Harley-Davidson's Q2 profit falls due to Trump tariffs and declining US demand

Harley-Davidson reported a lower second-quarter profit of $108 million, down from $218 million a year ago, due to US President Donald Trump's tariffs and declining leisure vehicle demand. The company's sales have struggled as its bikes fail to resonate with younger riders seeking fuel-efficient models with modern safety features. No annual forecast was provided.

Harley-Davidson, Inc. (NYSE: HOG) reported its second-quarter 2025 financial results, showing a significant drop in profitability due to a challenging commercial environment and uncertain tariff situations. The company reported a net income of $108 million, a decrease of $110 million from the same period last year [1].

The company's financial services subsidiary, Harley-Davidson Financial Services (HDFS), announced a strategic partnership with KKR and PIMCO, which is expected to generate $1.25 billion in cash. This transaction will allow Harley-Davidson to reduce its debt by $450 million and accelerate its $1 billion share buyback program by purchasing $500 million in the second half of 2025 [1].

Despite the financial challenges, Harley-Davidson's motorcycle shipments decreased by 28% year-over-year, driven primarily by planned dealer inventory reductions and soft demand. The company's global motorcycle retail sales were down 15% year-over-year, reflecting soft demand and unfavorable consumer confidence due to a high-interest rate environment and an uncertain economic outlook [1].

Harley-Davidson's financial services arm, HDFS, reported a decrease in operating income by less than $2 million, or 2%, compared to the previous year. The decrease was attributed to lower net interest income and higher operating expenses, partially offset by a lower provision for credit losses and higher other income [1].

The company's LiveWire segment, which focuses on electric motorcycles, reported a decrease in revenue by 7% year-over-year, primarily due to lower electric motorcycle unit sales. LiveWire's operating loss of $19 million was $10 million less than a year ago, in line with expectations [1].

Harley-Davidson's CEO, Jochen Zeitz, commented on the company's financial performance and the strategic partnership, stating, "While our second quarter results continue to be impacted by a challenging commercial environment for discretionary products and an uncertain tariff situation, we are extremely pleased to announce a strategic partnership for HDFS with KKR and PIMCO that generates significant value for Harley-Davidson on all levels" [1].

The company has withdrawn its full-year 2025 financial outlook due to the uncertain global tariff situation and overall macroeconomic conditions. However, Harley-Davidson expects HDFS operating income of $525-550 million for the full year 2025 based on the HDFS transaction [1].

References:
[1] https://www.prnewswire.com/news-releases/harley-davidson-delivers-second-quarter-financial-results-and-announces-hdfs-transaction-with-kkr-and-pimco-302517125.html