rates. Dealer loans that have been specifically identified as impaired are excluded from the collective assessment and the allowance is measured at the individual dealer level. 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. Prior to April 1, 2020, the allowance for credit losses was management's estimate of probable losses incurred on finance receivables. The allowance was based on management's evaluation of many factors, including the Company's historical credit loss experience, the value of the underlying collateral, delinquency trends, and economic conditions. Retail loans were collectively evaluated for impairment. Dealer loans that had not been specifically identified as impaired were collectively evaluated for impairment. Dealer loans were individually evaluated for impairment when specifically identified as impaired. |
Investment in Operating Leases and Determination of Lease Residual Values | Investment in Operating Leases and Determination of Lease Residual ValuesThe investment in operating leases is reported at cost, less accumulated depreciation and impairment losses, and net of 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 for dealer participation. Operating lease revenue is recognized on a straight-line basis over the lease term. Operating lease revenue includes accretion of origination fees, net of dealer rate participation amortization, which are also recognized on a straight-line basis over the lease term. Operating lease vehicles are depreciated on a straight-line basis over the lease term to the lower of contract residual values or estimated end of term residual values. Adjustments to estimated end of term residual values are made prospectively on a straight-line basis over the remaining lease term. Contractual residual values of lease vehicles are determined at lease inception based on the Company's expectations of used vehicle values at the end of their lease terms. Lease customers have the option at the end of the lease term to return the vehicle to the dealer or to buy the vehicle for the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance). Returned lease vehicles can be purchased by the grounding dealer for the contractual residual value (or if purchased prior to lease maturity, for the outstanding contractual balance) or a market based price. Returned lease vehicles that are not purchased by the grounding dealers are sold through online and physical auctions. The Company is exposed to a risk of loss on the disposition of returned lease vehicles if the market values of leased vehicles at the end of their lease terms are less than their contractual residual values. Estimated end of term residual values are dependent on the expected market values of leased vehicles at the end of their lease terms and the percentage of leased vehicles expected to be returned by the lessees. Factors considered in this evaluation include, among other factors, economic conditions, external market information on new and used vehicles, historical trends, and recent auction values. The Company assesses the estimated end of term residual values at minimum on a quarterly basis. A review for impairment of the Company’s operating lease assets is performed whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Generally, an impairment condition is determined to exist if estimated undiscounted cash flows from the use and eventual disposition of the asset is lower than their carrying value. For the purposes of testing for impairment, operating lease assets are grouped at the lowest level the Company can reasonably estimate cash flows. If impairment conditions are met, impairment losses are measured by the amount carrying values exceed their fair values. A portion of the Company’s operating leases is expected to terminate prior to their scheduled maturities when lessees default on their contractual obligations. Losses are generally realized upon the disposition of the repossessed operating lease vehicles. Operating leases are collectively evaluated to determine the estimated losses incurred using modeling methodologies consistent with those used for retail loans. Estimated early termination losses are recognized as a reduction to the carrying value of operating lease assets. |
Vehicles Held for Disposition | Vehicles Held for DispositionVehicles held for disposition consist of returned and repossessed vehicles. The vehicles are either sold at used vehicle auctions or purchased by dealers, usually within two months of return or repossession. The vehicles are valued at the lower of their carrying value or estimated fair value, less estimated disposition costs. For returned vehicles, valuation adjustments are recorded as a charge against the gain/loss on disposition of lease vehicles. Valuation adjustments made for repossessed collateral of finance receivables and operating leases are recognized as charges to the allowance for credit loss and estimated early termination losses on operating leases, respectively. |
Vehicle Service Contract Administration | Vehicle Service Contract AdministrationAHFC performed administrative services for vehicle service contracts (VSC) issued by certain subsidiaries of AHM. AHFC received fees for performing the services when the contracts were acquired, which was recognized in other income over the lives of the underlying contracts, proportionate to the anticipated amount of service to be performed. Effective April 1, 2021, the administration of VSCs was transferred to AHM. HCFI performs marketing services for vehicle service contracts issued by HCI. HCFI receives fees as the services are performed, which is recognized in other income. |
Securitizations and Variable Interest Entities | Securitizations and Variable Interest EntitiesThe Company enters into securitization transactions for funding purposes. Securitization transactions involve transferring pools of retail loans and operating leases to bankruptcy-remote SPEs. The SPEs are established to accommodate securitization structures, which have the limited purpose of acquiring assets, issuing asset-backed securities, and making payments on the securities. Assets transferred to SPEs are considered legally isolated from the Company and the claims of the Company’s creditors. The Company continues to service the retail loans and operating leases transferred to the SPEs. Investors in the 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 our other subsidiaries or to other SPEs. The assets of SPEs are the only source for repayment on the notes. The Company’s securitizations are structured to provide credit enhancements to investors in notes issued by the SPEs. Credit enhancements can include the following: Subordinated certificates – securities issued by the SPEs that are retained by the Company and are subordinated in priority of payment to the notes. Overcollateralization – securitized asset balances that exceed the balance of securities issued by SPEs. Excess interest – excess interest collections to be used to cover losses on defaulted loans. Reserve funds – restricted cash accounts held by SPEs to cover shortfalls in payments of interest and principal required to be paid on the notes. Yield supplement accounts – restricted cash accounts held by SPEs to supplement interest payments on notes. The risk retention regulations in Regulation RR of the Securities Exchange Act of 1934, as amended, require the sponsor to retain an economic interest in the credit risk of the securitized assets, either directly or through one or more majority-owned affiliates. Standard risk retention options allow the sponsor to retain either an eligible vertical interest, an eligible horizontal residual interest, or a combination of both. The Company has satisfied this obligation by retaining an eligible vertical interest of an amount equal to at least 5% of the principal amount of each class of note and certificate issued for the securitization transaction that was subject to this rule but may choose to use other structures in the future. The securitization SPEs formed by the Company are 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 its 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. Consolidation of these SPEs results in the securitization transactions being accounted for as on-balance sheet secured financings. The securitized retail loans and operating leases remain on the consolidated balance sheet of the Company along with the notes issued by the SPEs. The notes are secured solely by the assets of the SPEs and not by any other assets of the Company. The assets of the SPEs are the only source of funds for repayment on the notes. Restricted cash accounts held by the SPEs can only be used to support payments on the notes. The restricted cash accounts are included in the Company’s consolidated balance sheet in other assets. The Company recognizes revenue from retail loans and operating leases and provisions for credit losses and uncollectible operating leases on the securitized assets and interest expense on the related secured debt. |
