Harley-Davidson is weighing the sale of its financial services division, with a potential $1bn deal on the table and private equity firms among the expected suitors, according to Bloomberg sources.

The company has engaged an advisor to explore strategic alternatives for Harley-Davidson Financial Services (HDFS), a key business unit that supports motorcycle sales through dealer inventory financing, consumer loans, and insurance services.

Private credit funds and regional banks are also reportedly evaluating the opportunity. However, no final decision has been made, and Harley-Davidson may ultimately opt to retain ownership of HDFS.

The move follows mounting pressure on the US-based motorcycle brand, which has seen its share price plummet nearly 50% over the past year. The stock fell 9.3% on Thursday to close at $21.49, giving the company a market capitalisation of roughly $2.7bn.

HDFS generated $248m in operating income from approximately $1bn in revenue last year, contributing nearly 20% of Harley-Davidson’s total revenue.

The potential sale comes at a time of executive transition, with CEO Jochen Zeitz set to step down following a five-year tenure. Amid sluggish sales growth and intensifying competition from rivals like Honda and BMW, Harley-Davidson is under increasing pressure to streamline operations and unlock value.

A sale of HDFS would mark a significant shift in the company’s structure, and private equity’s involvement could bring fresh capital and operational expertise to one of the firm’s most profitable segments.

Source: Bloomberg