Don't you have to actually "purchase" something to qualify for section 179?

I thought so as well, but found that "When a shareholder transfers personal property (like a vehicle) to their S-Corp, it is treated as a capital contribution under Section 351." 

If that is true I should be able to take section 179 deduction; right? 

Capital contribution means an addition to equity - the other side of your journal entry when the vehicle was transferred into the corp.

There used to be an anti churning type rule that said you couldn't claim 179 in this situation. Don't know if there still is.

Also, what's the basis of the vehicles? If used 100% for business they were probably depreciated, or deemed depreciated by the depreciation factor in the cents per mile reimbursement amount.

And they get transferred in at FMV, not original cost.

Why did he do this?

See IRC 179(d)(2).  I think you fail both (A) and (C) so no 179.