# Harley-Davidson’s SWOT analysis: tariff headwinds stall iconic motorcycle stock’s recovery

Harley-Davidson Inc (NYSE:HOG) faces mounting challenges as it navigates through tariff complications and broader industry headwinds. The iconic American motorcycle manufacturer, known for its heavyweight cruisers, has recently seen diverging analyst opinions as it works to implement a turnaround strategy amid declining sales.

Company at a crossroads

Harley-Davidson stands at a critical juncture in its storied history. The company, synonymous with American motorcycle culture, is working to address a secular decline in motorcycling through a comprehensive turnaround plan. This strategy includes developing new products to attract different customer segments while maintaining its core identity.

The company’s efforts come amid significant retail sales challenges. In the first quarter of 2025, U.S. retail sales declined by 25%, with worldwide sales falling 21%. These figures highlight the substantial hurdles facing the motorcycle manufacturer as it attempts to revitalize its business in an increasingly difficult market environment.

Financial performance reveals mixed signals

Harley-Davidson’s first-quarter 2025 results presented a complex picture. The company managed to beat earnings expectations despite lower-than-expected revenue. This performance was driven by stronger margins that helped offset the revenue shortfall, demonstrating some effectiveness in cost management during challenging times.

April 2025 showed some improvement in retail demand compared to the first quarter, offering a glimmer of hope for the company’s near-term prospects. This slight uptick suggests that while the overall trend remains concerning, there may be potential for stabilization in certain markets.

Tariff complications derail guidance

In a significant move that has unsettled investors, Harley-Davidson withdrew its guidance for 2025 due to uncertainties related to tariffs and the broader macroeconomic environment. This decision reflects the substantial impact that trade policies are having on the company’s ability to forecast performance.

Analysts note that tariff-related inflation is expected to pressure margins and potentially impact consumer discretionary spending on high-ticket items like motorcycles. The estimated tariff impact has prompted several analysts to lower their future estimates for the company, creating additional uncertainty around Harley’s financial outlook.

Strategic initiatives to counter headwinds

Harley-Davidson is not standing still in the face of these challenges. The company has announced plans to shift its model year launches to the fall season, a move designed to create additional selling opportunities throughout the year and potentially smooth out seasonal sales patterns.

A key element of Harley’s strategy involves introducing more affordable bikes to expand its customer base. The company plans to launch new entry-level products and a smaller cruiser targeted at both U.S. and international markets in 2026. These initiatives aim to address one of the primary criticisms of Harley-Davidson’s lineup: its focus on expensive, heavyweight motorcycles in a market increasingly interested in more accessible options.

Exploring opportunities beyond core motorcycle business

Beyond its traditional motorcycle operations, Harley-Davidson is exploring "value-enhancing opportunities" for Harley-Davidson Financial Services (HDFS). While the company has clarified that HDFS is not for sale, it is examining ways to maximize the value of this business segment, which provides financing for motorcycle purchases.

The company is also evaluating options for its LiveWire electric motorcycle division. This reassessment comes in response to slower-than-expected electric vehicle adoption and what the company describes as an unfavorable regulatory environment. The future direction of LiveWire represents an important strategic decision as Harley balances traditional offerings with emerging technologies.

Bear Case

How might tariff-related inflation impact Harley’s profitability?

Tariff-related inflation poses a significant threat to Harley-Davidson’s profitability. The company faces a double-edged sword: increased costs for materials and components due to tariffs, plus potential price increases that could further dampen consumer demand for its products.

The withdrawal of 2025 guidance specifically cited tariff uncertainties as a key factor, indicating the magnitude of this concern. As production costs rise, Harley must either absorb these expenses—reducing profit margins—or pass them on to consumers through higher prices, potentially accelerating sales declines in an already challenging market.

The dynamic nature of tariff policies creates additional complications for long-term planning. Without clarity on future trade policies, Harley faces difficulties in optimizing its supply chain and manufacturing footprint, potentially leading to inefficiencies that further erode profitability.

