Harley-Davidson is exploring strategic alternatives for its financing arm, Harley-Davidson Financial Services (HDFS), including a potential $1bn sale of the unit, with private equity firms expected to be among the interested parties, according to a report by Bloomberg citing sources familiar with the matter.
While the company is in the early stages of the process, the business could also attract interest from regional banks, and private credit providers, the sources noted.
The iconic motorcycle manufacturer has engaged an advisor to gauge interest in the sale of HDFS, which serves as a key component of Harley-Davidson’s overall operations, facilitating dealer inventory financing, consumer loans for motorcycle purchases, and motorcycle insurance services.
Despite the ongoing discussions, a final decision on whether to move forward with a sale remains pending, and Harley-Davidson may ultimately choose to retain control of the unit.
This development comes as Harley-Davidson contends with challenging market conditions, including a sluggish stock price, muted sales growth, and increasing competition from global rivals such as Honda Motor and BMW.
In a separate announcement, Harley-Davidson revealed that CEO Jochen Zeitz will step down after completing a five-year tenure, further adding to the sense of uncertainty surrounding the company.
Harley-Davidson’s stock dropped 9.3% to close at $21.49 in New York trading on Thursday, bringing the company’s market capitalisation to approximately $2.7bn. The stock has lost nearly half its value over the past year.
HDFS generated operating income of $248m on approximately $1bn in revenue last year, contributing around 20% of the company’s total revenue, based on Harley-Davidson’s most recent filings.