Income Taxes | Income TaxesThe Company’s U.S. entities are included in the consolidated U.S. federal and many consolidated or combined state and local income tax returns of the Parent, though in some cases the Company files separately as required by certain state and local jurisdictions. The Company provides its share of the consolidated or combined income tax on a modified separate return basis pursuant to an intercompany income tax allocation agreement that it has entered into with the Parent. The Company files a separate California return based on California’s worldwide income and apportionment rules. To the extent the Company’s U.S. entities have taxable losses in its consolidated federal, and consolidated or combined state and local tax returns, a benefit will be recognized to the extent that it is more likely than not that these losses will be utilized by the consolidated or combined return group in the current or future year and thus would be subject to current or future reimbursement by the Parent under the terms of the intercompany income tax allocation agreement. To the extent such losses are attributable to a state where the Company files a separate return, a benefit for such losses would be recognized to the extent such losses are more likely than not to be utilized in the future. All but an insignificant amount of the federal and state taxes payable or receivable shown on the consolidated balance sheets are due to or from the Parent, pursuant to the intercompany income tax allocation agreement. The Company’s Canadian subsidiary, HCFI, files Canadian federal and provincial income tax returns based on the separate legal entity financial statements. HCFI does not file U.S. federal, state, or local income tax returns. Consequently, HCFI does not participate in the intercompany income tax allocation agreement that the Company has with the Parent. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under this method, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income during the period in which the enactment date occurs. A valuation allowance is provided to offset deferred tax assets if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In addition, tax benefits related to positions considered uncertain are recognized only if, based on the technical merits of the issue, the Company believes that it is more likely than not to sustain the position and then at the largest amount that is greater than 50% likely to be realized upon settlement. |
Foreign Currency Translation | Foreign Currency Translation Upon consolidation, the assets and liabilities of HCFI are translated at year-end exchange rates, and the revenues and expenses are translated at the average rates of exchange during the respective years. The resulting translation adjustment is included in other comprehensive income and the cumulative translation adjustment is reported as a separate component of equity in accumulated other comprehensive income and noncontrolling interest. Foreign currency denominated debt is translated at year-end exchange rates, and the foreign currency transaction gains and losses are recognized through earnings. |
Derivative Instruments | Derivative Instruments The Company utilizes derivative instruments to manage exposures to interest rate and foreign currency risks. The Company’s assets consist primarily of fixed rate receivables and operating lease assets. The Company’s liabilities consist of both floating and fixed rate debt, denominated in various currencies. Interest rate and basis swaps are used to match the interest rate characteristics of the Company’s assets and debt. Currency swaps are used to manage currency risk exposure on foreign currency denominated debt. Derivative instruments are not used for trading or any other speculative purposes. All derivative financial instruments are recorded on the consolidated balance sheets at fair value. The Company elects to present derivative instruments in the Company’s consolidated balance sheets on a gross basis rather than on a net basis by counterparty. Refer to Note 5 for additional information. Except in very limited circumstances involving counterparties with consolidated securitization SPEs, AHFC generally has not entered into credit support (collateral) agreements with its counterparties. Changes in the fair value of derivatives are recognized in earnings in the period of the change. In Canada, HCFI is a party to credit support agreements that require posting of cash collateral to mitigate credit risk on derivative positions. |
Recently Adopted/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. Effective April 1, 2021, the Company adopted 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 adoption of this standard did not have a material impact on the consolidated financial statements. (n) Recently Issued Accounting Standards In March 2022, the Financial Accounting Standards Board issued ASU 2022-02, Financial Instruments—Credit Losses (Topic326): Troubled Debt Restructurings and Vintage Disclosures |
Legal Proceedings and Regulatory Matters | 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. |
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. |
Segment Reporting | 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. |
Finance Receivables (Tables)
Finance Receivables (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Receivables [Abstract] | |
Summary of Finance Receivables | Finance receivables consisted of the following: March 31, 2022 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 36,028 $ 2,066 $ 38,094 Allowance for credit losses (206) (5) (211) Deferred dealer participation and other deferred costs 390 — 390 Unearned subsidy income (792) — (792) Finance receivables, net $ 35,420 $ 2,061 $ 37,481 March 31, 2021 Retail Dealer Total (U.S. dollars in millions) Finance receivables $ 38,102 $ 4,085 $ 42,187 Allowance for credit losses (280) (8) (288) Deferred dealer participation and other deferred costs 434 — 434 Unearned subsidy income (900) — (900) Finance receivables, net $ 37,356 $ 4,077 $ 41,433 |
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: Year ended March 31, 2022 Retail Dealer Total (U.S. dollars in millions) Beginning balance $ 280 $ 8 $ 288 Provision (19) (3) (22) Charge-offs (145) — (145) Recoveries 90 — 90 Effect of translation adjustment — — — Ending balance $ 206 $ 5 $ 211 Year ended March 31, 2021 Retail Dealer Total (U.S. dollars in millions) 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 (67) (2) (69) Charge-offs (232) (1) (233) Recoveries 116 2 118 Effect of translation adjustment 1 — 1 Ending balance $ 280 $ 8 $ 288 Year ended March 31, 2020 Retail Dealer Total (U.S. dollars in millions) Beginning balance $ 193 $ 8 $ 201 Provision 388 14 402 Charge-offs (317) (17) (334) Recoveries 100 1 101 Effect of translation adjustment — — — Ending balance $ 364 $ 6 $ 370 |
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) March 31, 2022 Retail loans: New auto $ 194 $ 50 $ 11 $ 255 $ 29,297 $ 29,552 Used and certified auto 78 22 5 105 4,615 4,720 Motorcycle and other 13 4 2 19 1,335 1,354 Total retail 285 76 18 379 35,247 35,626 Dealer loans: Wholesale flooring — — — — 1,266 1,266 Commercial loans — — — — 800 800 Total dealer loans — — — — 2,066 2,066 Total finance receivables $ 285 $ 76 $ 18 $ 379 $ 37,313 $ 37,692 March 31, 2021 Retail loans: New auto $ 145 $ 33 $ 7 $ 185 $ 30,715 $ 30,900 Used and certified auto 50 12 3 65 5,202 5,267 Motorcycle and other 10 3 2 15 1,454 1,469 Total retail 205 48 12 265 37,371 37,636 Dealer loans: Wholesale flooring 1 — — 1 3,205 3,206 Commercial loans — — — — 879 879 Total dealer loans 1 — — 1 4,084 4,085 Total finance receivables $ 206 $ 48 $ 12 $ 266 $ 41,455 $ 41,721 |
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 year 2022 2021 2020 2019 2018 Prior Total March 31, 2022 (U.S. dollars in millions) Credit grade A $ 8,849 $ 8,065 $ 3,073 $ 1,912 $ 727 $ 169 $ 22,795 Credit grade B 2,433 2,010 898 525 271 74 6,211 Credit grade C 1,713 1,409 718 405 228 64 4,537 Credit grade D 451 418 341 188 100 33 1,531 Others 214 153 91 56 25 13 552 Total retail loans $ 13,660 $ 12,055 $ 5,121 $ 3,086 $ 1,351 $ 353 $ 35,626 Retail loans by vintage year 2021 2020 2019 2018 2017 Prior Total March 31, 2021 (U.S. dollars in millions) Credit grade A $ 11,763 $ 5,384 $ 3,965 $ 1,982 $ 728 $ 136 $ 23,958 Credit grade B 2,898 1,508 996 629 255 60 6,346 Credit grade C 2,081 1,245 767 504 206 47 4,850 Credit grade D 628 598 349 212 90 27 1,904 Others 223 153 105 58 32 7 578 Total retail loans $ 17,593 $ 8,888 $ 6,182 $ 3,385 $ 1,311 $ 277 $ 37,636 The following table summarizes the amortized cost of dealer loans by risk rating groups: Commercial loans by vintage fiscal year 2022 2021 2020 2019 2018 Prior Revolving loans Wholesale Flooring Total March 31, 2022 (U.S. dollars in millions) Group I $ 11 $ 207 $ 56 $ 18 $ 32 $ 99 $ 317 $ 671 $ 1,411 Group II 6 3 7 17 22 5 — 595 655 Group III — — — — — — — — — Total dealer loans $ 17 $ 210 $ 63 $ 35 $ 54 $ 104 $ 317 $ 1,266 $ 2,066 Commercial loans by vintage fiscal year 2021 2020 2019 2018 2017 Prior Revolving loans Wholesale Flooring Total March 31, 2021 (U.S. dollars in millions) Group I $ 155 $ 57 $ — $ 43 $ 44 $ 88 $ 283 $ 1,491 $ 2,161 Group II 92 25 40 30 9 13 — 1,715 1,924 Group III — — — — — — — — — Total dealer loans $ 247 $ 82 $ 40 $ 73 $ 53 $ 101 $ 283 $ 3,206 $ 4,085 |
Investment in Operating Leases
Investment in Operating Leases (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of Investment in Operating Leases | Investment in operating leases consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Operating lease vehicles $ 42,990 $ 45,153 Accumulated depreciation (8,529) (8,726) Deferred dealer participation and initial direct costs 114 130 Unearned subsidy income (869) (1,123) Estimated early termination losses (82) (89) Investment in operating leases, net $ 33,624 $ 35,345 |
Schedule of Operating Lease Revenue | Operating lease revenue consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Lease payments $ 6,913 $ 6,808 $ 6,713 Subsidy income and dealer rate participation, net 798 894 968 Reimbursed lessor costs 67 63 68 Total operating lease revenue, net $ 7,778 $ 7,765 $ 7,749 |
Schedule of Leased Vehicle Expense | Leased vehicle expenses consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Depreciation expense $ 5,676 $ 5,669 $ 5,705 Initial direct costs and other lessor costs 151 140 141 Gain on disposition of leased vehicles (1) (197) (229) (153) Total leased vehicle expenses, net $ 5,630 $ 5,580 $ 5,693 ________________________ (1) Included in the gain on disposition of leased vehicles are end of term charges of $17 million, $54 million, and $73 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. |
