Harley-Davidson revival strategy lifts shares as classic bikes return

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Harley-Davidson revival lifts shares

Highlights

Harley-Davidson is reissuing classic models like the Superglide and launching a lower-priced Sportster to attract younger riders and boost brand appeal.
Management plans to cut $150 million in costs—about 20% of the base—which could add $1.2 billion in enterprise value and lift shares by 35%.
Despite the turnaround plan, Harley-Davidson sells less than half the motorcycles of its peak 20 years ago, with profit down two-thirds amid shrinking U.S. demand.

Classic models and customization drive turnaround plan

As reported by Financial Times, chief executive Artie Starrs is using nostalgia as a central part of Harley-Davidson's turnaround, reissuing classic motorcycles and expanding customization options to strengthen the brand's appeal.

In June, Harley-Davidson produced a limited run of Superglide motorcycles to mark America's 250th anniversary. The company is also reintroducing the Sportster, a popular model that was phased out in 2022 because of emissions rules.

The new Sportster edition is set to be priced more modestly than many of Harley-Davidson's other bikes, with the goal of attracting a younger generation of riders. That matters for a company whose average customer age stands at 45, even though it has kept that figure broadly stable for more than a decade.

Harley-Davidson is also trying to deepen ties with riders by giving customers, including second-hand owners, more ways to personalize their motorcycles. Seats, louder exhausts and higher handlebars remain popular upgrades, helping both brand loyalty and revenue per customer, and Starrs said in July that the parts and accessories division was running ahead of his January expectations.

Cost cuts and market limits shape investor case

Alongside the product push, Harley-Davidson is planning to cut $150 million in costs, equal to about one-fifth of its total cost base. On the group's current valuation multiple, that reduction alone would account for much of the potential upside for investors, with the source text estimating it could add $1.2 billion in enterprise value and lift the share price by 35%.

Even so, the company faces structural limits. Harley-Davidson now sells less than half the number of motorcycles it did at its peak 20 years ago, while profit has fallen by two-thirds over the same period.

Total new U.S. motorcycle registrations have also declined at nearly the same pace. Where growth is emerging globally, especially in markets such as India, demand is concentrated in smaller, cheaper bikes rather than Harley-Davidson's heavier cruisers.

The company still retains cultural cachet that management may yet turn into commercial value. With younger riders far removed from the brand's best-known pop culture moments, Harley-Davidson is still relying on its iconic image and celebrity following to keep the business relevant to a new audience.

Our earlier report on the Deloitte CFO survey highlighted how finance leaders at major UK companies are turning more defensive as they expect inflation and borrowing costs to remain elevated over the next year. We noted that cost-cutting has become a top priority for many CFOs, alongside heightened concern about further rate rises and ongoing geopolitical risks.

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