Harley-Davidson Ordered Not To Enforce Ban On Internet Sales Made By Its Dealers.

You remember that last August Harley-Davidson informed its US dealers network that online sales were forbidden outside their dealership territories. Main targets were those dealers selling online parts and accessories to 3rd party independent dealers (brick & mortar and online shops usually reselling Harley genuine parts at a discount) and to individuals whose residence are outside each dealer territory. Beginning of this month, I reported that St. Paul Harley-Davidson (incorporated as St. Paul Motorsports Inc.) sued the motorcycle manufacturer to fight the policies, which would eliminate about a quarter of the 72-year-old dealership’s revenue.

On Monday November 28, 2011, U.S. District Judge Patrick Schiltz ordered Harley-Davidson Motor Co not to enforce its ban on sales of parts, accessories and apparel through third-party websites or to international customers. The judge’s order is effective through Feb. 29, 2012. Through his attorney, St-Paul Harley owner Tom Giannetti successfully argued that although his dealership motorcycle sales were dropping since year 2000, he was able to stay in business thanks to profitable online sales. Judge Shiltz keeps the case on hold until February to give both parties enough time to negotiate an amicable resolution of the dispute.

27 Responses to “Harley-Davidson Ordered Not To Enforce Ban On Internet Sales Made By Its Dealers.”

  1. 1 Dick Gazinia Dec 1st, 2011 at 9:23 am

    Get out of your antique corporate cages, MoCo The Internet is real. Deal with it…

  2. 2 2Low Dec 1st, 2011 at 9:52 am

    Harley-Davidson tries to negotiate because they know that in February they gonna lose. Their business model is obsolete. Internet has changed forever our lives and the way to do business,. Geographically, you can’t limit internet sales. Freedom of speech, freedom of business, when you want, where you want, with who you want.

  3. 3 chopmonster66 Dec 1st, 2011 at 11:15 am

    another case of big business trying to cotrol the little guy so HD can profit . THEY ARE NOT HAPPY WITH THE B ILLIONS THE HAVE MADE , NOW THEY WANT IT ALL!!!!!! GREED THE END OF THE WORLD AS WE KNOW IT . GOOD LUCK TO ST PAUL ,I HOPE THEY WIN …

  4. 4 Jim C Dec 1st, 2011 at 11:23 am

    How is St Paul wrong for being greedy and the MoCo right?? I will continue to buy St Paul H-D items from ebay when my local guy doesn’t stock them!

  5. 5 fuji Dec 1st, 2011 at 1:37 pm

    Dick Gazinia. states. Dec 1st, 2011 at 9:23 am
    Get out of your antique corporate cages.

    Maybe they need to be set free like the dog cage commercial. LOL

    The Company knows for real the Internet potential. They want it for themselves. Not their slaves.

    I don’t for one minute believe the Motor Company cares about any of their dealers and thier investment overhead. unless its a prime location for their restructuring and even then total control.

    Thinning the heard. lets just say St Paul will have a bumpy rd from here on. It will be interesting to see how it goes down.

  6. 6 jacky Dec 1st, 2011 at 2:24 pm

    if a dealer wholesales parts to a brand x shop in another dealers area its pickin the pocket of that dealer as well as the employees that work there,theres no two ways about it.! amazingly we have recently been selling items that we normally wouldn’t , like zumos for instance.if all the dealers play by the new rules we can all make an honest living……….

  7. 7 Paul Dec 1st, 2011 at 5:25 pm

    Jacky,the reason people use these sites is because their local dealer doesn’t have the part or the local dealer is high on the price. Why would I buy from you when I can get the same part down the street for less . Your option is compete or lose the sale.

  8. 8 jacky Dec 1st, 2011 at 7:54 pm

    paul,,you’re exactly right,,,,people will go to theese sights and buy it from the cheapest dealer…where does it end?some one giving ten percent off,twenty off…cost pluss ten percent?
    pretty soon we are all workin for free…if the dealerships all go by the rules then we are able to make a buck instead of seeing who can survive on nothing.. .i think i read something about the dealer doing eight million a year?? at twenty percent proffit he would make aprox. a million and a half dollars annually,,,thats pretty greedy .