Schedule of Operating Lease Payments | Contractual operating lease payments due as of March 31, 2022 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. Year ending March 31, (U.S. dollars in millions) 2023 $ 5,459 2024 3,536 2025 1,170 2026 230 2027 56 Total $ 10,451 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt Net of Discounts and Fees, 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 March 31, March 31, March 31, 2022 2021 2022 2021 2022 2021 (U.S. dollars in millions) Unsecured debt: Commercial paper $ 2,307 $ 5,542 0.74 % 0.31 % 0.33 - 1.21% 0.20 - 0.67% Bank loans 3,108 4,052 1.52 % 1.01 % 0.94 - 2.01% 0.56 - 1.29% Private MTN program — 500 — % 3.80 % — - —% 3.80 - 3.80% Public MTN program 28,659 28,943 1.53 % 1.53 % 0.30 - 3.63% 0.33 - 3.63% Euro MTN programme 25 27 2.23 % 2.23 % 2.23 - 2.23% 2.23 - 2.23% Other debt 3,952 3,973 2.20 % 2.11 % 1.05 - 3.44% 0.53 - 3.44% Total unsecured debt 38,051 43,037 Secured debt 8,888 8,890 0.93 % 1.34 % 0.14 - 3.30% 0.12 - 3.30% Total debt $ 46,939 $ 51,927 |
Scheduled and Projected Maturities of Debt | The Company’s secured debt is amortizing, and unsecured debt is non-amortizing. Scheduled and projected maturities of the Company’s debt at March 31, 2022 are summarized below: 2023 2024 2025 2026 2027 Thereafter Total (U.S. dollars in millions) Unsecured debt: Commercial paper $ 2,309 $ — $ — $ — $ — $ — $ 2,309 Bank loans 1,770 200 480 — 660 — 3,110 Public MTN program 7,878 7,203 5,357 1,500 2,407 4,380 28,725 Euro MTN programme 25 — — — — — 25 Other debt 1,119 640 600 799 320 480 3,958 Total unsecured debt 13,101 8,043 6,437 2,299 3,387 4,860 38,127 Secured debt (1) 4,881 2,666 1,207 147 — — 8,901 Total debt (2) $ 17,982 $ 10,709 $ 7,644 $ 2,446 $ 3,387 $ 4,860 $ 47,028 Unamortized discounts/fees (89) Total debt, net $ 46,939 ________________________ (1) Projected repayment schedule of secured debt. Reflects payment performance assumptions on underlying assets. (2) Principal amounts. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
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 14 regarding the valuation of derivative instruments. March 31, 2022 2021 Notional Assets Liabilities Notional Assets Liabilities (U.S. dollars in millions) Interest rate swaps $ 61,941 $ 931 $ 683 $ 64,088 $ 545 $ 586 Cross currency swaps 7,920 40 436 6,303 373 46 Gross derivative assets/liabilities 971 1,119 918 632 Collateral posted/held 5 28 37 5 Counterparty netting adjustment (804) (804) (591) (591) Net derivative assets/liabilities $ 172 $ 343 $ 364 $ 46 |
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. Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Interest rate swaps $ 140 $ (148) $ (127) Cross currency swaps (711) 377 (178) Total gain/(loss) on derivative instruments $ (571) $ 229 $ (305) |
Transactions Involving Relate_2
Transactions Involving Related Parties (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
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: Years ended March 31, Income Statement 2022 2021 2020 (U.S. dollars in millions) Revenue: Subsidy income $ 1,410 $ 1,476 $ 1,639 Interest expense: Related party debt — 2 14 Other income, net: VSC administration fees 3 106 109 Support Service Fee — (45) (36) General and administrative expenses: Support Compensation Agreement fees 76 72 68 Benefit plan expenses 8 9 10 Shared services 72 69 70 Lease expense 4 2 — March 31, Balance Sheet 2022 2021 (U.S. dollars in millions) Assets : Finance receivables, net: Unearned subsidy income $ (783) $ (891) Investment in operating leases, net: Unearned subsidy income (867) (1,120) Due from Parent and affiliated companies 62 194 Liabilities: Due to Parent and affiliated companies 125 106 Other liabilities: Accrued interest expense — — Unearned VSC administrative fees — 333 Accrued benefit expenses 63 60 Dividend Payable 133 — Operating lease liabilities 15 17 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Consolidated Income Tax Expense/(Benefit) | The Company’s consolidated income tax expense/(benefit) was computed on a modified separate return basis pursuant to the intercompany tax allocation agreement with the Parent and consisted of the following: Current Deferred Total (U.S. dollars in millions) Year ended March 31, 2022 Federal $ 643 $ (205) $ 438 State and local 220 (84) 136 Foreign 44 57 101 Total $ 907 $ (232) $ 675 Year ended March 31, 2021 Federal $ 36 $ 378 $ 414 State and local 146 (5) 141 Foreign 38 54 92 Total $ 220 $ 427 $ 647 Year ended March 31, 2020 Federal $ (46) $ 333 $ 287 State and local 231 (166) 65 Foreign 30 42 72 Total $ 215 $ 209 $ 424 |
Reconciliation of the Expected Income Tax Expense to the Reported Income Tax Expense | Income tax expense differs from the expected income taxes by applying the statutory federal corporate rate of 21% to income before income taxes as follows: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Computed “expected” income taxes $ 541 $ 563 $ 301 Foreign tax rate differential 21 19 14 State and local income taxes, net of federal income tax benefit 111 112 62 Change in estimated state tax rate, net of federal income tax benefit (15) (6) (16) Change in unrecognized tax benefit 5 (47) 64 Other 12 6 (1) Income tax expense $ 675 $ 647 $ 424 |
Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below: March 31, 2022 2021 (U.S. dollars in millions) Deferred tax assets: State income tax $ 151 $ 163 Receivable allowance 85 111 Accrued postretirement 13 12 State loss carryforwards 33 36 Income tax credits — 80 Derivatives 1 — Other assets 66 67 Total gross deferred tax assets 349 469 Less valuation allowance — — Net deferred tax assets 349 469 Deferred tax liabilities: HCFI leases 522 466 AHFC leases 6,563 6,950 Other 67 86 Total gross deferred tax liabilities 7,152 7,502 Net deferred tax liabilities $ 6,803 $ 7,033 |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) Balance, beginning of year $ 95 $ 169 $ 86 Additions for current year tax positions — — — Additions for prior year tax positions — — 98 Reductions for prior year tax positions (14) (21) (15) Settlements — (4) — Reductions related to a lapse in the statute of limitations — (49) — Foreign currency translation — — — Balance, end of year $ 81 $ 95 $ 169 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Annual Minimum Lease Commitments Attributable to Long-Term Noncancelable Operating Leases | At March 31, 2022, maturities of operating lease liabilities were as follows: Year ending March 31: (U.S. dollars in millions) 2023 $ 10 2024 8 2025 7 2026 8 2027 8 Thereafter 24 Total undiscounted future lease obligations 65 Less: imputed interest (8) Operating lease liabilities $ 57 |
Securitizations and Variable _2
Securitizations and Variable Interest Entities (VIE) (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
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. March 31, 2022 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 9,033 $ 364 $ 14 $ 8,682 $ 3 Operating lease securitizations 294 1 1 205 2 Total $ 9,327 $ 365 $ 15 $ 8,887 $ 5 March 31, 2021 Assets Liabilities (U.S. dollars in millions) Securitized assets Restricted cash (1) Other Secured debt Other Retail loan securitizations $ 8,783 $ 378 $ 16 $ 8,540 $ 4 Operating lease securitizations 440 2 1 350 2 Total $ 9,223 $ 380 $ 17 $ 8,890 $ 6 ________________________ (1) Included with other assets in the Company’s consolidated balance sheets (Note 11). |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Other Assets [Abstract] | |
Schedule of Other Assets | Other assets consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Interest receivable and other assets $ 82 $ 92 Vehicles held for disposition 51 94 Other receivables 93 194 Deferred expense 3 93 Software, net of accumulated amortization of $173 and $168 as of March 31, 2022, and 2021, respectively 22 24 Property and equipment, net of accumulated depreciation of $16 and $19 as of March 31, 2022, and 2021, respectively 5 3 Restricted cash 365 380 Operating lease assets 51 62 Like-kind exchange assets 851 89 Other miscellaneous assets 10 11 Total $ 1,533 $ 1,042 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Other Liabilities Disclosure [Abstract] | |
Components of Other Liabilities | Other liabilities consisted of the following: March 31, 2022 2021 (U.S. dollars in millions) Dealer payables $ 99 $ 175 Accrued interest expense 136 138 Accounts payable and accrued expenses 368 484 Lease security deposits 72 81 Unearned VSC administrative fees (Note 6) — 333 Unearned income, operating leases 317 340 Operating lease liabilities 57 65 Uncertain tax positions 94 103 Dividend payable 133 — Other liabilities 34 15 Total $ 1,310 $ 1,734 |
Other Income, net (Tables)
Other Income, net (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Other Income and Expenses [Abstract] | |
Components of Other Income | Other income consisted of the following: Years ended March 31, 2022 2021 2020 (U.S. dollars in millions) VSC administration (Note 6) $ 3 $ 106 $ 109 Other, net 47 (42) (21) Total $ 50 $ 64 $ 88 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
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: March 31, 2022 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 931 $ — $ 931 Cross currency swaps — 40 — 40 Total assets $ — $ 971 $ — $ 971 Liabilities: Derivative instruments: Interest rate swaps $ — $ 683 $ — $ 683 Cross currency swaps — 436 — 436 Total liabilities $ — $ 1,119 $ — $ 1,119 March 31, 2021 Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Derivative instruments: Interest rate swaps $ — $ 545 $ — $ 545 Cross currency swaps — 373 — 373 Total assets $ — $ 918 $ — $ 918 Liabilities: Derivative instruments: Interest rate swaps $ — $ 586 $ — 586 Cross currency swaps — 46 — 46 Total liabilities $ — $ 632 $ — $ 632 |
