Harley-Davidson weighs options to sell financing arm for more than $1 billion

Harley-Davidson is considering various options for its financing arm, including a potential sale that could yield at least $1 billion, sources familiar with the situation have indicated.

The renowned motorcycle manufacturer is collaborating with an advisor to gauge interest in Harley-Davidson Financial Services, or HDFS, according to these individuals, who requested anonymity as the details are not yet public. This business might attract potential buyers such as regional banks, private equity firms, and private credit investors, the sources noted.

Harley-Davidson has not reached a definitive conclusion regarding the sale of the unit and may decide to retain it, the sources stated. A spokesperson for the Milwaukee-based company refrained from commenting.

The possible sale arises as Harley-Davidson faces challenges with a declining stock price, stagnant sales growth, and intense competition from rivals like Honda Motor Co and BMW. This week, Harley-Davidson announced that Chief Executive Officer Jochen Zeitz intends to resign, concluding a five-year term.

On Thursday, Harley-Davidson shares dropped by 9.3%, closing at $21.49 in New York trading, resulting in a market capitalization of approximately $2.7 billion. The stock has plummeted 48% over the past year.

HDFS aids the company’s dealers in financing their inventory and assists consumers in financing the purchase of Harley-Davidson and LiveWire motorcycles. It also collaborates with third parties to provide motorcycle insurance.

Last year, the unit generated an operating income of $248 million on revenues of around $1 billion, representing roughly one-fifth of Harley-Davidson’s total revenue, according to a company statement and filing.

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