| 3:24 PM EST

Harley-Davidson Warns of Shrinking Market as Sales Sag

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Motorcycle maker Harley-Davidson Inc. says its U.S. sales fell 13% to 36,200 units in the third quarter, its worst any-quarter result in five years.

Separately, the company says it will recall 238,300 of its motorcycles worldwide to repair a clutch defect. The callback is the company’s fourth in five years that involves a clutch problem.

Harley-Davidson says its U.S. sales are down 10% this year, and demand overseas has softened. The company blames the downturn in domestic volume on an aging customer base. Overseas demand is slumping too, largely because of European tariffs imposed on its bikes in retaliation to the Trump administration’s import taxes on foreign steel and aluminum.

The company estimates that higher tariffs will cost it about $45 million this year and $120 million in 2019. Reviving sales will take time, CEO Matt Levatich concedes in an earnings call earlier today. He predicts weak demand in the U.S. through 2019.

Still, healthy wholesales of its more expensive touring bike hiked Harley-Davidson’s overall revenue 17% in the third quarter. Net profit climbed to $114 million from $68 million in the same period last year.

Over the next four years, the company hopes to attract younger riders by rolling out 16 new models, including five all-electrics and an array of lighter-weight sport bikes. The company expects those products will help boost its annual revenue by as much as $1.5 billion.

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