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) March 31, 2022 Vehicles held for disposition $ — $ — $ 26 $ 26 $ 5 March 31, 2021 Vehicles held for disposition $ — $ — $ 50 $ 50 $ 13 |
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. March 31, 2022 Fair value Carrying Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 2,607 $ 2,607 $ — $ — $ 2,607 Dealer loans, net 2,061 — — 1,859 1,859 Retail loans, net 35,420 — — 35,161 35,161 Restricted cash 365 365 — — 365 Liabilities: Commercial paper $ 2,307 $ — $ 2,306 $ — $ 2,306 Bank loans 3,108 — 3,110 — 3,110 Medium term note programs 28,684 — 28,055 — 28,055 Other debt 3,952 — 3,828 — 3,828 Secured debt 8,888 — 8,762 — 8,762 March 31, 2021 Fair value Carrying Level 1 Level 2 Level 3 Total (U.S. dollars in millions) Assets: Cash and cash equivalents $ 1,870 $ 1,870 $ — $ — $ 1,870 Dealer loans, net 4,077 — — 3,936 3,936 Retail loans, net 37,356 — — 38,284 38,284 Restricted cash 380 380 — — 380 Liabilities: Commercial paper $ 5,542 $ — $ 5,543 $ — $ 5,543 Bank loans 4,052 — 4,085 — 4,085 Medium term note programs 29,470 — 30,069 — 30,069 Other debt 3,973 — 4,066 — 4,066 Secured debt 8,890 — 8,968 — 8,968 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Financial Information for the Company's Reportable Segments | Financial information for the Company’s reportable segments for the fiscal years ended or at March 31 is summarized in the following tables: United Canada Valuation Consolidated (U.S. dollars in millions) Year ended March 31, 2022 Revenues: Retail $ 1,414 $ 185 $ — $ 1,599 Dealer 58 9 — 67 Operating leases 6,489 1,289 — 7,778 Total revenues 7,961 1,483 — 9,444 Leased vehicle expenses 4,655 975 — 5,630 Interest expense 604 109 — 713 Realized (gains)/losses on derivatives and foreign currency denominated debt 121 22 (143) — Net revenues 2,581 377 143 3,101 Other income 36 14 — 50 Total net revenues 2,617 391 143 3,151 Expenses: General and administrative expenses 423 56 — 479 Provision for credit losses (22) — — (22) Early termination loss on operating leases 16 — — 16 Loss on derivative instruments — — 571 571 Gain on foreign currency revaluation of debt — — (470) (470) Income before income taxes $ 2,200 $ 335 $ 42 $ 2,577 March 31, 2022 Finance receivables, net $ 33,320 $ 4,161 $ — $ 37,481 Investment in operating leases, net 28,691 4,933 — 33,624 Total assets 66,877 9,401 — 76,278 United Canada Valuation Consolidated (U.S. dollars in millions) Year ended March 31, 2021 Revenues: Retail $ 1,474 $ 190 $ — $ 1,664 Dealer 94 13 — 107 Operating leases 6,437 1,328 — 7,765 Total revenues 8,005 1,531 — 9,536 Leased vehicle expenses 4,576 1,004 — 5,580 Interest expense 772 121 — 893 Realized (gains)/losses on derivatives and foreign currency denominated debt 247 39 (286) — Net revenues 2,410 367 286 3,063 Other income 51 13 — 64 Total net revenues 2,461 380 286 3,127 Expenses: General and administrative expenses 418 53 — 471 Provision for credit losses (65) (4) — (69) Early termination loss on operating leases (157) 1 — (156) Gain on derivative instruments — — (229) (229) Loss on foreign currency revaluation of debt — — 430 430 Income before income taxes $ 2,265 $ 330 $ 85 $ 2,680 March 31, 2021 Finance receivables, net $ 36,905 $ 4,528 $ — $ 41,433 Investment in operating leases, net 30,036 5,309 — 35,345 Total assets 70,590 10,212 — 80,802 United Canada Valuation Consolidated (U.S. dollars in millions) Year ended March 31, 2020 Revenues: Retail $ 1,533 $ 204 $ — $ 1,737 Dealer 198 24 — 222 Operating leases 6,402 1,347 — 7,749 Total revenues 8,133 1,575 — 9,708 Leased vehicle expenses 4,667 1,026 — 5,693 Interest expense 1,063 178 — 1,241 Realized (gains)/losses on derivatives and foreign currency denominated debt 106 (4) (102) — Net revenues 2,297 375 102 2,774 Other income 77 11 — 88 Total net revenues 2,374 386 102 2,862 Expenses: General and administrative expenses 439 59 — 498 Provision for credit losses 393 9 — 402 Early termination loss on operating leases 327 4 — 331 Loss on derivative instruments — — 305 305 Gain on foreign currency revaluation of debt — — (107) (107) Income before income taxes $ 1,215 $ 314 $ (96) $ 1,433 March 31, 2020 Finance receivables, net $ 35,381 $ 4,173 $ — $ 39,554 Investment in operating leases, net 28,809 5,034 — 33,843 Total assets 67,566 9,690 — 77,256 |
Summary of Business and Signi_3
Summary of Business and Significant Accounting Policies - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||||
Apr. 01, 2020 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 | |
Business And Significant Accounting Policies [Line Items] | |||||
Majority owned percentage in HCFI subsidiary (percent) | 52.33% | 52.33% | |||
After-tax cumulative-effect reduction to opening retained earnings and noncontrolling interest | $ 19,452 | $ 19,165 | $ 17,563 | $ 17,268 | |
Cumulative Effect, Period of Adoption, Adjustment | |||||
Business And Significant Accounting Policies [Line Items] | |||||
Increase to allowance for credit loss | $ 101 | ||||
After-tax cumulative-effect reduction to opening retained earnings and noncontrolling interest | $ 75 | $ (75) | |||
Dealer | |||||
Business And Significant Accounting Policies [Line Items] | |||||
Dealer loans threshold days past due for recognition of finance revenue to be discontinued | 90 days | ||||
Retail | |||||
Business And Significant Accounting Policies [Line Items] | |||||
Retail loans and leases threshold days past due for automatic charge off | 120 days | ||||
Minimum | |||||
Business And Significant Accounting Policies [Line Items] | |||||
Retail loan term | 2 years | ||||
Lease term | 2 years | ||||
Maximum | |||||
Business And Significant Accounting Policies [Line Items] | |||||
Retail loan term | 6 years | ||||
Lease term | 5 years |
Finance Receivables - Summary o
Finance Receivables - Summary of Finance Receivables (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Finance receivables | $ 38,094 | $ 42,187 | ||
Allowance for credit losses | (211) | (288) | $ (370) | $ (201) |
Deferred dealer participation and other deferred costs | 390 | 434 | ||
Unearned subsidy income | (792) | (900) | ||
Finance receivables, net | 37,481 | 41,433 | 39,554 | |
Retail | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Finance receivables | 36,028 | 38,102 | ||
Allowance for credit losses | (206) | (280) | (364) | (193) |
Deferred dealer participation and other deferred costs | 390 | 434 | ||
Unearned subsidy income | (792) | (900) | ||
Finance receivables, net | 35,420 | 37,356 | ||
Dealer | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Finance receivables | 2,066 | 4,085 | ||
Allowance for credit losses | (5) | (8) | $ (6) | $ (8) |
Deferred dealer participation and other deferred costs | 0 | 0 | ||
Unearned subsidy income | 0 | 0 | ||
Finance receivables, net | $ 2,061 | $ 4,077 |
Finance Receivables - Narrative
Finance Receivables - Narrative (Detail) - USD ($) | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Financing receivables | $ 37,481,000,000 | $ 41,433,000,000 | $ 39,554,000,000 |
Retail loans and leases threshold delinquent (percent) (more than) | 10% | ||
Retail | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Financing receivables | $ 35,420,000,000 | 37,356,000,000 | |
Dealer | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Financing receivables | 2,061,000,000 | 4,077,000,000 | |
Dealer loans modified as troubled debt restructurings | 0 | 0 | $ 0 |
Collateral Pledged | Retail | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Financing receivables | $ 9,000,000,000 | $ 8,800,000,000 |
Finance Receivables - Summary_2
Finance Receivables - Summary of Activity in Allowance for Credit Losses of Finance Receivables (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Finance receivables, net: | |||
Beginning balance | $ 288 | $ 370 | $ 201 |
Provision | (22) | (69) | 402 |
Charge-offs | (145) | (233) | (334) |
Recoveries | 90 | 118 | 101 |
Effect of translation adjustment | 0 | 1 | 0 |
Ending balance | 211 | 288 | 370 |
Cumulative Effect, Period of Adoption, Adjustment | |||
Finance receivables, net: | |||
Beginning balance | 101 | ||
Ending balance | 101 | ||
Adjusted balance | |||
Finance receivables, net: | |||
Beginning balance | 471 | ||
Ending balance | 471 | ||
Retail | |||
Finance receivables, net: | |||
Beginning balance | 280 | 364 | 193 |
Provision | (19) | (67) | 388 |
Charge-offs | (145) | (232) | (317) |
Recoveries | 90 | 116 | 100 |
Effect of translation adjustment | 0 | 1 | 0 |
Ending balance | 206 | 280 | 364 |
Retail | Cumulative Effect, Period of Adoption, Adjustment | |||
Finance receivables, net: | |||
Beginning balance | 98 | ||
Ending balance | 98 | ||
Retail | Adjusted balance | |||
Finance receivables, net: | |||
Beginning balance | 462 | ||
Ending balance | 462 | ||
Dealer | |||
Finance receivables, net: | |||
Beginning balance | 8 | 6 | 8 |
Provision | (3) | (2) | 14 |
Charge-offs | 0 | (1) | (17) |
Recoveries | 0 | 2 | 1 |
Effect of translation adjustment | 0 | 0 | 0 |
Ending balance | $ 5 | 8 | 6 |
Dealer | Cumulative Effect, Period of Adoption, Adjustment | |||
Finance receivables, net: | |||
Beginning balance | 3 | ||
Ending balance | 3 | ||
Dealer | Adjusted balance | |||
Finance receivables, net: | |||
Beginning balance | $ 9 | ||
Ending balance | $ 9 |
Finance Receivables - Summary_3
Finance Receivables - Summary of Aging Analysis of Past Due Finance Receivables (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | $ 37,692 | $ 41,721 |
Total past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 379 | 266 |
30 – 59 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 285 | 206 |
60 – 89 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 76 | 48 |
90 days or greater past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 18 | 12 |
