Harley-Davidson Withdraws 2025 Outlook Due To Tariff Situation

Harley-Davidson Inc. withdrew its 2025 outlook, citing a lack of clarity around US trade policy and weakening economic conditions.

Revenue tumbled 23% to $1.3 billion, missing estimates, as motorcycle sales worldwide fell 21% in the first quarter, including a 24% drop in the key North America market. It had previously forecast revenue that would be flat or down 5% this year, and a 7% to 8% operating income margin. 

“Our first quarter results were ahead of our expectations in many areas, while retail sales in the US came in softer than anticipated,” Chief Executive Officer Jochen Zeitz said in a statement. “Due to the uncertain global tariff situation and macroeconomic conditions, we are withdrawing our full year 2025 financial outlook.”

Zeitz, who notified Harley’s board last fall of his desire to step down, is defending his strategy and fighting a proxy battle against one of the company’s shareholders, which has called for the immediate removal of Zeitz and two other board members. The search for his successor is unfolding while the the 122-year-old company contends with falling sales, as high interest rates and the potential impact of President Donald Trump’s trade war crimp demand for discretionary items like motorcycles. 

Harley imports $50 million worth of steel from Mexico and Canada and $50 million worth of components from China, a source of potential tariff exposure, UBS AG noted in a March research note. During President Trump’s first term, the company was ensnared in a tit-for-tat trade war between the US and the EU. 

The company also announced last summer it would move some US production to Thailand, according to the Milwaukee Journal Sentinel, potentially adding another tariff wrinkle.

Zeitz noted in a memo to employees in April that the company is “facing one of the most challenging times in the long history of motorcycling, including due to many external factors and headwinds,” according to a securities filing. The company is exploring options for its financing arm, including a sale, Bloomberg reported last month.

Earnings per share fell 38% from a year ago to $1.07.

Shares of the Milwaukee-based company rose less than 1% in premarket trading Thursday. The stock has fallen 26% this year through Wednesday’s close.

Zeitz sought to rehabilitate Harley’s profits by shrinking inventories and selling fewer bikes at higher prices, while exiting money-losing markets around the world and growing Harley’s apparel business. That strategy has been tested as the highest interest rates in more than two decades dampened US consumer appetite. At the same time, he strained relationships with dealers as he sought more control of merchandise via online channels and trimmed their cut of revenue.

The social restrictions of the pandemic triggered fervent demand for motorcycles, snowmobiles and boats, and many power sports companies responded by cranking up production, only to see demand fall off as inflation climbed, said Tony Gonzales, CEO of power sports consulting firm Garage Composites in Denver, Colorado.

“The power sports industry as a whole, post-Covid has had a rough go,” Gonzales said. “What has compounded it and made it worse for Harley-Davidson is you have an individual leading from the front, and he doesn’t realize that if he were to stop and look behind him, nobody’s following him.”

Zeitz also embraced electrification, championing the company’s first electric motorcycle, LiveWire, and spinning it out as a separate business through a reverse-merger in the fall of 2022. But EV demand has been weaker than expected, and the company has been reintegrating LiveWire Group Inc.’s management functions like customer and dealer support, according to a January research note from UBS AG. 

LiveWire sold just 33 electric motorcycles in the first quarter, versus 117 a year ago. The unit’s $20 million operating loss was 33% smaller than a year ago after a series of cost cuts taken in the fourth quarter of 2024, the company said.