By YUJI MASUYAMA/ Staff Writer
July 30, 2024 at 17:56 JST
The Fair Trade Commission began searching the offices of Harley-Davidson Inc.’s subsidiary in Tokyo on July 30 on suspicion of forcing dealerships to buy motorcycles out of their own pockets to reach sales quotas.
According to sources, Harley-Davidson Japan KK started unilaterally setting excessively high sales quotas for contract dealerships about four years ago.
When dealerships failed to sell the assigned number of motorcycles, the company forced them to buy the remaining vehicles at their expenses by threatening to not renew contracts, the sources said.
The practice is suspected to be a violation of the Anti-Monopoly Law, which prohibits the abuse of a superior bargaining position.
When the dealerships register the excess motorcycles they bought under the names of employees or others, they are considered “unused, registered” vehicles and depreciate in value. These motorcycles can only be sold to customers at much lower prices, the sources explained.
“The more (motorcycles) I sell, the more (money) I lose,” a Harley-Davidson dealer in eastern Japan told The Asahi Shimbun.
The man said his dealership was assigned a sales quota of about 130 motorcycles this year, although it only sells about 70 a year on average.
New motorcycles are delivered every month under the quota even if there are no buyers.
The man said he spent nearly 100 million yen ($651,000) of his own money to take on unsold vehicles last year, but could only re-sell them at a substantial loss.
He explained that the market price of a once-registered motorcycle falls by several hundred thousand yen even if the vehicle has no mileage.
He intends to end his dealership contract this year.
A Harley-Davidson Japan representative told The Asahi Shimbun that the company will fully cooperate with the FTC’s investigation.
Harley-Davidson Japan reported sales of 28 billion yen in 2023, up 24 percent from the year before, due partly to the yen’s depreciation, according to credit researcher Tokyo Shoko Research Ltd.
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