Current or less than 30 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 37,313 | 41,455 |
Retail | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 35,626 | 37,636 |
Retail | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 29,552 | 30,900 |
Retail | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 4,720 | 5,267 |
Retail | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 1,354 | 1,469 |
Retail | Total past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 379 | 265 |
Retail | Total past due | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 255 | 185 |
Retail | Total past due | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 105 | 65 |
Retail | Total past due | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 19 | 15 |
Retail | 30 – 59 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 285 | 205 |
Retail | 30 – 59 days past due | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 194 | 145 |
Retail | 30 – 59 days past due | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 78 | 50 |
Retail | 30 – 59 days past due | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 13 | 10 |
Retail | 60 – 89 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 76 | 48 |
Retail | 60 – 89 days past due | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 50 | 33 |
Retail | 60 – 89 days past due | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 22 | 12 |
Retail | 60 – 89 days past due | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 4 | 3 |
Retail | 90 days or greater past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 18 | 12 |
Retail | 90 days or greater past due | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 11 | 7 |
Retail | 90 days or greater past due | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 5 | 3 |
Retail | 90 days or greater past due | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 2 | 2 |
Retail | Current or less than 30 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 35,247 | 37,371 |
Retail | Current or less than 30 days past due | New auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 29,297 | 30,715 |
Retail | Current or less than 30 days past due | Used and certified auto | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 4,615 | 5,202 |
Retail | Current or less than 30 days past due | Motorcycle and other | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 1,335 | 1,454 |
Dealer | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 2,066 | 4,085 |
Dealer | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 1,266 | 3,206 |
Dealer | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 800 | 879 |
Dealer | Total past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 1 |
Dealer | Total past due | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 1 |
Dealer | Total past due | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 30 – 59 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 1 |
Dealer | 30 – 59 days past due | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 1 |
Dealer | 30 – 59 days past due | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 60 – 89 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 60 – 89 days past due | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 60 – 89 days past due | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 90 days or greater past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 90 days or greater past due | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | 90 days or greater past due | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 0 | 0 |
Dealer | Current or less than 30 days past due | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 2,066 | 4,084 |
Dealer | Current or less than 30 days past due | Wholesale flooring | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | 1,266 | 3,205 |
Dealer | Current or less than 30 days past due | Commercial loans | ||
Financing Receivable, Past Due [Line Items] | ||
Total finance receivables | $ 800 | $ 879 |
Finance Receivables - Summary_4
Finance Receivables - Summary of Loans by Internal Credit Grade (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Current Period | ||
Total | $ 38,094 | $ 42,187 |
Prior Year | ||
Total | 38,094 | 42,187 |
Retail loans | ||
Current Period | ||
Total | 36,028 | 38,102 |
Prior Year | ||
Total | 36,028 | 38,102 |
Performing Financing Receivable | Retail loans | ||
Current Period | ||
2022 | 13,660 | 17,593 |
2021 | 12,055 | 8,888 |
2020 | 5,121 | 6,182 |
2019 | 3,086 | 3,385 |
2018 | 1,351 | 1,311 |
Prior | 353 | 277 |
Total | 35,626 | 37,636 |
Prior Year | ||
2021 | 13,660 | 17,593 |
2020 | 12,055 | 8,888 |
2019 | 5,121 | 6,182 |
2018 | 3,086 | 3,385 |
2017 | 1,351 | 1,311 |
Prior | 353 | 277 |
Total | 35,626 | 37,636 |
Credit grade A | Performing Financing Receivable | Retail loans | ||
Current Period | ||
2022 | 8,849 | 11,763 |
2021 | 8,065 | 5,384 |
2020 | 3,073 | 3,965 |
2019 | 1,912 | 1,982 |
2018 | 727 | 728 |
Prior | 169 | 136 |
Total | 22,795 | 23,958 |
Prior Year | ||
2021 | 8,849 | 11,763 |
2020 | 8,065 | 5,384 |
2019 | 3,073 | 3,965 |
2018 | 1,912 | 1,982 |
2017 | 727 | 728 |
Prior | 169 | 136 |
Total | 22,795 | 23,958 |
Credit grade B | Performing Financing Receivable | Retail loans | ||
Current Period | ||
2022 | 2,433 | 2,898 |
2021 | 2,010 | 1,508 |
2020 | 898 | 996 |
2019 | 525 | 629 |
2018 | 271 | 255 |
Prior | 74 | 60 |
Total | 6,211 | 6,346 |
Prior Year | ||
2021 | 2,433 | 2,898 |
2020 | 2,010 | 1,508 |
2019 | 898 | 996 |
2018 | 525 | 629 |
2017 | 271 | 255 |
Prior | 74 | 60 |
Total | 6,211 | 6,346 |
Credit grade C | Performing Financing Receivable | Retail loans | ||
Current Period | ||
2022 | 1,713 | 2,081 |
2021 | 1,409 | 1,245 |
2020 | 718 | 767 |
2019 | 405 | 504 |
2018 | 228 | 206 |
Prior | 64 | 47 |
Total | 4,537 | 4,850 |
Prior Year | ||
2021 | 1,713 | 2,081 |
2020 | 1,409 | 1,245 |
2019 | 718 | 767 |
2018 | 405 | 504 |
2017 | 228 | 206 |
Prior | 64 | 47 |
Total | 4,537 | 4,850 |
Credit grade D | Performing Financing Receivable | Retail loans | ||
Current Period | ||
2022 | 451 | 628 |
2021 | 418 | 598 |
2020 | 341 | 349 |
2019 | 188 | 212 |
2018 | 100 | 90 |
Prior | 33 | 27 |
Total | 1,531 | 1,904 |
Prior Year | ||
2021 | 451 | 628 |
2020 | 418 | 598 |
2019 | 341 | 349 |
2018 | 188 | 212 |
2017 | 100 | 90 |
Prior | 33 | 27 |
Total | 1,531 | 1,904 |
Others | Performing Financing Receivable | Retail loans | ||
Current Period | ||
2022 | 214 | 223 |
2021 | 153 | 153 |
2020 | 91 | 105 |
2019 | 56 | 58 |
2018 | 25 | 32 |
Prior | 13 | 7 |
Total | 552 | 578 |
Prior Year | ||
2021 | 214 | 223 |
2020 | 153 | 153 |
2019 | 91 | 105 |
2018 | 56 | 58 |
2017 | 25 | 32 |
Prior | 13 | 7 |
Total | $ 552 | $ 578 |
Finance Receivables - Summary_5
Finance Receivables - Summary of Outstanding Dealer Loans by Grouping (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Current Period | ||
Total | $ 38,094 | $ 42,187 |
Prior Year | ||
Total | 38,094 | 42,187 |
Dealer loans | ||
Current Period | ||
Total | 2,066 | 4,085 |
Prior Year | ||
Total | 2,066 | 4,085 |
Dealer loans | Performing Financing Receivable | ||
Current Period | ||
Total | 2,066 | 4,085 |
Prior Year | ||
Total | 2,066 | 4,085 |
Dealer loans | Group I | Performing Financing Receivable | ||
Current Period | ||
Total | 1,411 | 2,161 |
Prior Year | ||
Total | 1,411 | 2,161 |
Dealer loans | Group II | Performing Financing Receivable | ||
Current Period | ||
Total | 655 | 1,924 |
Prior Year | ||
Total | 655 | 1,924 |
Dealer loans | Group III | Performing Financing Receivable | ||
Current Period | ||
Total | 0 | 0 |
Prior Year | ||
Total | 0 | 0 |
Dealer loans | Commercial loans | Performing Financing Receivable | ||
Current Period | ||
2022 | 17 | 247 |
2021 | 210 | 82 |
2020 | 63 | 40 |
2019 | 35 | 73 |
2018 | 54 | 53 |
Prior | 104 | 101 |
Revolving loans | 317 | 283 |
Prior Year | ||
2021 | 17 | 247 |
2020 | 210 | 82 |
2019 | 63 | 40 |
2018 | 35 | 73 |
2017 | 54 | 53 |
Prior | 104 | 101 |
Revolving loans | 317 | 283 |
Dealer loans | Commercial loans | Group I | Performing Financing Receivable | ||
Current Period | ||
2022 | 11 | 155 |
2021 | 207 | 57 |
2020 | 56 | 0 |
2019 | 18 | 43 |
2018 | 32 | 44 |
Prior | 99 | 88 |
Revolving loans | 317 | 283 |
Prior Year | ||
2021 | 11 | 155 |
2020 | 207 | 57 |
2019 | 56 | 0 |
2018 | 18 | 43 |
2017 | 32 | 44 |
Prior | 99 | 88 |
Revolving loans | 317 | 283 |
Dealer loans | Commercial loans | Group II | Performing Financing Receivable | ||
Current Period | ||
2022 | 6 | 92 |
2021 | 3 | 25 |
2020 | 7 | 40 |
2019 | 17 | 30 |
2018 | 22 | 9 |
Prior | 5 | 13 |
Revolving loans | 0 | 0 |
Prior Year | ||
2021 | 6 | 92 |
2020 | 3 | 25 |
2019 | 7 | 40 |
2018 | 17 | 30 |
2017 | 22 | 9 |
Prior | 5 | 13 |
Revolving loans | 0 | 0 |
Dealer loans | Commercial loans | Group III | Performing Financing Receivable | ||
Current Period | ||
2022 | 0 | 0 |
2021 | 0 | 0 |
2020 | 0 | 0 |
2019 | 0 | 0 |
2018 | 0 | 0 |
Prior | 0 | 0 |
Revolving loans | 0 | 0 |
Prior Year | ||
2021 | 0 | 0 |
2020 | 0 | 0 |
2019 | 0 | 0 |
2018 | 0 | 0 |
2017 | 0 | 0 |
Prior | 0 | 0 |
Revolving loans | 0 | 0 |
Dealer loans | Wholesale flooring | Performing Financing Receivable | ||
Current Period | ||
Total | 1,266 | 3,206 |
Prior Year | ||
Total | 1,266 | 3,206 |
Dealer loans | Wholesale flooring | Group I | Performing Financing Receivable | ||
Current Period | ||
Total | 671 | 1,491 |
Prior Year | ||
Total | 671 | 1,491 |
Dealer loans | Wholesale flooring | Group II | Performing Financing Receivable | ||
Current Period | ||
Total | 595 | 1,715 |
Prior Year | ||
Total | 595 | 1,715 |
Dealer loans | Wholesale flooring | Group III | Performing Financing Receivable | ||
Current Period | ||
Total | 0 | 0 |
Prior Year | ||
Total | $ 0 | $ 0 |
Investment in Operating Lease_2
Investment in Operating Leases - Schedule of Investment in Operating Leases (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 |