  9. 9 Oldude Dec 2nd, 2011 at 8:09 am

    Thank you court system for bringing Harley Davidson into the 21st century. The Harley Dealer where I live would cut off his arm rather than give a discount and you had to wait for a part for at least a week. In the past I could order the part for a nearby out of state dealer and get a twenty % discount , no sales tax and low shipping cost And receive the part in two days. Hooray for Harley owners!!!!

  10. 10 Oldude Dec 2nd, 2011 at 8:14 am

    Jacky, Remember the 90’s and dealers were selling bikes at invoice plus because there were more customers than bikes! Bet you maximized profits just like every H/D dealer in the world. Times have changed…compete or get out!

  11. 11 Skully Dec 2nd, 2011 at 8:43 am

    What would happen if all manufacturers did the same thing, did not allow internet sales or sales to third party individuals (including licensed independent motorcycle repair shops) who intend to use the bought parts in their everyday business activities.

    How would prices be controlled then. They wouldn’t. The manufacturer(s) would soon realize (under a monopoly) that they could name their own price, as competition would be non-existant.

    It seems to me that the “Every Day Values” which are eluded to as part of Harley Davidson’s core of business conduct, which is supposed to guide not only the way they interact with with others but also in the way that they conduct themselves in their everyday interactions with other businesses and communities.

    Unless I’m mistaken, Harley Davidson also eludes to the fact that there are anti-trust laws regulating how fairly the marketplace is governed, meaning any agreement or action to limit competition in the free marketplace would most likely result in a violation of these (anti-trust) laws. These laws also govern activities directed at agreements with dealerships, suppliers and distributors to set or dictate retail (resale) prices.

  12. 12 Red Dog Dec 2nd, 2011 at 8:49 am

    I doubt in these times that Harley Dealers are making 20% net profit. HD would have sucked that up a long time ago. I agree with most that say ” Welcome to the new way of doing business. Sell what you can for whatever you can get. It’s all about volume now.”

  13. 13 Brett Dec 2nd, 2011 at 8:52 am

    Bottom line…..if HD decides, it can pull the dealership from this owner. There were multiple fights between Ken McCoy of McCoy’s Harley-Davidson in Green Bay Wisconsin & HD. HD stripped him of his dealership. Now Vandervest who has the dealership in Peshtigo Wisconsin is opening a Green Bay dealership.

    So, while he may win this fight, he may actually lose the battle if they strip the St. Paul dealership from him. I’m sure Twin Cities or Zylstra would be set to jump in & snatch it up….He’d also lose his Wild Prairie dealership in Eden Prairie as well……

    We’ll see, but this could turn into more then internet sales.

  14. 14 Ga. Red Clay Dec 2nd, 2011 at 9:01 am

    “i think i read something about the dealer doing eight million a year?? at twenty percent proffit he would make aprox. a million and a half dollars annually,,,thats pretty greedy ” This is the United States. If I open a business I am there to make profit. Amazon invades every store in every community everyday with goods that could be purchased locally. To much profit, greedy, where did you come from? Occupy Wall Street? Give the 20% on your Chinese made goods and move on. You can order more. Compete, Compete this is the American way.

  15. 15 ST Paul IS the big guy putting the little guy out of business Dec 2nd, 2011 at 9:18 am

    Congratulations all of you small minded people. SO.. St Pauls are the good guys? They’re the little guys being put down by the MoCo? What about the fact that St Pauls have got BIG off of the backs of the little dealers who cant compete on their small turnover? How many of you guys are out of work because the company you worked for was put under by the bigger company who out-bid on contracts? What about your local dealer who is trying his best to hang on to a business and his staff thier jobs? I’m not sayin all dealers are perfect but I for one want my local guy to be there for a long time to come.. and I’m gonna support him, his family and his staff. Hopefully the folks in my locality will also buy local and keep ME in a job, for my kids’ sake. If we all did this, ther’d be less difference between the big guy and the little guy… rant over.