Can Harley overcome the secular decline in motorcycling?

The motorcycle industry, particularly in the heavyweight segment where Harley-Davidson has traditionally dominated, faces a secular decline that presents fundamental challenges to the company’s business model. Changing demographics, shifting transportation preferences, and evolving leisure activities have all contributed to reduced interest in motorcycling.

Harley’s 25% decline in U.S. retail sales during Q1 2025 reflects this broader trend. While the company is implementing strategies to attract new riders, including more affordable models, these initiatives face an uphill battle against entrenched consumer behavior changes.

The company’s turnaround plan acknowledges this reality, but success requires not just stemming the decline but actually reversing it—a feat that remains unproven. The substantial sales drops suggest that current efforts have yet to meaningfully address the underlying structural challenges in the motorcycle market.

Bull Case

Could new affordable models reverse Harley’s sales decline?

Harley-Davidson’s planned introduction of more affordable bikes represents a potential catalyst for sales growth. By expanding its product lineup to include entry-level options and a smaller cruiser for both domestic and international markets, the company aims to attract new customers who may have previously considered Harley products out of reach.

This strategy directly addresses one of the primary barriers to new customer acquisition: price point. A more accessible entry into the Harley brand could help cultivate a new generation of riders who might eventually upgrade to premium models. The international focus of these new products also opens opportunities in markets where smaller motorcycles are preferred or where economic conditions make heavyweight bikes impractical.

The timing of these new models, expected in 2026, provides a concrete milestone for investors to evaluate the effectiveness of this strategy. If successful, these products could help stabilize retail sales and provide a foundation for future growth, potentially shifting the narrative around Harley’s prospects.

What potential value could be unlocked from HDFS and other business segments?

Harley-Davidson Financial Services (HDFS) represents a significant but potentially undervalued asset within the company’s portfolio. By exploring "value-enhancing opportunities" for this division, Harley could unlock additional shareholder value while maintaining the strategic benefits of an in-house financing arm.

HDFS provides financing for motorcycle purchases, generating revenue streams that are somewhat insulated from the cyclicality of motorcycle sales. Options for enhancing value might include partnerships, restructuring, or operational improvements that increase efficiency without sacrificing the division’s strategic importance to the core business.

Similarly, the company’s evaluation of options for LiveWire could lead to more optimal capital allocation. While electric vehicle adoption has been slower than anticipated, the LiveWire brand represents intellectual property and technological capabilities that may have value in various scenarios—whether through continued internal development, partnerships, or other arrangements that maximize return on investment.

SWOT Analysis

Strengths

• Iconic brand with strong global recognition and loyal customer base
• Improved margin profile despite revenue challenges
• Strategic initiatives underway to address market challenges
• Diversified business model including HDFS and LiveWire

Weaknesses

• Significant decline in retail sales (25% in U.S., 21% worldwide)
• High exposure to tariff impacts affecting cost structure
• Heavy reliance on heavyweight motorcycle segment facing secular decline
• Withdrawal of guidance creating uncertainty for investors

Opportunities

• Introduction of more affordable bikes to expand customer base
• International market expansion with smaller cruiser models
• Potential value enhancement from HDFS optimization
• Shift in model year launches to create additional selling opportunities

Threats

• Ongoing tariff uncertainties and trade policy changes
• Macroeconomic pressures affecting discretionary consumer spending
• Secular decline in motorcycling, particularly in core markets
• Slower than expected EV adoption affecting LiveWire prospects

Analyst Targets

• Morgan Stanley (October 27th, 2025): Underweight rating with a price target of $25.00, reduced from previous target of $27.00
• BMO Capital Markets (May 2nd, 2025): Outperform rating with a price target of $32.00
• KeyBanc Capital Markets (April 17th, 2025): Reduced estimates due to potential tariff impacts, no specific rating or price target provided

This analysis is based on information available as of October 30th, 2025, incorporating analyst reports from Morgan Stanley, BMO Capital Markets, and KeyBanc Capital Markets.

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