Leases [Abstract] | |||
Operating lease vehicles | $ 42,990 | $ 45,153 | |
Accumulated depreciation | (8,529) | (8,726) | |
Deferred dealer participation and initial direct costs | 114 | 130 | |
Unearned subsidy income | (869) | (1,123) | |
Estimated early termination losses | (82) | (89) | |
Investment in operating leases, net | $ 33,624 | $ 35,345 | $ 33,843 |
Investment in Operating Lease_3
Investment in Operating Leases - Schedule of Lease Revenue (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Leases [Abstract] | |||
Lease payments | $ 6,913 | $ 6,808 | $ 6,713 |
Subsidy income and dealer rate participation, net | 798 | 894 | 968 |
Reimbursed lessor costs | 67 | 63 | 68 |
Total operating lease revenue, net | $ 7,778 | $ 7,765 | $ 7,749 |
Investment in Operating Lease_4
Investment in Operating Leases - Leased Vehicle Expense (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Lessor, Lease, Description [Line Items] | |||
End of term charges | $ 17 | $ 54 | $ 73 |
Leased Vehicles | |||
Lessor, Lease, Description [Line Items] | |||
Depreciation expense | 5,676 | 5,669 | 5,705 |
Initial direct costs and other lessor costs | 151 | 140 | 141 |
Gain on disposition of leased vehicles | (197) | (229) | (153) |
Total leased vehicle expenses, net | $ 5,630 | $ 5,580 | $ 5,693 |
Investment in Operating Lease_5
Investment in Operating Leases - Narrative (Detail) - USD ($) | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Lessor, Lease, Description [Line Items] | |||
Net carrying amount of lease assets | $ 33,624,000,000 | $ 35,345,000,000 | $ 33,843,000,000 |
Reversal (loss) of early termination losses on operating leases | (16,000,000) | 156,000,000 | (331,000,000) |
Net realized losses on operating losses | 23,000,000 | 72,000,000 | 129,000,000 |
Provision for credit losses on operating leases | 2,000,000 | 31,000,000 | $ 28,000,000 |
Impairment losses | 0 | 0 | |
Collateral Pledged | |||
Lessor, Lease, Description [Line Items] | |||
Net carrying amount of lease assets | $ 294,000,000 | $ 440,000,000 |
Investment in Operating Lease_6
Investment in Operating Leases - Future Minimum Rental Payments (Detail) $ in Millions | Mar. 31, 2022 USD ($) |
Year ending March 31: | |
2023 | $ 5,459 |
2024 | 3,536 |
2025 | 1,170 |
2026 | 230 |
2027 | 56 |
Total | $ 10,451 |
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 | Mar. 31, 2022 | Mar. 31, 2021 |
Debt Instrument [Line Items] | ||
Unsecured debt | $ 38,051 | $ 43,037 |
Secured debt | 8,888 | 8,890 |
Total debt | 46,939 | 51,927 |
Commercial paper | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 2,307 | $ 5,542 |
Weighted average contractual interest rate (percentage) | 0.74% | 0.31% |
Commercial paper | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.33% | 0.20% |
Commercial paper | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 1.21% | 0.67% |
Bank loans | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 3,108 | $ 4,052 |
Weighted average contractual interest rate (percentage) | 1.52% | 1.01% |
Bank loans | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.94% | 0.56% |
Bank loans | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 2.01% | 1.29% |
Private MTN program | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 0 | $ 500 |
Weighted average contractual interest rate (percentage) | 0% | 3.80% |
Private MTN program | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0% | 3.80% |
Private MTN program | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0% | 3.80% |
Public MTN program | ||
Debt Instrument [Line Items] | ||
Unsecured debt | $ 28,659 | $ 28,943 |
Weighted average contractual interest rate (percentage) | 1.53% | 1.53% |
Public MTN program | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.30% | 0.33% |
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 | $ 25 | $ 27 |
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 | $ 3,952 | $ 3,973 |
Weighted average contractual interest rate (percentage) | 2.20% | 2.11% |
Other debt | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 1.05% | 0.53% |
Other debt | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.44% | 3.44% |
Secured debt | ||
Debt Instrument [Line Items] | ||
Secured debt | $ 8,888 | $ 8,890 |
Weighted average contractual interest rate (percentage) | 0.93% | 1.34% |
Secured debt | Minimum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 0.14% | 0.12% |
Secured debt | Maximum | ||
Debt Instrument [Line Items] | ||
Contractual interest rate ranges (percentage) | 3.30% | 3.30% |
Debt - Narrative (Detail)
Debt - Narrative (Detail) | 12 Months Ended | ||
Mar. 31, 2022 USD ($) note | Mar. 31, 2021 USD ($) | Aug. 31, 2019 USD ($) | |
Debt Instrument [Line Items] | |||
Outstanding principal balance of long-term debt with floating interest rates | $ 5,900,000,000 | $ 9,900,000,000 | |
Outstanding principal balance of long-term debt with fixed interest rates | 37,900,000,000 | 35,600,000,000 | |
Short-term debt | 3,100,000,000 | 6,400,000,000 | |
AHFC | Syndicated Bank Credit Facilities | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 7,000,000,000 | ||
Line of credit facility outstanding amount | 0 | ||
AHFC | Syndicated Bank Credit Facilities With 364 Day Credit Agreement | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 3,500,000,000 | ||
AHFC | Syndicated Bank Credit Facilities With Three Year Credit Agreement | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 2,100,000,000 | ||
AHFC | Syndicated Bank Credit Facilities With Five Year Credit Agreement | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 1,400,000,000 | ||
AHFC | Syndicated Bank Credit Facilities With One Year Revolving Term | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 800,000,000 | ||
AHFC | Syndicated Bank Credit Facilities With Five Year Revolving Term | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 800,000,000 | ||
AHFC | Other Credit Agreements | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 1,000,000,000 | ||
Line of credit facility outstanding amount | 0 | ||
HCFI | Syndicated Bank Credit Facilities | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 1,600,000,000 | ||
Line of credit facility outstanding amount | 0 | ||
Commercial paper | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | 9,000,000,000 | 9,000,000,000 | |
Average outstanding balance | 4,900,000,000 | 5,300,000,000 | |
Commercial paper | AHFC | Other Credit Agreements | |||
Debt Instrument [Line Items] | |||
Maximum balance outstanding at any month-end | $ 6,700,000,000 | $ 6,800,000,000 | |
Public MTN program | |||
Debt Instrument [Line Items] | |||
Maximum funds available (up to) | $ 30,000,000,000 | ||
Euro MTN programme | |||
Debt Instrument [Line Items] | |||
Number of notes outstanding | note | 1 |
Debt - Scheduled and Projected
Debt - Scheduled and Projected Maturities of Debt (Detail) $ in Millions | Mar. 31, 2022 USD ($) |
Debt Instrument [Line Items] | |
2023 | $ 17,982 |
2024 | 10,709 |
2025 | 7,644 |
2026 | 2,446 |
2027 | 3,387 |
Thereafter | 4,860 |
Total | 47,028 |
Unamortized discounts/fees | (89) |
Total debt, net | 46,939 |
Commercial paper | |
Debt Instrument [Line Items] | |
2023 | 2,309 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total | 2,309 |
Bank loans | |
Debt Instrument [Line Items] | |
2023 | 1,770 |
2024 | 200 |
2025 | 480 |
2026 | 0 |
2027 | 660 |
Thereafter | 0 |
Total | 3,110 |
Public MTN program | |
Debt Instrument [Line Items] | |
2023 | 7,878 |
2024 | 7,203 |
2025 | 5,357 |
2026 | 1,500 |
2027 | 2,407 |
Thereafter | 4,380 |
Total | 28,725 |
Euro MTN programme | |
Debt Instrument [Line Items] | |
2023 | 25 |
2024 | 0 |
2025 | 0 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total | 25 |
Other debt | |
Debt Instrument [Line Items] | |
2023 | 1,119 |
2024 | 640 |
2025 | 600 |
2026 | 799 |
2027 | 320 |
Thereafter | 480 |
Total | 3,958 |
Total unsecured debt | |
Debt Instrument [Line Items] | |
2023 | 13,101 |
2024 | 8,043 |
2025 | 6,437 |
2026 | 2,299 |
2027 | 3,387 |
Thereafter | 4,860 |
Total | 38,127 |
Secured debt | |
Debt Instrument [Line Items] | |
2023 | 4,881 |
2024 | 2,666 |
2025 | 1,207 |
2026 | 147 |
2027 | 0 |
Thereafter | 0 |
Total | $ 8,901 |
Derivative Instruments - Notion
Derivative Instruments - Notional Balances and Fair Values of Derivatives (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Assets | ||
Gross derivative assets | $ 971 | $ 918 |
Collateral posted/held | 5 | 37 |
Counterparty netting adjustment | (804) | (591) |
Net derivative assets | 172 | 364 |
Liabilities | ||
Gross derivative liabilities | 1,119 | 632 |
Collateral posted/held | 28 | 5 |
Counterparty netting adjustment | (804) | (591) |
Net derivative liabilities | 343 | 46 |
Interest rate swaps | ||
Derivatives, Fair Value [Line Items] | ||
Notional balances | 61,941 | 64,088 |
Assets | ||
Gross derivative assets | 931 | 545 |
Liabilities | ||
Gross derivative liabilities | 683 | 586 |
Cross currency swaps | ||
Derivatives, Fair Value [Line Items] | ||
Notional balances | 7,920 | 6,303 |
Assets | ||
Gross derivative assets | 40 | 373 |
Liabilities | ||
Gross derivative liabilities | $ 436 | $ 46 |
Derivative Instruments - Income
Derivative Instruments - Income Statement Impact of Derivative Instruments (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Total gain/(loss) on derivative instruments | $ (571) | $ 229 | $ (305) |
Interest rate swaps | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Total gain/(loss) on derivative instruments | 140 | (148) | (127) |
Cross currency swaps | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Total gain/(loss) on derivative instruments | $ (711) | $ 377 | $ (178) |
Transactions Involving Relate_3
Transactions Involving Related Parties - Summary of Income Statement Impact of Transactions with Parent and Affiliated Companies (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