  16. 16 Skully Dec 2nd, 2011 at 9:27 am

    What about our kids (the kids that belong to the people who own licensed independent repar shops)? Harley has also issued the “directive” that prevents sales to any person or business who intends to re-sell those items (parts), whether it’s in this businesses legal daily operations or not.

    I’ve received numerous e-mails that state “Harley does not want us selling parts to independent repair shops under any circumstances”. This to me sounds like a direct violation of Harley Davidson’s Code of Conduct as related to their own Corporate Rules and Regulations…..not to mention being in direct violation of the Federal Trade Commission Act laws.

    Is Harley trying to run us out of business or just monopolize on their products. It’s one in the same isn’t it?

  17. 17 Ga Red Clay Dec 2nd, 2011 at 10:17 am

    I knew it would not take long for “What about our children?” Number 2 play just behind racism in the Democratic party. Now the little guy getting beat up by the big guy. I bet you hate Wal Mart also.

    “I’ve received numerous e-mails that state “Harley does not want us selling parts to independent repair shops under any circumstances”. This to me sounds like a direct violation of Harley Davidson’s Code of Conduct as related to their own Corporate Rules and Regulations…..not to mention being in direct violation of the Federal Trade Commission Act laws” Skully can you please post these laws or did this just sound good when you were typing?

    “How many of you guys are out of work because the company you worked for was put under by the bigger company who out-bid on contracts? ” Sounds like to me you were out of a job because your company bid to high. Lowest bid wins contracts

  18. 18 Wiskers Dec 2nd, 2011 at 10:51 am

    I am beyond happy to see this happen. I own a small independent shop, and when I was told I had to buy my parts from the Harley dealer around the corner from me I freaked. My local dealer and I have been at war for years, cause I am cheaper and faster then them. The dealer I was buying from told me that motor company said no more, I have not sold 1 Harley item since then. If motor company thinks that limiting sales to districts will help the local dealers. Think again! I have enough aftermarket suppliers to get my stuff. To Hell with business trying to kill us little guys.

  19. 19 Mike Dec 3rd, 2011 at 12:10 am

    Harley is going the way of the dodo,to it’s customers, but it does not care, they believe we are too old and dying off!! Hmmm strange thought. I just bought a new Jackpot this year.

    Can’t buy any real custom parts, but them again, it looks custom right out of the box for me!

    I buy from St Paul. when the deal is right or they have the right product. However I do buy from my local dealer also. I understand those people got to eat TOO!

    Tough Call. Lets get America working and proud again and this will go away.

  20. 20 Slow Ride Dec 3rd, 2011 at 12:49 pm

    This is simply a case of a manufacturer trying to control distribution. They have every right to control distribution. Manufacturers do it all the time. They pick and choose who they want to distribute their products, and how they want their products distributed, they have criteria. An Example: Okay, Harley wants to put a dealer in, lets say, for lack of a better idea, Siberia. (insert any place you want). Since they never had a dealer there, they want a strong operator with plenty of capital to support the brand for the long term. They don’t want some fly-by-night horse trader. They want some local guy who can relate to the local population and is going to be around and do a good job representing the brand. So they find a guy with $5 million US that is willing to put that money at risk to start a dealership. He puts up a building, hires people, and buys inventory. If someone is going to invest that kind of money, the motor company wants that new guy to be profitable. So this new guy opens his doors and a few weeks later finds out that some dealer in Saint Paul is selling products into his territory. He says to the Motor Company, “what the F**k?” “What do you need me for if some other guy is distributing product here?” “I thought you were giving me this sales territory in exchange for my investment?” And the motor company says to the new guy, “we need you to sell motorcycles and grow the brand”. And the new guy says, “I need a return on my investment so that I can grow the brand, maybe I should start selling stuff into Saint Paul”. And the Motor Company realizes that that is a poor use of capital for the new dealer since they already have a dealer in Saint Paul and the Saint Paul dealer is just hurting all the other dealers who made large investments with the company. So they control distribution. Companies have been doing it for decades. Ford does it. GM does it. Toyota does it. Hell, even small companies like Baker Transmissions does it. In fact, pick any manufacturer you can think of and I’ll guarantee you that they’ve done something, to some degree, to control distribution, to protect or promote the brand. Some manufactures don’t rely on distributors and do their own distribution. That is a form of control too. Companies who do a poor job controlling distribution usually have a cheap, non-branded, or poorly made product that anyone can duplicate.

