Japan’s Bigmotor ordered to suspend 34 shops amid govt inquiry

TOKYO: Bigmotor Co., one of Japan’s largest used car dealers and vehicle repair businesses, was ordered to suspend operations at a quarter of its maintenance shops after allegations of widespread fraud triggered a government investigation in July.

Some 34 shops across the country must shut down for as long as three months, and a dozen will have their safety inspection certifications revoked, the Ministry of Land, Infrastructure, Transport and Tourism said Friday.

Officials confirmed legal violations - including excessive repair fees and inadequate safety checks - during on-site inspections in July, Transport Minister Tetsuo Saito told reporters.

Punitive measure will be finalised after local municipalities conduct hearings for each case during the coming months, the ministry said, adding that Bigmotor’s remaining 101 shops are still under scrutiny.

Damaged cars

Reports emerged earlier this year about alleged incidents where Bigmotor employees intentionally damaged cars in order to inflate customer bills, or charged them for repairs that weren’t made.

The resulting scandal drew speculation about systemic and cultural issues at Bigmotor and across the used car industry.

Under Japanese law, companies aren’t allowed to charge clients for repairs they didn’t request.

"We accept the ministry’s decision and will strive to prevent such matters from happening again,” the company said in an emailed statement.

Bigmotor chief executive officer Hiroyuki Kaneshige stepped down in July. He wasn’t alone.

The chief executive officer of Sompo Japan Insurance Inc. - a subsidiary of Sompo Holdings Inc. that has a partnership with Bigmotor - stepped down in September.

A week later, the Financial Services Agency began conducting on-site investigations of both companies after reports about excessive fees and fraudulent insurance claims.

On Tuesday, Sompo Holdings released the initial results of an independent review that found Sompo Japan knowingly withheld information from the FSA during its investigation.

A final report is set to be released by the end of the year.