Harley-Davidson projected on Wednesday that its 2025 profit and motorcycle revenue will remain flat to 5% lower as consumer demand for high-priced items slows, causing its shares to drop by 5% in early trading.
The pandemic has diminished interest in recreational vehicles, with rising inflation and borrowing costs prompting financially constrained Americans to focus on essentials rather than luxuries.
The iconic motorcycle manufacturer has faced challenges capturing the interest of younger riders, who are opting for modern, affordable bikes from rival brands.
In the North American market, retail sales of Harley's motorcycles dropped by 13% in the fourth quarter, impacted by increased interest rates and reduced sales of non-core models.
To alleviate some of the financial pressure, Harley has updated its 2025 lineup to feature more high-margin Touring bikes and concentrate on custom-vehicle operations catering to its wealthier clientele.
CFRA Research analyst Garrett Nelson criticized Harley's performance as "ugly" and downgraded the stock to "sell," noting that market expectations would need to adjust to more realistic levels.
He also mentioned that the company's decision to eliminate Diversity, Equity, and Inclusion (DEI) hiring quotas in response to conservative criticism contributed to its challenges.
Harley executives stated that the company has not factored in any new tariffs related to President Donald Trump's policies towards Canada, Mexico, and China but is actively working to minimize their effects.
Harley clarified that it does not have production facilities in Canada or Mexico and a significant portion of its U.S. profits come from domestically manufactured vehicles.
The company reported a net loss of $117 million, or 93 cents per share, in the fourth quarter, contrasting with a profit of $26 million, or 18 cents per share, in the previous year.
Total revenue declined by 35% to $688 million.
Analysts, according to data compiled by LSEG, had anticipated a 1.5% increase in motorcycle revenue for 2025.