Harley-Davidson Raises Forecast: Why Europe Remains the Problem

• Worldwide second-quarter sales: 42,467 motorcycles, up one percent
• North America up 3 percent, Europe, Middle East and Africa down 9 percent
• 2026 forecast raised to 133,500 to 138,500 motorcycles sold

The second-quarter 2026 figures show a company running at two different speeds. At home, business is going better than expected, dealer inventories are notably leaner than a year ago, and the new models are landing well. At the same time, group profit is falling, tariffs keep eating into earnings, and Europe shows a decline that can’t be explained by a weak market. It’s exactly this mix that pushed management to raise its full-year guidance rather than play it safe.

How did Harley-Davidson’s second quarter go?

Worldwide, Harley-Davidson sold 42,467 motorcycles to retail customers in the second quarter, one percent more than in the same period last year. That growth was carried entirely by North America, which posted 29,751 units and a three percent increase.

That marks the region’s third consecutive quarter of growth, after the first quarter had already delivered a 14 percent increase. In the US market for motorcycles over 601cc, the company held a 32 percent market share. Latin America grew four percent to 767 units, driven mainly by Mexico while Brazil slipped slightly. Asia-Pacific was essentially flat at 4,990 motorcycles, with Australia and New Zealand pulling the region upward.

Wholesale shipments to dealers rose nine percent to 39,209 motorcycles, deliberately kept below retail sales. Worldwide new-unit dealer inventory fell 17 percent year-over-year, and 15 percent in North America. More important than the raw volume is its composition: around 85 percent of dealer stock now consists of model-year 2026 bikes, up from less than 75 percent a year ago.

Why is profit falling despite better motorcycle numbers?

The decline in group profit stems almost entirely from the financial services division, not the motorcycle business. Net income attributable to the group came in at roughly 70 million euros (80 million US dollars), 26 percent below the prior-year figure.

Group revenue dropped six percent to about 1.08 billion euros (1.23 billion US dollars). The cause is the slump at Harley-Davidson Financial Services, or HDFS. Its revenue fell 55 percent to roughly 103 million euros (117 million US dollars), and operating income dropped 69 percent to about 19 million euros (22 million US dollars). The reason is the sale of large parts of the loan portfolio in the second half of 2025. The division has since been operating with significantly less of its own capital, which permanently shrinks both revenue and earnings.

The motorcycle division, HDMC, moved in the opposite direction. Its revenue rose six percent to around 970 million euros (1.104 billion US dollars), with motorcycle revenue alone up nine percent to about 744 million euros (848 million US dollars). The division’s operating income improved 18 percent to roughly 63 million euros (72 million US dollars). Adjusted EBITDA margin — operating return before interest, taxes and depreciation — climbed from 9.3 to 10.4 percent. Earnings per share, meanwhile, fell 15 percent to 0.66 euros (0.75 US dollars), yet still came in above analyst expectations.

The accessories business was weaker. Revenue from parts and accessories declined five percent, while apparel and licensing grew two percent.

What’s behind the Back to the Bricks strategy?

Back to the Bricks is the turnaround plan unveiled in April 2026, designed to reduce dealer inventory, tie shipments to actual demand, and rebuild retail margins. According to the company, the plan is having a measurable effect.

CEO Artie Starrs focused on dealer profitability during the analyst call. He said: “Based on current trends, we expect domestic dealer profitability to double in 2026.” He called dealer health non-negotiable. As recently as the fourth quarter, he said, practically every dealer had complained about excess inventory; now the large majority consider their stock levels appropriate or are even asking for additional motorcycles.

CFO and sales chief Jonathan Root, meanwhile, tempered expectations that this would lead back to full warehouses. He said inventory would not be meaningfully expanded in the coming quarters. Instead, the goal is to get the right model to the right place at the right time.

Why is Harley-Davidson losing market share in Europe?

In Europe, the Middle East and Africa, sales fell nine percent to 6,959 motorcycles — in a market environment that is otherwise growing strongly. Performance was particularly weak in the German-speaking region, which the company defines as Germany, Austria and Switzerland.