General and administrative expenses: | |||
Lease expense | $ 11 | $ 10 | $ 10 |
Affiliated Entity | |||
Revenue: | |||
Subsidy income | 1,410 | 1,476 | 1,639 |
Interest expense: | |||
Related party debt | 0 | 2 | 14 |
Other income, net: | |||
VSC administration fees | 3 | 106 | 109 |
Support Service Fee | 0 | (45) | (36) |
General and administrative expenses: | |||
Support Compensation Agreement fees | 76 | 72 | 68 |
Benefit plan expenses | 8 | 9 | 10 |
Shared services | 72 | 69 | 70 |
Lease expense | $ 4 | $ 2 | $ 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 | Mar. 31, 2022 | Mar. 31, 2021 |
Investment in operating leases, net: | ||
Due from Parent and affiliated companies | $ 62 | $ 194 |
Liabilities | ||
Due to Parent and affiliated companies | 125 | 106 |
Other liabilities: | ||
Dividend payable | 133 | 0 |
Operating lease liabilities | 57 | 65 |
Affiliated Entity | ||
Finance receivables, net: | ||
Unearned subsidy income | (783) | (891) |
Investment in operating leases, net: | ||
Unearned subsidy income | (867) | (1,120) |
Due from Parent and affiliated companies | 62 | 194 |
Liabilities | ||
Due to Parent and affiliated companies | 125 | 106 |
Other liabilities: | ||
Accrued interest expense | 0 | 0 |
Unearned VSC administrative fees | 0 | 333 |
Accrued benefit expenses | 63 | 60 |
Dividend payable | 133 | 0 |
Operating lease liabilities | $ 15 | $ 17 |
Transactions Involving Relate_5
Transactions Involving Related Parties - Narrative (Detail) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | ||||||||
Mar. 22, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transaction [Line Items] | ||||||||||
Dividends declared | $ 1,626 | $ 608 | $ 605 | |||||||
AHM | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Dividends declared | $ 1,000 | $ 491 | $ 465 | $ 143 | $ 313 | $ 292 | ||||
AHFC | Honda Motor Co., Ltd. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Honda Motor Company required ownership interest (percentage) | 80% | 80% | ||||||||
AHM | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Compensating funds from parent for waived rental payments | $ 1 | $ 8 | ||||||||
HCFI | Honda Motor Co., Ltd. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Honda Motor Company required ownership interest (percentage) | 80% | 80% | ||||||||
HCFI | AHFC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Dividends declared | $ 146 | |||||||||
HCFI | HCI | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Dividends declared | $ 133 | |||||||||
Minimum | AHFC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Vehicle service contract terms | 2 years | |||||||||
Vehicle service original contract terms | 4 years | |||||||||
Maximum | AHFC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Vehicle service contract terms | 9 years | |||||||||
Vehicle service original contract terms | 8 years |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Increase (decrease) in translation adjustments of deferred tax liabilities | $ 2 | $ 41 | $ (19) |
Accumulated undistributed earnings of HCFI | 1,100 | ||
Unrecognized deferred tax liability from undistributed foreign earnings | 59 | ||
State loss carryforwards | 33 | 36 | 48 |
Income tax credits | 0 | 80 | |
Unrecognized tax benefits, net of federal benefit of state taxes, would affect the effective tax | 80 | 94 | 166 |
Uncertain tax positions | 94 | 103 | |
Interest expense (income) as a component of income tax expense | 4 | (20) | 25 |
Accrued interest payable attributable to income taxes | $ 20 | $ 16 | $ 36 |
Income Taxes - Consolidated Inc
Income Taxes - Consolidated Income Tax Expense/(Benefit) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Current | |||
Federal | $ 643 | $ 36 | $ (46) |
State and local | 220 | 146 | 231 |
Foreign | 44 | 38 | 30 |
Total current | 907 | 220 | 215 |
Deferred | |||
Federal | (205) | 378 | 333 |
State and local | (84) | (5) | (166) |
Foreign | 57 | 54 | 42 |
Total deferred | (232) | 427 | 209 |
Total | |||
Federal | 438 | 414 | 287 |
State and local | 136 | 141 | 65 |
Foreign | 101 | 92 | 72 |
Income tax expense | $ 675 | $ 647 | $ 424 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the Expected Income Tax Expense to the Reported Income Tax Expense (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Reconciliation of the expected income tax expense to the reported income tax expense | |||
Computed “expected” income taxes | $ 541 | $ 563 | $ 301 |
Foreign tax rate differential | 21 | 19 | 14 |
State and local income taxes, net of federal income tax benefit | 111 | 112 | 62 |
Change in estimated state tax rate, net of federal income tax benefit | (15) | (6) | (16) |
Change in unrecognized tax benefit | 5 | (47) | 64 |
Other | 12 | 6 | (1) |
Income tax expense | $ 675 | $ 647 | $ 424 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 |
Deferred tax assets: | |||
State income tax | $ 151 | $ 163 | |
Receivable allowance | 85 | 111 | |
Accrued postretirement | 13 | 12 | |
State loss carryforwards | 33 | 36 | $ 48 |
Income tax credits | 0 | 80 | |
Derivatives | 1 | 0 | |
Other assets | 66 | 67 | |
Total gross deferred tax assets | 349 | 469 | |
Less valuation allowance | 0 | 0 | |
Net deferred tax assets | 349 | 469 | |
Deferred tax liabilities: | |||
HCFI leases | 522 | 466 | |
AHFC leases | 6,563 | 6,950 | |
Other | 67 | 86 | |
Total gross deferred tax liabilities | 7,152 | 7,502 | |
Net deferred tax liabilities | $ 6,803 | $ 7,033 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Balance, beginning of year | $ 95 | $ 169 | $ 86 |
Additions for current year tax positions | 0 | 0 | 0 |
Additions for prior year tax positions | 0 | 0 | 98 |
Reductions for prior year tax positions | (14) | (21) | (15) |
Settlements | 0 | (4) | 0 |
Reductions related to a lapse in the statute of limitations | 0 | (49) | 0 |
Foreign currency translation | 0 | 0 | 0 |
Balance, end of year | $ 81 | $ 95 | $ 169 |
Benefit Plans - Narrative (Deta
Benefit Plans - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Retirement Benefits [Abstract] | |||
Pension Plans' expense | $ 5 | $ 21 | $ 6 |
Company's contribution to the Savings Plans | 8 | 8 | 8 |
Expense (benefit) included in general and administrative expenses for postretirement plans | $ 3 | $ (12) | $ 4 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Lease Liabilities Maturity Schedule (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Operating leases future minimum payments due | ||
2023 | $ 10 | |
2024 | 8 | |
2025 | 7 | |
2026 | 8 | |
2027 | 8 | |
Thereafter | 24 | |
Total undiscounted future lease obligations | 65 | |
Less: imputed interest | (8) | |
Operating lease liabilities | $ 57 | $ 65 |
Commitments and Contingencies_2
Commitments and Contingencies - Narrative (Detail) $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Nov. 30, 2020 regional_office service_center | Mar. 31, 2022 USD ($) regional_office | Mar. 31, 2021 USD ($) | Mar. 31, 2020 USD ($) | Sep. 29, 2021 demand | Sep. 28, 2021 demand | |
Commitments And Contingencies Disclosure [Line Items] | ||||||
Number of regional offices to be consolidated | regional_office | 9 | |||||
Number of service centers, after consolidation | service_center | 3 | |||||
Number of remaining regional offices | regional_office | 6 | |||||
Operating lease, expense | $ 11 | $ 10 | $ 10 | |||
Weighted average remaining lease term | 7 years 10 months 24 days | |||||
Weighted average discount rate (percent) | 2.88% | |||||
Pending Litigation | ||||||
Commitments And Contingencies Disclosure [Line Items] | ||||||
Number of civil investigative demands | demand | 2 | |||||
Settled Litigation | ||||||
Commitments And Contingencies Disclosure [Line Items] | ||||||
Number of civil investigative demands | demand | 2 | |||||
Revolving lines of credit | ||||||
Commitments And Contingencies Disclosure [Line Items] | ||||||
Unused balance of commercial revolving lines of credit | $ 680 | |||||
Construction of auto dealerships | ||||||
Commitments And Contingencies Disclosure [Line Items] | ||||||
Remaining unfunded balance for construction loans | $ 5 |
Securitizations and Variable _3
Securitizations and Variable Interest Entities (VIE) - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Asset-backed securitization notes issued during period | $ 6,000 | $ 4,800 |
Initial receivable principal balance underlying asset-backed securitization notes issued during period | 6,500 | 5,100 |
Cash to be remitted to trusts | $ 529 | $ 581 |
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 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Assets | ||||
Restricted cash | [1] | $ 365 | $ 380 | $ 582 |
Other | 10 | 11 | ||
Liabilities | ||||
Secured debt | 8,888 | 8,890 | ||
Other | 1,310 | 1,734 | ||
Variable Interest Entity, Primary Beneficiary | ||||
Assets | ||||
Securitized assets | 9,327 | 9,223 | ||
Restricted cash | 365 | 380 | ||
Other | 15 | 17 | ||
Liabilities | ||||
Secured debt | 8,887 | 8,890 | ||
Other | 5 | 6 | ||
Variable Interest Entity, Primary Beneficiary | Retail loan securitizations | ||||
Assets | ||||
Securitized assets | 9,033 | 8,783 | ||
Restricted cash | 364 | 378 | ||
Other | 14 | 16 | ||
Liabilities | ||||
Secured debt | 8,682 | 8,540 | ||
Other | 3 | 4 | ||
Variable Interest Entity, Primary Beneficiary | Operating lease securitizations | ||||
Assets | ||||
Securitized assets | 294 | 440 | ||
Restricted cash | 1 | 2 | ||
Other | 1 | 1 | ||
Liabilities | ||||
Secured debt | 205 | 350 | ||
Other | $ 2 | $ 2 | ||
[1]Restricted cash balances relate primarily to securitization arrangements (Note 10). |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Other Assets [Abstract] | ||||
Interest receivable and other assets | $ 82 | $ 92 | ||
Vehicles held for disposition | 51 | 94 | ||
Other receivables | 93 | 194 | ||
Deferred expense | 3 | 93 | ||
