Harley-Davidson bets on affordable models, dealer network in latest turnaround effort

By Nathan Gomes

May 5 (Reuters) - Harley-Davidson HOG.N outlined a new strategy on Tuesday focused on lower-priced motorcycles and its dealer network to help shore up volumes, under new top boss Artie Starrs.

The company's "Back to the Bricks" plan targets over $350 million in core profit from its motorcycle business by 2027 and over $150 million in cost reduction, with more focus on its higher-margin parts and accessories sales.

Harley said it would introduce its entry-level, 440cc model, Sprint, and revive its iconic Sportster model, while expanding customization options through "blank canvas" models.

"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," CEO Artie Starrs told Reuters.

Starrs added that the new strategy was centered around leveraging Harley's dealer network, designed to improve dealer profitability and better align inventory with demand.

The reset comes at a time when inflation, higher borrowing costs and gasoline prices have squeezed household budgets, pressuring demand for big-ticket items, such as motorcycles.

Harley reported a lower profit in the first quarter, hurt by lower demand and tariffs.

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. It reported $45 million in tariff-related costs in the first quarter.

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.

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.