  21. 21 Mike Dec 3rd, 2011 at 8:25 pm

    Sorry, but Ebay and internet sales has massively changed pricing and availability on many products.

    Look at the massive irresponsibility of GM closing all those dealers in small towns. I have gotten better deals in smal towns around my large town and with less hassle,

    Still need the economy to straighten out and things should get better.

    Protected dealerships who gouge are always losing customers and always will, but their revenue is King.

  22. 22 Tim williams Dec 4th, 2011 at 9:57 am

    Its very simple for any dealer set up a second store in your parts dept sell all your surplus stock to the second store for pennys on the dollor take your tax break on inventory loss and use your second store to do internet sales and also as a warehouse for your store it pretty simple

  23. 23 Jason Hallman Dec 4th, 2011 at 12:33 pm

    There are two sides to this coin. It is one thing for Harley to dictate how low their dealers advertise their products to get clients in the stores…it is another ting altogether to dictate where they can sell their items. Harley may actually win this once it is over because of the way that dealer franchise agreements are written and structured. Harley aims to guarantee a dealer (say Orlando HD) a given territory to market to and advertise in. If St Paul HD were to advertise in Orlando, that is a clear violation. The issue is that the internet is a domain that is global. Somthing similar happened in the auto aftermarket when MSD caved to Summit and Jegs and began selling the 6A ignition box for tiny profits in lieu of large volume. Today, it is almost impossible to find or start a “mom and pop” brick and mortar speed shop. Drag Specialties does a great job of protecting margins for its dealer network. I for one appreciate what they do. Once a customer is in my shop I can wheel and deal but in the end, my margins are solid. What this will do is create a new clause in future franchisee agreements and allow older more established dealers to control the pricing of HD’s parts.

  24. 24 Ken from down under Dec 6th, 2011 at 2:54 pm

    this is bloody great news, I can tell you that living in Australia has its disadvantages when it comes to buying parts for my bikes. The local dealers have the market , and us, by the balls and have screwed us for many years. When Harley made the decision to shut down international internet sales, my dealer got greedy again. Our Aussie dollar has gained 20 % – 30 % over the mighty US dollar but do you think we see a discount ? no way !!

    Harley came direct and set up in Australia and the prices went down a modest amount but we, the customers are NOT stupid.

    I have in the past, and will continue to support those who do the correct thing by the customer. If our local dealer doesn’t like it, TOUGH !! Suck it up or look after us. If I could get a bike direct from the states, I would do that as well. You would be supprised how much we pay over here.

  25. 25 Santa Claus Dec 7th, 2011 at 3:38 am

    “You would be surprised how much we pay over here”

    I live in Finland and this is so true..would you pay 40 usd for a oil filter..or 1000 usd for a leather jacket? Well, we do. Believe me, I’ve ordered one (1) washer from US and including shipping it was half the price of my local h-h dealer lol…
    And I’m not ranting about not to get the lowest price possible but we are paying 3 to 4 times more than you in the US. I hope St Paul wins and I can continue to shopping from them..good luck!

  26. 26 joe Dec 30th, 2011 at 5:18 pm

    Harley-Davidson has missed the boat on the internet segment of their business. They are in the process of revamping their on-line shopping experience by building a new E-Commerce store. They know they have to get on board with the internet; they just don’t want their dealers to be price slashers. Some companies are built on price and value (Target, Wal-Mart) and there are companies who are based on brand and others are built on brand strength (BMW, Apple). Harley is trying to manage their brand strength. If their dealers aren’t on board, they are going to find a way to drive them out of the business.

  27. 27 JORDAN Alain Jan 31st, 2012 at 6:12 am

    According to me, the real problem is the price of the parts in Europe. Price in Europe = 2.5 x price in USA. How can HDMC explain this situation? That’s why we buy our parts at St. Paul Harley instead of our local dealer in France…

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Cyril Huze