tochu’s Massive Investment Spurs New Era for Big Motor with Import Car Giant Yanase in the Spotlight

In early March, Big Motor’s President Shinji Izumi (55) sent an email to all 4,243 employees titled “Notice of Contract Signing for Business Reconstruction.” The email informed them that the due diligence by Itochu Corporation, Itochu Enex, and the corporate restructuring fund J. Will Partners (the JWP Fund company) had concluded, and contracts for reconstruction had been signed.

The first thing that caught the recipients’ attention upon seeing the email was the number of recipients. At its peak, there should have been over 6,000 employees, but after the resignation of the founder and former president, along with the vice president, the email history sent by President Izumi showed a decrease in employees to 4,941 as of August 31. From there, it decreased to 4,722 on December 8, 4,408 on January 31, and now, to 4,243.

The email detailed the contract signing and mentioned plans to establish a new company to take over Big Motor’s main business by the end of April. It also cautioned that if the agreed conditions were not met or if significant compliance issues arose, the support could be revoked.

A big motor that doesn’t stop its stride towards a fresh start. However, there are also doubts in the streets about Itochu’s support. The amount of investment is reported to be as high as 20 billion yen, but what is Itochu trying to achieve by supporting Big Motor?

 

The key to deciphering that aim lies in certain negotiations conducted behind the scenes. Big Motor closed its flagship store and headquarters function at the Tama store, which houses a major body painting and coating factory, citing significant compliance violations earlier this year. Around the same time, factories in Koga (Fukuoka Prefecture) and Tsukuba (Ibaraki Prefecture) were also closed. Tama and Koga boast consistently top sales nationwide, and Tsukuba was also positioned highly. The facilities are excellent, and in June 2019, like other Big Motor factories, they obtained certification (gold) from the third-party certification body “TÜV Rheinland Japan.”

However, there is speculation that factories once closed, including those in Tama, may have the potential to reopen. It is said that this could be the aim of support provided by Itochu. Specifically, this support might be aimed at Itochu’s consolidated subsidiary, Yanase Corporation.

Yanase is Japan’s largest importer and distributor of foreign cars, having pioneered and developed Japan’s imported car market. Simultaneously, its repair workshops maintain an exceptionally high standard. Its quality, often described as restoring performance and appearance to 100% of their original state, is considered not only the best in Japan but also among the world’s finest. In November 2016, it became the first in Japan to receive platinum certification, the highest level of certification in the world, for its sheet metal painting factory through TÜV certification. Why did Itochu choose Big Motor?

“Generally, becoming a cooperating factory for Yanase entails a very high hurdle. The quality demanded is also at the highest level. However, the remuneration received as a subcontractor is surprisingly low, and I’ve heard that many factories are not satisfied with the situation. Due to such circumstances, there is a shortage of high-level sheet metal painting factories under Yanase. It is speculated that Itochu is aiming to operate some of Big Motor’s factories as subcontractors under Yanase, aiming to secure high-quality yet inexpensive labor.” (Source: Automotive maintenance company insider)

No matter how fantastic the state-of-the-art facilities at Big Motor may be, can they crawl to the pinnacle from the depths of mediocrity? Achieving that would require rigorous training and technical education. On the other hand, Yanase has Yanase Auto Systems, its sheet metal painting division, which serves as the core supporting Yanase’s high technical prowess through stringent guidance. Perhaps Itochu sees potential in nurturing this division.

Itochu plans to inherit not only the used car trading business, stores, and factories but also the employees into the new company as a rule, with departments and responsibilities being carried over unchanged. However, there have been talks of encouraging retirement for executives and managers with close ties to the founding family, the Kanemotos.

With just one month until the launch of the new company, under the support of this new initiative, will Big Motor be able to undergo a transformation?