On February 11, 2026, S&P Global Ratings placed Harley‑Davidson on CreditWatch with negative implications, signaling a potential downgrade from its BBB‑ rating to junk status.
Harley‑Davidson reported a 12% decline in global retail motorcycle sales for 2025, falling to 132,535 units from 151,200 in 2024. Full‑year earnings swung to an operating loss of $29 million in the HDMC segment, compared with an operating income of $278 million in 2024. Diluted EPS for 2025 was $2.78 versus $3.44 in 2024.
Tariff costs rose to $67 million in 2025, contributing to a gross margin collapse from 6.7% in 2024 to –0.8% in 2025. The loss of pricing power and higher input costs compressed margins, while lower volumes and negative operating leverage amplified the impact.
Management projected 2026 operating income for HDMC to range from a $40 million loss to a $10 million profit, a sharp shift from the $278 million profit in 2024. CEO Artie Starrs described 2026 as a “reset year” and emphasized actions to stabilize the business and align wholesale activity with retail demand. CFO Jonathan Root highlighted ongoing inflationary pressures and elevated interest rates as persistent challenges.
Investor reaction to the CreditWatch placement was driven by the earnings miss, the 14% decline in consolidated revenue, and the cautious 2026 outlook. The downgrade signal underscored concerns about Harley‑Davidson’s ability to meet debt obligations amid weaker earnings and tariff‑related cost pressures.
Despite the downturn in the motorcycle segment, Harley‑Davidson Financial Services posted record earnings in 2025, offsetting some losses. LiveWire, the electric motorcycle brand, reported an operating loss of $75 million for the full year. A new strategic plan is expected in May 2026, aimed at restoring profitability and adapting to evolving consumer preferences.
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