Harley-Davidson (NYSE:HOG) executives used the company’s fiscal 2025 fourth-quarter earnings call to outline a business “reset” centered on dealer health, tighter inventory discipline, and a strategic plan the company expects to unveil in May. Management acknowledged that 2025 results were pressured by a challenging demand environment and deliberate actions to reduce elevated dealer inventory, particularly touring models in North America.
Management frames 2026 as a transition year
CEO Artie Starrs, in his first full quarter as chief executive, said he has spent extensive time with dealers and riders and believes there is “a clear path” to a more stable operating and financial future in 2026 and beyond. He said the company is working with urgency on issues within its control, including inventory and cost structure, while also navigating macro headwinds in discretionary spending.
Dealer relationship and inventory interventions
Starrs said Harley-Davidson is “resetting the relationship” with its dealer network around mutual trust, shared accountability, and dealer health as a “non-negotiable” foundation. He cited dealer feedback calling for healthier inventory, better product mix, simpler rider engagement programs, and greater flexibility by local market.
He also pointed to two quick changes already underway:
- Adjustments to facility model guidelines to better balance global brand identity with local community expression.
- A reevaluation of e-commerce after the prior approach “created customer confusion and driven excessive discounting.” In North America, the company shifted to a model intended to drive incremental dealership traffic to support motorcycle sales.
Inventory reductions were a major focus of the quarter. Starrs said the company reduced wholesale shipments and used targeted promotions to accelerate progress toward balanced dealer inventories. Management characterized early retail response as positive, with North American retail sales growth accelerating into December and early indications of improving dealer profitability.
By year-end, dealer inventory declined 16% in North America and 17% globally versus year-end 2024, exceeding the company’s prior 10% global reduction target. However, Starrs said the touring inventory overhang remains “pronounced” and is still being worked down through disciplined interventions intended to move product without undermining long-term brand value.
Q4 and full-year results reflect pressure across segments
Chief Financial and Commercial Officer Jonathan Root said consolidated revenue fell 28% year over year in the fourth quarter, driven by a 10% decline in Harley-Davidson Motor Company (HDMC) revenue and a 59% decline in Harley-Davidson Financial Services (HDFS) revenue. Consolidated operating income was a loss of $361 million versus an operating loss of $193 million in the prior-year quarter. Earnings per share were a loss of $2.44 compared with a loss of $0.93 a year earlier.
For the full year, Root reported consolidated revenue of $4.5 billion, down 14% year over year. Consolidated operating income was $387 million versus $417 million in 2024, and full-year earnings per share were $2.78 compared with $3.44 the prior year.
In HDMC, fourth-quarter revenue fell 10% to $379 million, with Root citing net pricing and incentive spend and lower wholesale volumes. Full-year HDMC revenue declined 13% to $3.6 billion as wholesale shipments fell to about 125,000 motorcycles, down 16% from the prior year, while net pricing was “largely flat” for the year.
HDMC margins weakened. Root said full-year gross margin was 24.2% versus 28% in 2024, driven by incremental tariffs, negative operating leverage, and lower volumes, partly offset by lower supply management and logistics costs, favorable mix, foreign exchange, and largely flat net pricing. HDMC reported an operating loss of $29 million for 2025 compared with operating income of $278 million in 2024.
Retail trends, promotions, and tariff impacts
In the fourth quarter, North American retail sales of new motorcycles rose 5% to 15,847 units, while international retail sales fell 10% to 9,440 units. Global retail was down 1% to 25,287 units. Root said volatility in results has persisted since mid-2024 amid inflationary pressures and interest rates that remain above recent historical lows.
Within regions, Root highlighted:
- North America: U.S. retail up 6%, Canada down 7%. Grand American Touring up 6% driven by promotional support; lower-priced sport models up 33%. Trike down 24% due to tight inventory ahead of a January 2026 new Trike launch.
