Shares of Japanese auto parts manufacturer Nidec plunged by as much as 18 percent following reports that the company will record a substantial impairment charge of approximately ¥1 trillion ($6.4 billion) related to one of Japan’s largest accounting scandals. The write-down, expected to be recognized retroactively for the fiscal year ending March 2026, reflects ongoing efforts by the Kyoto-based firm to address significant financial and governance issues.
According to reports, around ¥600 billion of the impairment losses stem from a more stringent reassessment of asset values in divisions undergoing restructuring, including its home appliance business. An additional ¥300 billion relates to adjustments made to correct improper accounting practices. Earlier in the year, Nidec had already cautioned investors that asset impairments totaling ¥250 billion might be recorded.
The company’s board has also reportedly voted to remove Chief Executive Mitsuya Kishida, potentially announcing the leadership change imminently. Nidec confirmed discussions regarding executive changes and the large impairment charge but said no final decisions had been made.
Nidec, which claims the title of the world’s largest motor manufacturer and supplies key components for Volkswagen, BMW, drones, robots, and electric vehicles, has been grappling with an internal crisis since 2024. An investigation into a payment made by a Chinese subsidiary triggered an independent inquiry that uncovered widespread accounting fraud. This revelation has been compounded by allegations of manufacturing misconduct affecting approximately 1,000 cases.
The company’s challenges are compounded by concerns over governance lapses, which have put Nidec at risk of being delisted from the stock exchange this October. Efforts to overhaul internal controls have yet to fully restore confidence among investors, with the company’s share price falling to roughly one-third of its peak in 2021.
Nidec was founded in 1973 by Shigenobu Nagamori and three associates in a small Kyoto workshop and expanded aggressively through 75 acquisitions over four decades. Nagamori, who cultivated a demanding corporate culture—including reportedly requiring employees to clean toilets with toothbrushes—has been widely cited as a factor contributing to the company’s internal problems. He relinquished the CEO role in 2024 but remained chair and later chair emeritus until stepping down entirely in February.
As Nidec navigates this critical juncture, market watchers will be closely monitoring its ability to implement effective governance reforms and stabilize its operations amid the fallout from the accounting scandal.