Violations of Subcontract Law: Major Automakers Must Eliminate Old Practices

Editorial

15:44 JST, November 30, 2025

Major automakers have once again been found to have violated the law by unilaterally imposing burdens on subcontractors. This time, they must end these long-standing business practices and strive to ensure proper transactions.

The Japan Fair Trade Commission has determined that Toyota Motor East Japan, Inc., a subsidiary of Toyota Motor Corp. that produces vehicles such as the Yaris compact model, and Mitsubishi Fuso Truck and Bus Corp. violated the Subcontract Law. The JFTC also issued a recommendation that these companies take preventive measures.

The Toyota subsidiary made 10 subcontractors store 440 molds and other items used for manufacturing auto parts for free over long periods of time, despite their having no prospect of receiving new orders for certain models.

Mitsubishi Fuso made 61 subcontractors store a total of 5,694 molds and other items. The automaker also forced them to conduct annual inventory checks to confirm the storage conditions and did not pay for that work.

Amid rising prices, the burden of costs for storing items at warehouses and other facilities is only growing. It is unacceptable for major companies to take advantage of their dominant position and force subcontractors to store molds so that they can avoid the cost burden.

The Subcontract Law prohibits large companies from using their advantageous position to force subcontractors to provide money or services. The automobile industry, a key sector for Japan, is characterized by a multi-tiered pyramid structure of subcontracting, making it prone to the exploitation of small and midsize companies.

The long-standing practice of forcing subcontractors to store molds for free is a chronic problem for manufacturing sectors, including the automobile industry.

Of the 21 cases in which the JFTC issued recommendations last fiscal year regarding violations of this law, nine involved the free storage of molds. In some cases, the storage periods spanned several decades. The depth of the problem is serious.

The Japanese economy is at a critical juncture in achieving a virtuous cycle in which both prices and wages rise. It is essential to strive for appropriate business transactions to allow small and midsize companies, which account for 70% of the nation’s total employment, to secure funds for wage increases.

The latest recognition of violations of the law targeted the automakers, who are at the top of the supply chain and should particularly serve as a model for compliance with laws and regulations. It must be said that they lacked awareness of their position.

The JFTC also demanded that parent company Toyota improve its manuals about the storage of molds because the watchdog believes they are a contributing factor to the legal violation. As an industry leader, Toyota must take this matter seriously.

The JFTC further asked the Japan Automobile Manufacturers Association, an industry body, to prevent recurrences. The entire industry will likely need to identify issues and thoroughly instill awareness of legal compliance.

The Subcontract Law will be revised and renamed “the law to ensure proper transactions with entrusted small and midsize enterprises,” which will come into force in January next year. It is hoped that the government will strengthen oversight to eradicate the bullying of subcontractors.

(From The Yomiuri Shimbun, Nov. 30, 2025)