Engine Failure after Three Days of Delivery,” “I Was Assured the Car Was a Certified Pre-Owned Car…” A Series of “Dark Side of Buying Troubles” in the Used Car Industry

Last December, the former Big Motor finally filed for bankruptcy. While the used car industry is under pressure to change, many dealers are still treating buyers in a questionable manner. Automotive journalist Kumiko Kato looks at the current state of the used car industry based on examples of “trouble with buyers.

On December 2 of last year, it was announced that BALM Corporation, the surviving company of the former Big Motor, had applied to the Tokyo District Court for the application of the Civil Rehabilitation Law. The total amount of debt is a staggering 83 billion yen at maximum.

The former Big Motor’s fraudulent claims for insurance benefits were uncovered in 2011, and FRIDAY has also pursued the actual fraudulent activities of the company, focusing on the “tire-punching video” and many others. The bankruptcy filing marks a milestone, but the roots of the problem may be deeper. However, the roots of the problem may go much deeper, as numerous allegations of fraud still linger in the used car industry as a whole. Since last October alone, the FSA has conducted on-site inspections of IDOM Corporation, the largest used car sales company in the industry, which operates Gulliver, Nextage, and Goodspeed, which is based in Nagoya City, Aichi Prefecture, and operates 44 stores nationwide.

All three companies, like the former Big Motor, are mainly involved in fraudulent insurance claims. In addition, Goodspeed also includes accounting irregularities.’ According to Goodspeed’s internal investigation report released in January 2012, it was clearly stated that sales were recorded in advance under the names of “false vehicle delivery” and “vehicle delivery tay,” and organizational involvement is also strongly suspected. The report also revealed the falsification of “vehicle delivery confirmation forms,” and the amount of sales recorded in advance since the fiscal year ended September 30, 2006 totaled approximately 6,000 cases, amounting to about 15 billion yen.

What is going on in the used car industry today? We take a closer look at the actual situation.

What I learned after buying a car at the former Big Motor

One year has passed since ITOCHU announced the acquisition of Big Motor in November 2011. In May 2012, the new company name “WECARS” was announced, and now the old Big Motor stores nationwide are replacing their signboards one after another. TV commercials have been running since the end of the year, and many of you may recognize the cheerful music of the commercials.

The author purchased a Suzuki Alto (450,000 yen) at the former Big Motor Shimonoseki store at the end of August 2012, and the total price exceeded 600,000 yen, including a 5-year warranty. The Shimonoseki store was the second store to be established by the former Big Motor after the Iwakuni store, the main store, and was the first store in Japan to have a large-scale sheet metal shop, making it a “long-established” store.

When it came time to buy a car, I noticed a “change. There was a move afoot to review the many irregularities that had been committed at the former Big Motor. For example

If there is a problem with the car, the purchase can be canceled until the day after delivery. There is no cancellation fee.

No additional charges for maintenance after purchase.

The customer can cut out unnecessary services and maintenance that used to be mandatory at the customer’s request.

The following points are important: ” Since October 1, 2011, under the guidance of the Fair Trade Council, used car prices have been displayed on a “total price” basis, which includes all expenses and other items, so the prices are clear at a glance, giving the impression of a cleaner market.

However, we still hear “suspicions” from other major used car dealers.

Growing Distrust of Unclear Responses

Mr. A, who purchased a “Toyota 86 (2012 model)” from Nextage in July 2012, had a terrible experience: Mr. A participates in amateur car racing as a hobby, and purchased the 86 as a car for the circuit. However, the engine broke down on the third day of delivery.

He said, “It was the third day of delivery, so I hadn’t even driven the car on the track yet. We had changed all the oil and grease just to be safe, and the engine blew while we were breaking in the car. At first Nextage said, ‘We will repair everything free of charge because it is covered by the free warranty. After a while, however, Nextage told us, “We will check to see if the engine is being operated in a way that puts a heavy load on it. If there is even a slight problem with the buyer, the inspection fee will also be the buyer’s responsibility and will not be covered by any warranty.

