Harley-Davidson Shares Rev Up on Private Equity Deal for Finance Arm
The iconic American motorcycle manufacturer Harley-Davidson saw its stock surge yesterday following news that investment giants KKR and Pimco will purchase a significant stake in the company’s financial services division. The deal, valued at approximately $1.8 billion, represents a strategic pivot that could reshape the future of the Milwaukee-based motorcycle maker.
Wall Street responded enthusiastically to the announcement, with Harley’s shares climbing over 15% in morning trading before settling at a 12.3% gain by market close. This marks the stock’s biggest single-day jump since early 2023, providing welcome momentum for a company that has faced headwinds in recent years.
The transaction will see KKR and Pimco acquire a controlling interest in Harley-Davidson Financial Services (HDFS), the unit responsible for financing motorcycle purchases and leases. Under the agreement, Harley will maintain a 40% ownership stake in the finance arm while receiving a substantial cash infusion that executives say will strengthen the company’s core manufacturing business.
“This partnership allows us to unlock significant value while maintaining our crucial connection to customers through the financing relationship,” said Jochen Zeitz, Harley-Davidson’s CEO, during yesterday’s investor call. “The capital we’re receiving enables us to focus more intensely on our Hardwire strategic plan and accelerate our product innovation pipeline.”
The finance unit has long been a steady performer for Harley, contributing approximately 15-20% of the company’s overall profits in recent years. In 2024, HDFS reported operating income of $262 million on $732 million in revenue, according to company filings with the SEC.
Industry analysts view the deal as a smart move that addresses multiple challenges simultaneously. “Harley gets to monetize a valuable asset while retaining significant ownership and freeing up capital to invest in electric motorcycle development and their core business,” noted Jennifer Harmon, senior transportation analyst at Morgan Stanley. “It’s essentially having your cake and eating it too.”
The motorcycle manufacturer has struggled with declining sales in its traditional heavyweight motorcycle category as its core baby boomer demographic ages out of riding. The company’s attempts to attract younger riders have shown promise but haven’t yet fully offset these losses. According to the Motorcycle Industry Council, U.S. motorcycle sales have remained relatively flat over the past five years, with growth coming primarily from smaller displacement models and electric options.
For KKR and Pimco, the investment represents an opportunity to acquire a profitable financial services business with a loyal customer base and stable returns. Vehicle financing has become an increasingly attractive sector for private equity firms seeking predictable cash flows in an uncertain economic environment.
“Consumer vehicle financing, particularly for lifestyle purchases like motorcycles, has demonstrated remarkable resilience even during economic downturns,” explained Michael Roberts, financial services sector lead at Deloitte. “The Harley customer tends to be more affluent than average, which further insulates the portfolio from typical credit risks.”
I’ve covered Harley’s strategic initiatives for nearly a decade, and this move appears to be part of Zeitz’s broader vision to streamline the company while generating capital for future growth. Since taking the helm in 2020, Zeitz has implemented the “Rewire” and subsequent “Hardwire” strategic plans, which have involved exiting unprofitable markets, reducing product complexity, and investing in the company’s premium brand positioning.
The deal’s structure allows Harley to maintain considerable influence over the financing options available to customers. According to people familiar with the transaction, the agreement includes provisions ensuring that Harley-Davidson motorcycle purchasers will continue to have access to competitive financing terms through HDFS.
The $1.8 billion windfall presents several options for Harley. The company indicated it would use approximately $900 million for share repurchases, helping to boost earnings per share, while allocating the remainder toward debt reduction and strategic investments in product development.
Particular focus will likely fall on Harley’s electric motorcycle division, LiveWire, which was partially spun off in 2022 but continues to require significant investment as it competes in the growing electric motorcycle market against startups like Zero Motorcycles and established players including BMW and Honda.
The Federal Reserve’s recent interest rate policy has complicated matters for vehicle financing across industries. With rates remaining elevated compared to historical norms, the cost of motorcycle loans has increased substantially for consumers. This transaction may provide HDFS with additional flexibility and capital resources to navigate the current rate environment.
Looking forward, investors will be watching closely to see how Harley deploys its newfound capital. The company faces significant challenges, including an aging customer base, increased competition in international markets, and the costly transition toward electric mobility.
“This is a pivotal moment for Harley-Davidson,” said Robert Johnson, senior transportation analyst at Bloomberg Intelligence. “The cash infusion provides breathing room, but the fundamental challenge remains: how to evolve a 120-year-old brand without alienating core customers while simultaneously attracting new ones.”
The transaction is expected to close in the first quarter of 2026, subject to regulatory approvals and customary closing conditions.