Software, net of accumulated amortization of $173 and $168 as of March 31, 2022, and 2021, respectively | 22 | 24 | ||
Property and equipment, net of accumulated depreciation of $16 and $19 as of March 31, 2022, and 2021, respectively | 5 | 3 | ||
Restricted cash | [1] | $ 365 | $ 380 | $ 582 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total | Total | ||
Operating lease assets | $ 51 | $ 62 | ||
Like-kind exchange assets | 851 | 89 | ||
Other miscellaneous assets | 10 | 11 | ||
Total | 1,533 | 1,042 | ||
Software, accumulated amortization | 173 | 168 | ||
Property and equipment, accumulated depreciation | $ 16 | $ 19 | ||
[1]Restricted cash balances relate primarily to securitization arrangements (Note 10). |
Other Assets - Narrative (Detai
Other Assets - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
General and administrative expenses | |||
Other Assets [Line Items] | |||
Depreciation on leased vehicles | $ 9 | $ 11 | $ 11 |
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 | Mar. 31, 2022 | Mar. 31, 2021 |
Other Liabilities [Line Items] | ||
Dealer payables | $ 99 | $ 175 |
Accrued interest expense | 136 | 138 |
Accounts payable and accrued expenses | 368 | 484 |
Lease security deposits | 72 | 81 |
Unearned income, operating leases | $ 317 | $ 340 |
Operating lease liability, financial statement location | Total | Total |
Operating lease liabilities | $ 57 | $ 65 |
Uncertain tax positions | 94 | 103 |
Dividend payable | 133 | 0 |
Other liabilities | 34 | 15 |
Total | 1,310 | 1,734 |
Affiliated Entity | ||
Other Liabilities [Line Items] | ||
Unearned VSC administrative fees (Note 6) | 0 | 333 |
Operating lease liabilities | 15 | 17 |
Dividend payable | $ 133 | $ 0 |
Other Income, net - Components
Other Income, net - Components of Other Income (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Condensed Income Statements, Captions [Line Items] | |||
Other, net | $ 47 | $ (42) | $ (21) |
Other income | 50 | 64 | 88 |
Affiliated Entity | |||
Condensed Income Statements, Captions [Line Items] | |||
VSC administration (Note 6) | $ 3 | $ 106 | $ 109 |
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 | Mar. 31, 2022 | Mar. 31, 2021 |
Derivative instruments: | ||
Total assets | $ 971 | $ 918 |
Total liabilities | 1,119 | 632 |
Level 1 | ||
Derivative instruments: | ||
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Level 2 | ||
Derivative instruments: | ||
Total assets | 971 | 918 |
Total liabilities | 1,119 | 632 |
Level 3 | ||
Derivative instruments: | ||
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Interest rate swaps | ||
Derivative instruments: | ||
Total assets | 931 | 545 |
Total liabilities | 683 | 586 |
Interest rate swaps | Level 1 | ||
Derivative instruments: | ||
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Interest rate swaps | Level 2 | ||
Derivative instruments: | ||
Total assets | 931 | 545 |
Total liabilities | 683 | 586 |
Interest rate swaps | Level 3 | ||
Derivative instruments: | ||
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Cross currency swaps | ||
Derivative instruments: | ||
Total assets | 40 | 373 |
Total liabilities | 436 | 46 |
Cross currency swaps | Level 1 | ||
Derivative instruments: | ||
Total assets | 0 | 0 |
Total liabilities | 0 | 0 |
Cross currency swaps | Level 2 | ||
Derivative instruments: | ||
Total assets | 40 | 373 |
Total liabilities | 436 | 46 |
Cross currency swaps | Level 3 | ||
Derivative instruments: | ||
Total assets | 0 | 0 |
Total liabilities | $ 0 | $ 0 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Nonrecurring Fair Value Measurements (Detail) - USD ($) $ in Millions | Mar. 31, 2022 | Mar. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | $ 26 | $ 50 |
Lower-of-cost or fair value adjustment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Vehicles held for disposition | 5 | 13 |
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 | $ 26 | $ 50 |
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 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2020 | |
Assets | ||||
Cash and cash equivalents, carrying value | $ 2,607 | $ 1,870 | $ 1,503 | |
Dealer loans, net, carrying value | 2,061 | 4,077 | ||
Retail loans, net, carrying value | 35,420 | 37,356 | ||
Restricted cash, carrying value | [1] | 365 | 380 | $ 582 |
Liabilities | ||||
Commercial paper, carrying value | 2,307 | 5,542 | ||
Bank loans, carrying value | 3,108 | 4,052 | ||
Medium term note programs, carrying value | 28,684 | 29,470 | ||
Other debt, carrying value | 3,952 | 3,973 | ||
Secured debt, carrying value | 8,888 | 8,890 | ||
Fair value | ||||
Assets | ||||
Cash and cash equivalents | 2,607 | 1,870 | ||
Dealer loans, net | 1,859 | 3,936 | ||
Retail loans, net | 35,161 | 38,284 | ||
Restricted cash | 365 | 380 | ||
Liabilities | ||||
Commercial paper | 2,306 | 5,543 | ||
Bank loans | 3,110 | 4,085 | ||
Medium term note programs | 28,055 | 30,069 | ||
Other debt | 3,828 | 4,066 | ||
Secured debt | 8,762 | 8,968 | ||
Fair value | Level 1 | ||||
Assets | ||||
Cash and cash equivalents | 2,607 | 1,870 | ||
Dealer loans, net | 0 | 0 | ||
Retail loans, net | 0 | 0 | ||
Restricted cash | 365 | 380 | ||
Liabilities | ||||
Commercial paper | 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 | 2,306 | 5,543 | ||
Bank loans | 3,110 | 4,085 | ||
Medium term note programs | 28,055 | 30,069 | ||
Other debt | 3,828 | 4,066 | ||
Secured debt | 8,762 | 8,968 | ||
Fair value | Level 3 | ||||
Assets | ||||
Cash and cash equivalents | 0 | 0 | ||
Dealer loans, net | 1,859 | 3,936 | ||
Retail loans, net | 35,161 | 38,284 | ||
Restricted cash | 0 | 0 | ||
Liabilities | ||||
Commercial paper | 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 10). |
Segment Information - Financial
Segment Information - Financial Information for Reportable Segments (Detail) $ in Millions | 12 Months Ended | ||
Mar. 31, 2022 USD ($) reportable_segment | Mar. 31, 2021 USD ($) | Mar. 31, 2020 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | reportable_segment | 2 | ||
Revenues: | |||
Retail | $ 1,599 | $ 1,664 | $ 1,737 |
Dealer | 67 | 107 | 222 |
Operating leases | 7,778 | 7,765 | 7,749 |
Total revenues | 9,444 | 9,536 | 9,708 |
Leased vehicle expenses | 5,630 | 5,580 | 5,693 |
Interest expense | 713 | 893 | 1,241 |
Realized (gains)/losses on derivatives and foreign currency denominated debt | 0 | 0 | 0 |
Net revenues | 3,101 | 3,063 | 2,774 |
Other income | 50 | 64 | 88 |
Total net revenues | 3,151 | 3,127 | 2,862 |
Expenses: | |||
General and administrative expenses | 479 | 471 | 498 |
Provision for credit losses | (22) | (69) | 402 |
Early termination loss on operating leases | 16 | (156) | 331 |
Loss on derivative instruments | 571 | (229) | 305 |
Gain on foreign currency revaluation of debt | (470) | 430 | (107) |
Income before income taxes | 2,577 | 2,680 | 1,433 |
Assets | |||
Finance receivables, net | 37,481 | 41,433 | 39,554 |
Investment in operating leases, net | 33,624 | 35,345 | 33,843 |
Total assets | 76,278 | 80,802 | 77,256 |
Operating Segments | United States | |||
Revenues: | |||
Retail | 1,414 | 1,474 | 1,533 |
Dealer | 58 | 94 | 198 |
Operating leases | 6,489 | 6,437 | 6,402 |
Total revenues | 7,961 | 8,005 | 8,133 |
Leased vehicle expenses | 4,655 | 4,576 | 4,667 |
Interest expense | 604 | 772 | 1,063 |
Realized (gains)/losses on derivatives and foreign currency denominated debt | 121 | 247 | 106 |
Net revenues | 2,581 | 2,410 | 2,297 |
Other income | 36 | 51 | 77 |
Total net revenues | 2,617 | 2,461 | 2,374 |
Expenses: | |||
General and administrative expenses | 423 | 418 | 439 |
Provision for credit losses | (22) | (65) | 393 |
Early termination loss on operating leases | 16 | (157) | 327 |
Loss on derivative instruments | 0 | 0 | 0 |
Gain on foreign currency revaluation of debt | 0 | 0 | 0 |
Income before income taxes | 2,200 | 2,265 | 1,215 |
Assets | |||
Finance receivables, net | 33,320 | 36,905 | 35,381 |
Investment in operating leases, net | 28,691 | 30,036 | 28,809 |
Total assets | 66,877 | 70,590 | 67,566 |
Operating Segments | Canada | |||
Revenues: | |||
Retail | 185 | 190 | 204 |
Dealer | 9 | 13 | 24 |
Operating leases | 1,289 | 1,328 | 1,347 |
Total revenues | 1,483 | 1,531 | 1,575 |
Leased vehicle expenses | 975 | 1,004 | 1,026 |
Interest expense | 109 | 121 | 178 |
Realized (gains)/losses on derivatives and foreign currency denominated debt | 22 | 39 | (4) |
Net revenues | 377 | 367 | 375 |
Other income | 14 | 13 | 11 |
Total net revenues | 391 | 380 | 386 |
Expenses: | |||
General and administrative expenses | 56 | 53 | 59 |
Provision for credit losses | 0 | (4) | 9 |
Early termination loss on operating leases | 0 | 1 | 4 |
Loss on derivative instruments | 0 | 0 | 0 |
Gain on foreign currency revaluation of debt | 0 | 0 | 0 |
Income before income taxes | 335 | 330 | 314 |
Assets | |||
Finance receivables, net | 4,161 | 4,528 | 4,173 |
Investment in operating leases, net | 4,933 | 5,309 | 5,034 |
Total assets | 9,401 | 10,212 | 9,690 |
Valuation adjustments and reclassifications | |||
Revenues: | |||
Retail | 0 | 0 | 0 |
Dealer | 0 | 0 | 0 |
Operating leases | 0 | 0 | 0 |
Total revenues | 0 | 0 | 0 |
Leased vehicle expenses | 0 | 0 | 0 |
Interest expense | 0 | 0 | 0 |
Realized (gains)/losses on derivatives and foreign currency denominated debt | (143) | (286) | (102) |
Net revenues | 143 | 286 | 102 |
Other income | 0 | 0 | 0 |
Total net revenues | 143 | 286 | 102 |
Expenses: | |||
General and administrative expenses | 0 | 0 | 0 |
Provision for credit losses | 0 | 0 | 0 |
Early termination loss on operating leases | 0 | 0 | 0 |
Loss on derivative instruments | 571 | (229) | 305 |
Gain on foreign currency revaluation of debt | (470) | 430 | (107) |
Income before income taxes | 42 | 85 | (96) |
Assets | |||
Finance receivables, net | 0 | 0 | 0 |
Investment in operating leases, net | 0 | 0 | 0 |
Total assets | $ 0 | $ 0 | $ 0 |