Harley-Davidson’s Q1 2025 Results: A Stormy Ride Ahead?

The iconic American motorcycle manufacturer Harley-Davidson (HOG) reported its Q1 2025 earnings, revealing a starkly challenging landscape for the brand. Revenue plummeted 23% to $1.33 billion, while net income dropped 43% to $133 million. These figures underscore a deepening crisis as Harley grapples with tariff headwinds, declining demand, and struggles in its electric vehicle (EV) division, LiveWire.

Financial Performance: A Widespread Decline

Harley’s core motorcycle business, Harley-Davidson Motor Company (HDMC), saw revenue collapse 27% year-on-year to $1.08 billion. Motorcycle shipments fell 33%, with global retail sales down 21%. Even in its largest market, North America, sales dropped 24%, while European market share halved to just 2%. Parts and accessories sales—key revenue streams—declined 14%, reflecting reduced customer engagement.

The Financial Services segment (HDFS) offered a rare bright spot, with operating income rising 19% to $64 million, driven by lower credit losses and cost discipline. However, this gain was overshadowed by broader weaknesses.

Operational Challenges: Tariffs and Inventory Overhang

Harley’s troubles are compounded by escalating tariffs. New U.S. levies on Chinese imports, including a 145% tariff on certain components, are projected to cost the company $75–$100 million annually. Additional 25% tariffs on Mexican and Canadian goods add another $35–$45 million in annual headwinds. Despite manufacturing 75% of its U.S. models domestically, Harley’s reliance on global supply chains leaves it vulnerable to protectionist policies.

Dealer inventory swelled to 56,000 units in Q1—up from 48,000 at year-end 2024—highlighting cautious stockpiling amid weak demand. This overhang risks future discounts or write-offs if sales don’t rebound.

LiveWire’s Struggles: A Slow Electric Turnaround

LiveWire, Harley’s EV division, remains a concern. Motorcycle unit sales plunged 72% to just 33 units, while electric bike sales (STACYC) fell 33% to 1,970. Revenue dropped 42% to $3 million, though its operating loss narrowed to $20 million (down from $29 million in Q1 2024). Despite cost cuts, LiveWire’s minimal sales volume raises questions about its market viability.

CEO Jochen Zeitz emphasized LiveWire’s role in Harley’s future, but investors remain skeptical. The division’s 2025 outlook is clouded by execution challenges and the broader downturn in discretionary spending.

Strategic Moves and Investor Sentiment

Harley withdrew its full-year 2025 financial guidance, citing macroeconomic uncertainty and tariff risks. The company maintained shareholder returns, repurchasing $87 million in shares and paying $23 million in dividends. However, its stock price closed at $22.42—near its 52-week low of $20.45—reflecting investor pessimism.

Conclusion: Riding into Uncertain Terrain

Harley-Davidson’s Q1 results paint a grim picture. With revenue declining across nearly all segments, margin compression from tariffs, and LiveWire’s underwhelming performance, the company faces existential challenges. While the HDFS division’s resilience and margin improvements (to 12.1%) offer fleeting optimism, the broader trends suggest deeper structural issues.

Key data points underscore the severity:
- Tariff headwinds: $130–$175 million annualized, potentially eroding profitability further.
- LiveWire’s sales: 33 motorcycles sold in Q1—0.03% of Harley’s total motorcycle shipments.
- Market share: Collapsed in Europe, and slipping even in its U.S. stronghold.

Investors should remain cautious. While Harley’s U.S.-centric manufacturing and iconic brand retain value, the path to recovery requires resolving tariff disputes, reigniting demand for its core motorcycles, and proving LiveWire’s long-term viability. Until then, Harley’s ride into 2025 looks anything but smooth.