Japanese Government Raids Harley Japan, Allegations Over Excessive Quotas

If the allegations are true, it could violate Japan's Antimonopoly Act.

Photo by: Harley-Davidson

By: Janaki Jitchotvisut

Jul 31, 2024 at 7:22am ET

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On July 30, 2024, Japan's Fair Trade Commission reportedly raided the offices of Harley-Davidson Japan, a subsidiary of Harley-Davidson, Incorporated. The reason: Allegations of excessive sales quotas on contract dealerships.

According to multiple Japanese news reports, sources allege that H-D Japan began setting unrealistically high sales quotas around 2020-2021. Dealerships under contract were then allegedly threatened with not having their contracts renewed if they did not meet these high sales quotas.

This, in turn, left dealers no choice but to buy bikes themselves in order to meet the quotas. In some cases, the allegations say, this included models that they did not want or could not justify being purchased and sold in their areas.

Under this scheme, the bikes were then allegedly bought in the names of both executives and regular employees at the dealerships. However, since the bikes were then considered to be "unused, registered" bikes according to Japanese law, the machines would then immediately depreciate in value. They would then go on to be sold at a loss by the dealers that purchased them.

If these allegations are true, you can see the problem.

More than that, though, if these allegations are true, Japan's FTC believes that it could be a violation of the country's strict Anti-Monopoly Act. More specifically, it could violate a provision referred to as "abuse of superior bargaining position," since H-D Japan reportedly threatened to cancel the dealer's contracts if they didn't go along with this plan.

Harley-Davidson Japan is a subsidiary of Harley-Davidson, which reports its worldwide motorcycle sales (excluding LiveWire) by the following geographic segments: United States, Canada, Total North America, Europe/Middle East/Africa (EMEA), Asia Pacific, and Latin America.

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Because the company reports sales by region rather than by country, exact numbers for Japan on its own aren't clear. However, a look at HD's financial results from 2020 to the present shows that sales went down in the Asia Pacific region overall by a couple of thousand bikes in 2020 (as compared to 2019).

For FY2021, Asia Pacific regional sales were down by 8 percent year-on-year. In 2022, though, the news got a little better for Asia Pacific sales, to the tune of a 12 percent year-on-year rise over 2021. The 2023 numbers were down slightly for the Asia Pacific region, dropping by three percent.

The Motor Company's most recent reporting period of 2024 Q2 included reporting that sales in the Asia Pacific region were down by 14 percent year-on-year for FY2024 to date, and down by 16 percent for Q2 of 2024 as compared to Q2 of 2023.

RideApart has reached out to Harley-Davidson Japan for comment on this matter, and will update this report with any new information we learn.