The Quickshift
- A group of dealerships have accused Harley of hoarding profits
- They allege they've been saddled with inventory and high-priced upgrades
- Harley denies the allegations
Harley-Davidson is in a bit of a pickle.
The once steady revenue from Boomers flush with cash of the 1990s has all but dried up as the group ages out of motorcycling. Its forays into new models haven't gone exactly to plan. as though there was initial demand for its Pan America adventurer, it's since taken a dive off a cliff. And its bid at enticing The YouthsTM has all but failed with LiveWire.
I've even made the case that Harley should just give up on the fledgling EV brand previously.
Yet, if you looked at the Motor Company's financials as of late, you'd never know it, as revenue is up 13% this year. Nor would it be immediately obvious given its recent announcement that the company would buy $1 billion worth of stock back.
You'd probably see that and, understandably, believe Harley had overcome its recent hardships and was moving toward a better place. A spot where Harley could be reinvigorated to its once-former glory. But a group of Harley dealers are alleging that Harley-Davidson corporate is saddling them with unwanted inventory, high-priced dealership upgrades, and essentially lining their pockets while screwing dealerships over.
The group responsible for accusing Harley-Davidson is The Harley-Davidson Dealer Council, a cadre of over 200 dealerships within the National Powersports Dealer Association. The letter, obtained by The Wall Street Journal, which was sent to the association's members and Harley's Chief Commerical Officer, outlines the group's grievances, including shipping too much inventory to dealerships as sales stagnate or drop, as well as telling dealerships they have to make costly upgrades to their showrooms in order to stay as a dealer.
The Journal also reports that the dealers state that corporate's recent announcement of stock buybacks was directly "fueled" by "what was taken from dealerships" in those inventory pushes and beautification demands. Essentially, they've passed along the risk to dealerships and taken that revenue to make it seem as if Harley was on better footing than it actually is. At least, that's the accusation made.
Harley responded to the Journal's questions on the accusation that it does indeed plan to cut motorcycle shipments, along with "facility upgrade requirements" for the rest of this year, but denied the accusations listed above.
If this all sounds vaguely familiar, it should, because Harley-Davidson Japan was accused of similar practices not that long ago.
Late last month, Japan's Fair Trade Commission raided Harley Japan's offices, as allegations arose of excessive sales quotas. According to RideApart's own reporting, "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."
This in turn meant that dealerships were being saddled with "used" inventory that'd depreciate without ever being truly sold, all the while Harley corporate would see the profit. And if you didn't do it, your contract with Harley would be terminated.
It's worth noting that in the last few years, Harley has closed over 100 dealerships around the United States. Likewise, it recently announced that it'd be moving more of its production overseas, angering the union workers responsible for building those bikes.
As for what now happens given this dealer association has accused Harley-Davidson of malpractice, that's yet to be seen. But if the US FTC reacts in the same way as Japan's to these accusations, Harley's offices in Milwaukee might be getting a knock on the door pretty soon to see what's what.