In order to investigate the cause of the problem, Nextage demanded that the car be taken into their store. However, it was unclear whether or not there was a towing fee. Furthermore, we were told that after entering the shop, the dealer would be asked to inspect the car. The dealer’s analysis should not provide a specific log of who drove the car and when. No matter how much I asked for an explanation, the response was vague, and I could not shake the suspicion that they were going to charge me 200,000 yen and refuse to repair the engine, regardless of the outcome.

As a side note, the engine oil that …… Nextage inspected and determined did not need to be changed was pitch black when I looked at it after the car was delivered. This made me distrust the company more and more.”

Mr. A then asked a trusted Toyota-affiliated official to sort out the situation and confirm the actual vehicle. The detailed results were submitted to Nextage as documents. However, the person in charge did not respond even by the designated response time. Later, he said that he received a statement promising to repair the problem, saying, “We checked with legal affairs and the warranty responsibility is ours, so we will fix it free of charge regardless of the set warranty coverage,” …….

They again flip-flopped, saying, “We will not compensate you because the car was purchased for a race. The person claiming to be the manager of the store where we purchased the car only said, ‘This is a decision made with the head office, so we cannot provide any free repairs. I wonder what he meant by saying that since the car was purchased for circuit driving, there would be no warranty.”

Was this really such a sloppy response? In response to this magazine’s letter of inquiry, Nextage responded as follows.

Our staff has never responded with a “guarantee” of warranty. In order to identify the cause of the malfunction, we had requested a third-party organization, which neither we nor Mr. A had any connection with, to come in, but since that request was not accepted, we responded, ‘As long as we cannot investigate, we cannot offer free repair. As for our company, we are still willing to accept the investigation as long as the appropriate action is taken. Nevertheless, it is a fact that we have responded in a way that may have caused misunderstanding among our customers. We will make every effort to prevent a recurrence in the future.”

In the end, Mr. A paid out of his own pocket for the work, which would have cost more than 1.2 million yen at a dealership, to replace the engine.

Wheels and tires are out of model

We have also received information about many other problems. One customer, a woman in her 50s, bought her car for 1.2 million yen in the spring of 2012, but on the day of delivery, she was suddenly told, “The price will be reduced by 500,000 yen because there are repair marks on the car. She said she was told that the cancellation fee would be 300,000 yen. Another male customer in his 50s said that in the fall of 2012, he went to the store because the car he was looking for was offered at 1.5 million yen for a limited time. If you buy it today, it will be 1.8 million yen,” and the price was raised. However, when he checked the price a week later, it was again 1.5 million yen.

There are still numerous such problems. Just the other day, the author received a case concerning a “certified pre-owned” luxury imported car. Mr. B, who was a victim of the problem, revealed, “Certified pre-owned cars are certified by the manufacturer or dealer.

I bought a certified pre-owned car for 1 million yen more than the market price because I was told that the manufacturer’s or dealer’s warranty was very generous and that careful maintenance would be performed on the car. But then we found out that the wheels were one generation older and the hood had been replaced. This alone lowers the price by about minus 500,000 yen in the appraisal. Also, the tires that were said to be brand new were used ones that had been driven 2,000 km by the previous owner when we traced the records. However, the dealer refused to negotiate with us, claiming that ‘it was the customer who decided to purchase the car after seeing the actual car, so we did nothing wrong. I was relieved because it was a certified pre-owned car from an authorized dealer. ……”

It is true that it was Mr. B himself who actually saw the car and decided to purchase it, but in the absence of a specific explanation, it would be difficult for him to spot the parts on the spot.

Nearly two years have passed since the old Big Motor problem, and the used car industry is undoubtedly undergoing a period of change. However, there are still many cases where major used car dealers and even well-known dealers use misleading sales methods and opaque assessments and inspections that leave buyers in doubt.

Choosing a good used car dealer is extremely difficult. This is because the evaluations on major review sites are often based on so-called “cherry-picking. Nevertheless, since the incident with the former Big Motor, the used car industry has been making various efforts to dispel its dark image and ensure that customers can buy and use used cars with peace of mind. We hope that the day will come when everyone will be able to purchase a used car with complete confidence, thanks to the unrelenting efforts of these companies.