S&P Downgrades Harley-Davidson to BB+

S&P Global Ratings downgraded Harley-Davidson Inc.’s corporate long‑term rating to BB+ from BBB‑, and also lowered the issue‑level rating on its unsecured debt to BB+ from BBB‑. The agency assigned a recovery rating of 3 to the senior unsecured notes and removed the company from CreditWatch, where it had been placed with negative implications on 11 February 2026.

S&P projects the adjusted EBITDA margin to remain at 5 %‑6 % in 2026, with operating income and EBITDA margins expected to stay depressed through at least 2027. The firm’s “Back to Bricks” strategic plan, announced in May, targets gross margins of 25 %‑30 % and EBITDA margins of 10 %‑12 % over the next three to five years, below the 2022‑23 levels when gross margin exceeded 30 % and EBITDA margin surpassed 16 %.

Cost‑reduction initiatives include $150 million of planned savings, while the first quarter reported $15 million of restructuring charges related to headcount reductions and employee termination benefits. Tariff costs on steel and aluminium are forecast at $75 million‑$90 million for 2026, revised down from an earlier $75 million‑$105 million range, with peak impact expected in 2026 and relief anticipated thereafter due to trade‑policy changes and new exemptions for certain motorcycle parts.

The new product rollout features the entry‑level Sprint model and the re‑introduction of the Sportster model (priced around $10,000). Both are slated to launch in late 2026 and 2027, respectively, and are intended to attract newer riders and improve dealer profitability.

U.S. market share fell to 34.5 % in 2025 from 49.1 % in 2019, measured by total motorcycle registrations. S&P estimates that successful execution of the new models could lift Harley‑Davidson’s share into the mid‑40 % range.

S&P also lowered the short‑term rating on Harley‑Davidson Financial Services Inc. to B from A‑3 and reduced the issue‑level rating on its medium‑term notes to BB+ from BBB‑. As of 31 March 2026, Harley‑Davidson held $1.8 billion in cash and cash equivalents, with more than $2 billion available under various commercial‑paper programmes. The outlook remains stable, reflecting the company’s liquidity position and its commitment to maintaining low captive‑adjusted leverage.