Harley focuses on financing arm, addresses tariffs and consumer trends in Q1 earnings call
Harley-Davidson, Inc. offered insight into its strategic direction and business outlook during its first-quarter 2025 earnings call, emphasizing stability within its financial services division, the impact of global trade policies, and evolving consumer behavior. Harley’s Q1 retail sales were down 21 percent globally and 24 percent in North America, as the company continues to deal with headwinds from the slowing consumer demand and the planned lower shipments to dealers.
“Our first quarter results were ahead of our expectations in many areas, while retail sales in the U.S. were softer than anticipated. We remain focused on navigating the challenging economic and tariff environment through diligent execution of our cost productivity measures, supply chain mitigation, tight operating expense control, and reducing dealer inventory. In addition, we remain committed to driving retail sales through increased marketing initiatives as we enter the riding season,” says Jochen Zeitz, chairman, president and CEO, Harley-Davidson.
Strategic options under review
The company reiterated that Harley-Davidson Financial Services (HDFS), its in-house financing division, remains a core component of its business. However, leadership acknowledged interest in exploring structural changes that could better reflect HDFS’s market value while continuing to support Harley’s dealers and customers.
“This is not about divestiture,” says Jonathan Root, president of commercial services and former president of HDFS. “We’re looking at ways to improve governance, transparency, and long-term value creation—without disrupting the customer experience or product continuity.”
Trade policy challenges
Executives also highlighted persistent global trade risks, particularly the steep 145% tariff on certain Chinese components. While Harley has aggressively reshaped its supply chain since 2018—now sourcing approximately 75% of components from the U.S.—the company warned that some cost pressure remains.
“We’ve taken significant steps to diversify our sourcing, but certain policies still pose a challenge,” says Zeitz. “We’re ahead of the curve, but we continue to monitor regulatory developments closely.”
Retail and consumer sentiment
Despite softer-than-expected industry demand in early 2025, Harley-Davidson reported sequential retail improvements in April and expressed optimism for the months ahead.
Internal surveys revealed that elevated interest rates and macroeconomic uncertainty are influencing customer behavior, with many delaying discretionary purchases like motorcycles.
“We’re seeing progress, especially in North America, but the environment remains mixed,” notes Zeitz. “Our focus is on maintaining pricing discipline, targeted promotions, and long-term brand strength.”
Return to entry-level
Harley-Davidson confirmed plans to re-enter the entry-level motorcycle segment in the near future, signaling a renewed push to attract younger and first-time riders while maintaining its premium image. This move aligns with the company’s broader ambition to modernize its product lineup and expand its customer base. However, one thing is for sure: Harley is betting on the brand and its ability to attract and retain riders. Delivering them to the bottom line will be another story we will follow closely.
If you’re going to re-enter the entry level market don’t do it 1/2 assed. How about a made in America 500 twin (or single) available in several guises such as cruiser, adventure and standard? A 650 and 750 or 800 would be a good idea as well. No Chinese junk. Make it light, give it great brakes, decent suspension a comfortable seat and they’ll sell.
Bring back the Street 500s and 750s, and this time don’t make them so ugly. And bring in the X440 that you sell elsewhere around the world.
When a manufacturer starts looking to financing as a significant source of revenue, it always–ALWAYS–loses focus on manufacturing.
If Harley Davidson plans to survive. The first thing is rid management of WOKE. The second and most important is back off the high-tech and give the public a machine they can repair themselves. I’m still on my 91 Fatboy.It’s served me well. I’ve done all its maintenance and repairs myself. Except the machine work.