Harley-Davidson Was Saved With an Hour to Spare on New Year's Eve 1985

In 1903 William S. Harley and Arthur Davidson built a motorcycle in Milwaukee. Arthur’s father asked them to move the project to the backyard, and there they built a 10-by-15-foot wooden shed. Arthur’s brother Walter joined them, and later their brother William A. They sold their first motorcycle to a friend.

AMF and the slide

In 1969 the conglomerate AMF bought Harley-Davidson, with a plan to expand production. Quality fell, and Japanese makers took over more of the market; Harley blamed their lower prices. CNBC reported that Harley’s share of the US heavyweight motorcycle market fell from about 75% in the early 1970s to about 25% in the early 1980s.

By 1981 AMF wanted to sell. There was talk that Honda might be a buyer. Vaughn Beals, an AMF executive who ran the motorcycle business, later said the rumors scared Harley’s dealers badly.

1981: Buying it back with borrowed money

Beals put together a group of 13 executives, including Willie G. Davidson, the chief designer and a grandson of co-founder William A. Davidson. In 1981 they bought Harley-Davidson from AMF in a leveraged buyout of about $80 million. Fortune put the price at $81.5 million. Most of the money was borrowed from banks led by Citicorp. Jalopnik reported that many of the executives also put in $1 million or more of their own.

They owned a company with heavy debts and falling sales. Harley asked the US International Trade Commission for protection, arguing that Japanese imports were harming it. On April 1, 1983, President Reagan announced a five-year tariff on imported heavyweight motorcycles: 45% in the first year, then 35%, 20%, 15% and 10%.

1985: Two stacks of papers

Then the main lender lost patience. Citicorp told Harley it would have to find another lender. The executives gave themselves until midnight on December 31, 1985, to find new money or go bankrupt.

Jalopnik’s account of that night puts them in a room at a bank with two stacks of papers, one for bankruptcy and one for recapitalization. At 11 p.m. the call came: the new money had come through. The lender was Heller Financial of Chicago, which closed the deal with Harley that day, Cycle News reported.

The recovery, and the tariff question

By 1987 Harley was listed on the New York Stock Exchange. That year it did something unusual: it asked for the tariff to end a year early. The White House later called it an unprecedented step. By 1989, CNBC reported, Harley had won back nearly half of the US heavyweight market.

The tariff is often credited with the rescue. The evidence is weaker than the legend. A study for RIETI, a research institute affiliated with Japan’s trade ministry, estimated that the tariff explained only about 6% of Harley’s sales recovery. The company had also shrunk its workforce and improved quality, CNBC noted.

2025: The bank behind the bikes

Harley-Davidson, Inc. reported revenue of $4.47 billion for 2025, down 14%, and net income of $339 million. Global retail sales fell 12% to 132,535 motorcycles. The motorcycle company itself had an operating loss of $29 million. The profit came mostly from Harley-Davidson Financial Services, which lends to dealers and riders and earned $490 million in operating income, helped by a deal with the investment firms KKR and PIMCO.

What the record shows

• Debt bought the company and nearly lost it. The 1981 buyout ran on borrowed money, and one lender’s decision almost ended Harley four years later.
• Both outcomes were prepared. Harley’s executives sat with bankruptcy papers and refinancing papers side by side until the money arrived.
• Protection bought time, not recovery. Harley asked to end the tariff early, and research suggests it explained only a small part of the turnaround.
• The lender can earn more than the factory. In 2025 Harley’s finance arm made the money that its motorcycle business lost.

Other companies in this archive survived by a narrow margin. FedEx once met a payroll with blackjack winnings, and Apple took $150 million from Microsoft in 1997. Marvel did go bankrupt, in 1996, before its comeback.