A major Japanese used car dealership and repair factory chain has admitted to having made fraudulent insurance claims by intentionally damaging customers' cars.

Bigmotor has submitted a report on the issue compiled by a group of outside lawyers to insurance companies.

The lawyers found that workers smashed headlight covers or scratched car bodies to pad repair charges and received insurance money more than they were due.

The lawyers' survey found that 27 percent of employees said they were involved in intentionally damaging vehicles that led to inappropriate insurance claims.

The report says factory chiefs were involved in fraudulent acts because of tough sales quotas and pressure from the company headquarters.

The report also found that Bigmotor executives have demoted 47 factory chiefs since around August 2020, citing poor performance in such areas as cleaning and keeping factories tidy and in order.

The report says demotions were made without giving them a chance to explain or without discussing the matter at an in-house compensation committee, as was stipulated in the company's work rules.

The lawyers say what they call a twisted corporate culture has been created in which employees obeyed instructions from executives for fear of demotions that would lead to a major reduction in their basic salary.

Transport minister Saito Tetsuo said on Tuesday that his ministry plans to conduct an interview with Bigmotor over the issue.

Bigmotor says its founder and president, Kaneshige Hiroyuki, will return one year's worth of compensation.

The company pledges to implement measures to prevent recurrences and make consistent efforts to regain the public's trust.