- EMEA: Q4 retail down 24%, with weakness across bike families; touring and Softail were cited as the most pressured categories.
- Asia-Pacific: Q4 retail down 1%, an improvement from the first half; weakness in China offset by positive results in Japan and emerging Asian markets.
- Latin America: Q4 retail up 10%, with Brazil and Mexico both higher.
Root said the company used selective promotions in Q4—interest rate assistance, low APR offers, customer cash, and dealer cash credits—particularly to help dealers reduce touring inventory. Based on dealer discussions in December, management opted to continue consumer promotions into the first quarter of 2026 and said this decision weighed on Q4 financials but was intended to support a stronger start to 2026.
Tariffs were another key headwind. Root said new or increased tariffs cost $22 million in Q4 and $67 million for the full year 2025. For 2026, the company forecast $75 million to $105 million of new or increased tariff costs versus a 2024 baseline, noting that 2026 tariffs are expected to be more uniformly applied across the calendar year.
HDFS transaction reshapes earnings profile; LiveWire update
Root said the HDFS transaction, closed at the end of October, is intended to shift the financing business to a “capital-light, de-risked” model in partnership with KKR and PIMCO. He summarized the transaction’s components as a backbook sale of roughly $6 billion of loan receivables, a forward flow agreement for future originations, and the sale of a 9.8% common equity interest in HDFS to the partners.
HDFS posted an operating loss of $82 million in Q4, which Root attributed largely to liability management costs incurred while retiring a significant portion of HDFS debt. He quantified those discrete costs at $73 million in Q4. Despite the Q4 loss, Root said full-year 2025 HDFS operating income was $490 million, which he described as record high, up from $248 million in 2024.
During Q&A, management said 2026 HDFS operating income is expected to be $45 million to $60 million under the new model. Root added that, over time, the company believes HDFS can reach a more standardized run rate “approximately triple the midpoint” of that range, but said it may take 2.5 to 3 years to rebuild retail assets and that lower wholesale asset levels also pressure near-term earnings power.
On LiveWire, Root said full-year electric motorcycle units rose 7% and STACYC units increased 15%, while revenue declined 3% due to increased incentives. LiveWire’s full-year operating loss decreased 32% and net cash used declined 45% (excluding $75 million of proceeds from the term loan with Harley-Davidson). For Q4, LiveWire revenue rose 9% on higher unit volumes, and operating loss improved versus the prior year. Starrs said Harley-Davidson reduced and funded a term loan with LiveWire to $75 million and that LiveWire is pursuing other sources of capital; he described that loan extension as the company’s commitment.
Looking to 2026, Root guided to retail and wholesale unit volumes of 130,000 to 135,000, with an expectation of a “largely one-to-one relationship” between retail and wholesale given the cleaner dealer inventory position. He also said production units are expected to be lower than wholesale shipments in 2026 as Harley-Davidson manages overall company inventory levels, which management expects will pressure margins through operating deleverage.
Starrs said the company is conducting an end-to-end cost review supported by third-party specialists, and expects at least $150 million of annual run-rate savings impacting 2027 and beyond. In Q&A, Root said those savings relate to the Motor Company and HDFS, not LiveWire, and that some savings are expected to begin in the back half of 2026, while the full annual run rate is expected in 2027.
About Harley-Davidson (NYSE:HOG)
Harley-Davidson, Inc is a renowned American motorcycle manufacturer best known for its heavyweight cruiser and touring bikes. Founded in 1903 in Milwaukee, Wisconsin, the company has built a strong reputation for producing distinctive motorcycles characterized by their signature V-twin engines, chrome finishes and robust frames. Harley-Davidson markets its products globally through a network of franchised dealerships and focuses on delivering an immersive brand experience to its customers, emphasizing lifestyle and community alongside its motorcycles.
In addition to its core motorcycle business, Harley-Davidson offers an extensive range of parts, accessories and apparel under its Genuine Motor Parts & Accessories and MotorClothes lines.
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