Harley-Davidson's 2025 Q1: Navigating Contradictions in HDFS Strategy, Margins, and Inventory Plans

HDFS strategic importance and potential sale, gross margin expectations and strategy, HDFS strategic positioning, LiveWire cash burn and profitability, and dealer inventory reduction plan are the key contradictions discussed in Harley-Davidson's latest 2025Q1 earnings call.



Revenue and Profitability Impact:
- Harley-Davidson reported a 23% decrease in consolidated revenue and a 51% decline in operating income at HDMC for the first quarter of 2025.
- The company's financial performance was impacted by a 21% decline in global retail sales and a 24% decline in North America, primarily driven by historically low consumer confidence in the uncertain macro environment.

Financial Services Performance:
- Harley-Davidson Financial Services (HDFS) saw a 19% increase in operating income for the quarter.
- The increase was driven by a lower provision for credit losses and lower operating expenses, while interest expense remained flat.

Product Strategy and Market Expansion:
- Harley-Davidson plans to introduce new entry-level products and iconic classics starting next year, aiming to expand its product portfolio into smaller displacements.
- This strategic move is part of the Hardwire strategy to broaden its cruiser offerings and attract new customers.

Tariff Impact Mitigation:
- The company estimates a $130 million to $175 million impact from new tariffs in 2025, with the majority of exposure from China's 145% duties.
- Harley-Davidson is actively engaging with various administrations to mitigate tariff impacts and is implementing supply chain adjustments to reduce dependence on Chinese content.