Itochu Forms New Company to Revitalize Bigmotor After Fraud Scandal
TOKYO – Itochu Corp. announced on Wednesday the establishment of Wecars Co., a new entity designed to take over the primary operations of Bigmotor Co., which has been embroiled in an insurance fraud scandal.
Wecars will manage Bigmotor’s core activities, including used car sales and repair services, while all senior management from the troubled company has been dismissed. Bigmotor has been rebranded as Balm Co., with a focus on reparations related to the scandal.
Itochu, along with its energy division, Itochu Enex Co., has acquired a 49.9% stake in Wecars, with investment fund J-Will Partners holding the remainder. The combined investment is approximately 40 billion yen ($250 million). Itochu Executive Officer Masatoshi Maki indicated plans to acquire J-Will Partners’ share in the future.
Shinjiro Tanaka, the newly appointed president of Wecars, committed to ensuring transparency in the company’s operations during a press conference in Tokyo. Wecars will manage about 250 outlets and employ around 4,200 workers. The firm aims to create synergies with other Itochu subsidiaries, such as the rent-a-car service, Tokyo Century Corp., and luxury car importer Yanase & Co.
Bigmotor became infamous last year after reports surfaced alleging it charged customers excessive repair fees through intentional damage to vehicles, leading to fraudulent insurance claims. The scandal severely impacted its sales and reputation, prompting the search for sponsorship.
In a significant effort to improve compliance and restore integrity, Wecars has appointed notable figures, including a former head of the Consumer Affairs Agency as a board member and a past senior official from the Supreme Public Prosecutors Office as an auditor.
The founder and family of Bigmotor have distanced themselves from the company as part of the cleanup process, and staff implicated in the violations have faced serious repercussions.
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