The contrast with the overall market is stark. In the five largest European markets, new registrations of motorcycles and scooters above 50cc rose 16.8 percent in the first half of 2026 to 639,490 vehicles, an increase of 94,363 units, according to manufacturers’ association ACEM. Germany posted the strongest percentage growth at plus 27.6 percent, followed by Spain at plus 23.6 percent, the UK at plus 15.8 percent, Italy at plus 13.2 percent and France at plus 6.4 percent. Together, these countries account for a good 80 percent of the European market.

That decline is therefore not a market problem, but a brand problem. Harley-Davidson itself points to a weaker economic environment and cautious consumers. Within Europe, the touring and sport segments performed positively, but that wasn’t enough to turn the overall result around. Something is set to change on the product side: the Sportster 883 is scheduled to return in 2027, a model in a class that is considerably more in demand in Europe than heavy tourers.

How much are tariffs weighing on the business?

For the current year, Harley-Davidson still expects tariff costs of 66 to 79 million euros (75 to 90 million US dollars). In the second quarter, a refund of about 18 million euros (20 million US dollars) provided some relief.

The company is not counting on further refunds for the rest of the year. As a countermeasure, Harley-Davidson is moving production of Revolution Max engines for North American models back to the United States. That’s meant to reduce future tariff exposure and strengthen domestic manufacturing, though it will cost time and money in the short term.

New models and the outlook for the second half

For full-year 2026, Harley-Davidson now expects worldwide retail sales of 133,500 to 138,500 motorcycles, up from the previously stated 130,000 to 135,000 units. The same range applies to dealer shipments, underscoring the tight coupling between supply and demand.

Expected operating income for the motorcycle division was raised to a range of 9 to 44 million euros (10 to 50 million US dollars). The company had previously guided for a result between a loss of 35 million euros (40 million US dollars) and a profit of 9 million euros (10 million US dollars). The financial services division is now expected to deliver 48 to 57 million euros (55 to 65 million US dollars). For electric subsidiary LiveWire, the forecast remains unchanged at a loss of 61 to 70 million euros (70 to 80 million US dollars). LiveWire itself grew quarterly revenue by 52 percent to roughly 8 million euros (9 million US dollars), while its operating loss narrowed slightly to about 16 million euros (18 million US dollars).

That confidence is also being fueled by two new model launches. The Super Glide, introduced in June, and the Deadwood, unveiled shortly before the Sturgis Rally, are said to be outperforming expectations, according to the company. Starrs described strong sell-through for the Super Glide and said actual transaction prices are closer to MSRP than they have been in some time. Both models target more affordable, more customizable motorcycles, complemented by the Nightster and the revamped trike lineup.

How are analysts and the stock market reacting to the results?

The reaction was mixed: the results beat expectations, yet the stock still slipped after the release. According to media reports, the share price remains up around 27 percent from the start of the year.

Shortly before the earnings release, an investment bank had upgraded the stock from neutral to buy, citing feedback from the dealer network suggesting the turnaround plan was starting to work, with rising sales and improved margins expected by 2027. On the other hand, rating agency S&P Global Ratings had cut Harley-Davidson’s credit rating below investment grade in mid-July, citing doubts about long-term profitability.

During the analyst call, Starrs reaffirmed the medium-term targets without raising them. By 2027, the company aims to cut fixed costs by 132 million euros (150 million US dollars) and achieve adjusted EBITDA of more than 307 million euros (350 million US dollars) in the motorcycle division. On cost savings, he said the company is on plan or slightly ahead.

For the 2026 motorcycle season, the picture only partly aligns with how other manufacturers are performing. While the European market is rebounding strongly after last year’s slump, with smaller-displacement classes driving most of the growth, Harley-Davidson continues to earn its money almost exclusively from heavyweight models in North America. Whether that changes will likely only become clear once the smaller, more affordable models announced for coming years actually arrive.

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