Japan's transport ministry said Monday it will conduct hearings with major used car dealer Bigmotor Co. over the company being suspected of charging excessive vehicle repair fees and making alleged fraudulent insurance claims, which may have affected several hundreds of thousands of vehicles.
The decision to hold the hearings on Wednesday afternoon comes as Bigmotor admitted earlier this month that its employees had intentionally damaged customers' cars to charge them with excessive repair fees, saying it had uncovered at least 1,200 cases of inappropriate repairs having been carried out.
Company officials in charge of bodywork and paint services are expected to attend the hearings. Depending on the outcome, the ministry said it will consider launching an on-site inspection of the company's factories.
The Financial Services Agency will also look into what has happened, sources familiar with the matter said, amid concerns that insurance companies may have turned a blind eye to the false claims in exchange for the dealership allocating compulsory automobile liability insurance to them when customers purchased used cars.
Bigmotor recently said that it will expand the scope of its investigation, while the number of vehicles to be inspected could reach hundreds of thousands, according to the sources.
Employees at the dealership were scratching the bodies of vehicles with screwdrivers and damaging their surfaces with golf balls, according to a report compiled by outside lawyers.
The report, released earlier this month, found that the misconduct was being carried out so that Bigmotor could charge its customers more than was necessary over the repairs and receive fraudulent payments from customers' insurance companies.
The wrongdoing came to light after lawyers began investigating the case, following requests made by insurance companies for Bigmotor to look into the matter.
The incident has sparked outrage in Japan, with growing calls on the internet for a boycott campaign and for criminal charges to be brought against the company.
Several online posts also demanded the resignation of Bigmotor's president, Hiroyuki Kaneshige, describing his decision to give up his salary for one year as insufficient.
Amid the developing scandal, Japanese actor Ryuta Sato has canceled a TV commercial contract with the car dealer.
According to Bigmotor's internal investigation report, there were at least 1,275 cases of wrongdoing confirmed as of July 16, equivalent to about 15 percent of the 8,427 insurance claims checked since November 2022. The average amount of overcharge was about 39,000 yen ($275) per case.
Lawyers have said the company set a quota for each factory of about 140,000 yen in gross profit per repair, and that misconduct cases date back to at least 2018.
A total of 37 employees were on loan from Sompo Japan Insurance Inc. to Bigmotor since 2011, raising questions about the plausibility of the claim that the company was genuinely unaware of the malpractice, according to the sources.
Mitsui Sumitomo Insurance Co. and Tokio Marine & Nichido Fire Insurance Co. also sent their employees on loan to Bigmotor, underscoring the give-and-take relationship between Bigmotor and insurance companies.
Masakazu Tokura, chairman of the Japan Business Federation, the country's biggest business lobby, rebuked the car dealer at a press conference last week, saying, "It's fraud. This should not be happening."
Bigmotor is considering calling in independent experts called insurance adjusters for their expanded investigation, who specialize in examining insurance claims for traffic accidents.
The company has also stopped accepting requests for vehicle repairs and ordered its outlets to stop buying used cars through third-party car appraisal websites, according to sources.
