Why didn’t I get the car after I paid for it? The contents of “one of the biggest used car troubles in history” with an estimated 600 victims
The used car sales industry is rife with problems related to the buying and selling of used cars. This spring, a new large-scale problem was uncovered. Automotive journalist Kumiko Kato delves into the realities of the situation.
One of the biggest used car troubles in history
On March 23, I signed a purchase contract with a Honda FREED dealership that I found on used car information. When I signed the contract, I was told that it would take up to two months to deliver the car, so I thought it would take a lot of time for a used car. After that, we exchanged several e-mails, but there was no reply from before Golden Week at ……. When I went to the store on May 16, I found a sign on the wall. When I went to the store on May 16, there was a sign on the wall stating that the store had gone out of business. Of course, the car has still not been delivered.
Mr. A, a man in his 30s living in Hiroshima Prefecture, said, “I was cheated. The store he refers to as “that dealership” is the Higashihiroshima branch of Kernel, a used car dealership operated by WOOROM. (hereinafter referred to as “WOOROM.”), which operates 14 used car dealerships across the country with the low price of “as-is” (i.e., vehicles are sold in the same condition as they were purchased without any maintenance prior to delivery).
Mr. A visited the store several times after May 16, and confirmed that the Freed he purchased was in the parking lot. Despite this, the car has not been delivered, and although Ms. A has directly requested a refund from Mr. N, the president of Oolong, and he has promised to refund her money, the situation has been repeatedly violated up to the present.
According to the author’s research based on data obtained independently, the number of “unpaid car troubles” similar to Mr. A’s has reached approximately 250 nationwide.
Furthermore, Wollon also operates a car auction agency, “CarAuction.jp,” which also has an estimated 150 to 200 victims. When the refund of guarantee fees and other problems are taken into account, the total number of victims of the two companies is estimated to be more than 500 to 600. Some of them have received small refunds, but most of them have neither received any refunds nor had their vehicles delivered. This is thought to be the largest-ever used car problem affecting the general public.
Kernel” and “CarAuction.jp” together have caused one of the largest used car troubles in history, with more than 600 victims. The company was established in 2005 by the current president, Mr. N. Carnell opened its first store in Shizuoka, and has since opened 14 stores nationwide in Kobe, Okayama, Kitakyushu, and Kumamoto.’ In 2008, CarAuction.jp was transferred from TROIKA Corporation and the auction agency business was launched. There was a time when it was positioned as one of the largest in Japan.
The following is a bullet-point summary of the main problems that became apparent during our interviews.
(1) A customer purchased a used car at a kernel, but the car was not delivered until almost six months later. The financing company is pulling up the car.
(2) When we checked the registration status of the used car we purchased, we found that it had been “dismantled.
(iii) When signing a contract for a used car, the company offered a warranty as an option and the warranty fee was paid together, but in fact the warranty fee was not paid to the warranty company and warranty repairs could not be performed.
(4) I sold my car on CarAuctioCarAuction.jp, but the payment was not made.
(5) I purchased a car from CarAuctioNet and received payment for it, but the car was not delivered.
(6) The deposit for using CarAuctioNet.jp is not refunded.
In one case, a victim filed a damage report with the police after contacting President N but receiving no response.
The Horrifying Reality of “Unpaid Work” as Revealed by Employees
Furthermore, the nonpayment of wages to employees is also a serious matter. A male employee who worked at a Carnell store in western Japan until the end of May of this year revealed, “At all Carnell stores in Japan, the store manager is the one who is in charge of the store.
The manager has not been paid since January of this year, and the employees have not been paid since at least February. Each of them has suffered damages ranging from 1.2 million yen to 2 million yen. Even if they resign, they don’t receive unemployment insurance because the company won’t send them a rishokuhyo (release form).
Many of the stores have employees putting up the money to pay for store operations, vehicle registration, and other expenses because they do not receive it from Oolong. Furthermore, there are staff members who do car delivery work on their own dime in the hope of reducing the number of victims as much as possible. He has sent countless messages to Mr. N., but each time he sends a message, he tells a lie to give the impression that he will receive payment by the end of April, or that he will receive a loan of 300 million next week from Company 00.
Payments to related companies have also been almost nonexistent. The total of auction fees, payments to land transportation companies, administrative scriveners, insurance companies, and advertising fees in used car information magazines is estimated to be close to 50 million yen.
The responsibility for this trouble lies, needless to say, with President N. However, he has taken no concrete action, even after a month has passed since the trouble was discovered. On the contrary, he continued to sell and buy cars even as funds were being burnt, and it goes without saying that he is responsible for causing even more damage.
What is the last resort used car companies in financial distress use?
In recent years, it was not unusual for Kernel to take one to two months to deliver a car. With used cars, the basic rule is that it takes about a week to deliver a car. Why does it take so long? Why are there so many cars that have not been delivered? During the course of our interviews, we learned that Kernel had received “asset-backed lending” (ABL), a special type of financing that is common for used car dealerships in a terminal condition.
According to Kernel officials, the company began receiving ABL in February of last year. This makes it impossible to buy or sell easily, as all inventory is now under the jurisdiction of the financial institution (the financing company) that provides the loan, not the company. The flow of the car delivery process will also be: “customer makes payment to Kernel,” “Kernel makes payment to the financing company,” “financing company sends vehicle inspection certificate and documents necessary for title change to the store,” and “vehicle is delivered to the customer after title change, etc.” ……. A person involved in a major used car dealership talks about ABL.
The car is on display, but the formal owner is a financial institution. Not all companies that use ABL have bad credit, but no decent used car company would use it. The interest rates are high to begin with, and unless there is a very specific restructuring plan, it is obvious that the funds will be burned even more. The company’s creditworthiness must have deteriorated as its performance deteriorated, and the bank would have demanded inventory collateral.”
Carnell’s method is exactly this. If a lot of used cars are on display, it gives the impression of a “well-stocked, vibrant used car dealership. And most of these abundantly stocked vehicles, including those that had already found a customer, have been moved to the auction house over the past few days at the direction of the financing company. The goal, of course, was to convert them into cash.
What does President N., who is in the middle of all this, think about his responsibility for the situation? When we rang his cell phone, we received the following response.
We will definitely be able to raise the money by the end of June, and we plan to get loans from two different companies. Once the money is in, we will be able to refund everyone and everything will be resolved. It’s very upsetting because the press is getting in the way and negatively impacting our fundraising.”
In the phone call, President N. replied again and again, “We can raise the money so we can refund the money. In response to inquiries from many victims and former employees as well as the author, he has responded that refunds will begin on June 20, and that he will refund all money and deposit all salaries by the end of June.
Will refunds and responses to unpaid wages, which have been repeatedly stalled, ever really materialize?
Interview, text, and photos： Kumiko Kato
