Harley-Davidson bets on affordable models, dealer network in latest turnaround effort
Harley-Davidson's New Strategy and Market Approach
By Nathan Gomes
May 5 (Reuters) - Harley-Davidson outlined a new strategy on Tuesday focused on lower-priced motorcycles and its dealer network to help shore up volumes, the company's latest turnaround attempt under new top boss Artie Starrs.
Shares of the storied motorbike maker rose about 2.3% in early trading on the comments, even though Harley reported a weaker first quarter.
Targeting Younger Riders with Affordable Models
The company has largely leaned on older, affluent customers to snap up its high-margin touring models over the past few years, but is now preparing to make headway with younger riders with more affordable entry-level models.
"Back to the Bricks" Plan and Financial Goals
Its "Back to the Bricks" plan targets over $350 million in core profit from its motorcycle business by 2027 and over $150 million in cost reductions, with more focus on its higher-margin parts and accessories sales and promotions.
Introduction of the Sprint and Revived Sportster Models
Harley said it would introduce Sprint, its entry-level model that's powered by a smaller 440cc engine, later this year.
"We see the Sprint at a price point, approximately $6,000, with a size, maneuverability, features and benefits that are, say, more consistent with what some young riders are looking for," Starrs told Reuters.
Harley also revived Sportster, one of its most significant models, with a history spanning nearly seven decades, to spur demand from purists on a budget.
The revamped model is a mid-tier Harley priced at around $10,000, with an air-cooled engine, a format long associated with its traditional models.
Parts and Accessories as a Core Growth Driver
The company also said it was re-establishing its parts and accessories business as a core growth driver and expects to benefit from higher margins and wider customization options through "blank canvas" models.
Dealer Network and Operational Improvements
Starrs, who took the helm at Harley in October, added that the new strategy was centered around leveraging the company's dealer network, which aims to improve dealer profitability and better align inventory with demand.
The company has been struggling with a bumpy demand environment, higher material costs and tariffs. It reported $45 million in tariff-related costs in the first quarter.
Tariffs and Financial Performance
Tariffs Still a Drag
TARIFFS STILL A DRAG
Harley said it expects tariff-related costs of $75 million to $90 million in 2026, down from its earlier estimate of as much as $105 million.
Starrs said tariffs were still a headwind for the company, even if they were under control and the impact from them was expected to ease in the coming quarters.
Impact of U.S. Tariffs and Supply Chain
Although Milwaukee-based Harley manufactures most of its core products domestically, it continues to face pressures from U.S. tariffs on imports of components such as semiconductors that are used in modern motorbikes.
It sources about 75% of the components from American suppliers.
Quarterly Earnings and Revenue
The company reported a net income of $25 million, or 22 cents per share, for the first quarter, down from $133 million, or $1.07 per share, a year ago. Analysts had estimated a profit of 27 cents, according to data compiled by LSEG.
Its overall quarterly revenue fell 12% to about $1.2 billion.
(Reporting by Nathan Gomes in Bengaluru; Editing by Shinjini Ganguli)
