Nidec Corporation is facing a deepening crisis marked by an extensive accounting scandal, potential multi-billion-dollar impairment charges, and leadership changes, putting the Japanese motor manufacturer at risk of structural overhaul or takeover. The company announced Tuesday the sudden departure of CEO Mitsuya Kishida, 66, after less than three years in the role. Kishida will be succeeded immediately by Chief Technology Officer Michio Kaida, 70.

The company’s shares have plummeted about 20% this week, now trading at roughly one-third of their 2021 peak, amid renewed investor concerns following reports of a possible impairment charge close to ¥1 trillion ($6.4 billion). Such a writedown would rank among the largest in Japanese corporate history. Nidec plans to restate some of its past earnings, signaling ongoing efforts to address the accounting irregularities.

The crisis centers around improper accounting practices across Nidec’s subsidiaries in Italy, Switzerland and China, as well as issues tied to its automotive inverter business. The company has admitted to overstating raw material and inventory valuations, misstating customs data, recording government grants as revenue, and capitalizing labor costs to delay expense reporting. Regulators, including the Tokyo Stock Exchange, have issued warnings about possible delisting if internal controls are not sufficiently improved. The recent removal of Nidec from the Nikkei 225 and Topix indexes has further shaken market confidence.

The turmoil follows a prolonged period of management upheaval. Founder Shigenobu Nagamori, now 82, stepped down as CEO in 2024 but remains the largest shareholder with an 8.3% stake and considerable influence. His aggressive acquisitions and demanding leadership style helped build Nidec’s rise over two decades but has also drawn criticism, with some pointing to a corporate culture of excessive pressure contributing to the current scandal.

Activist investor Oasis Management, which holds an 8% stake, has advocated for stronger governance and a strategy to unlock shareholder value. While the company’s plunging market capitalization—roughly ¥2.7 trillion compared to nearly ¥8 trillion in 2021—has fueled speculation of a potential breakup or takeover, unresolved accounting issues pose a significant obstacle. Senior fund managers caution that clarity on the full impact of the scandal is necessary before any bid or restructuring can proceed.

Any potential breakup could mirror that of Toshiba, involving the sale or spin-off of underperforming units, particularly Nidec’s automotive business, which has suffered shrinking profits. The company’s other divisions, including appliance, industrial motors, and precision components, remain comparatively stable.

Nidec’s designation as a core sector company critical to national security also complicates foreign investment, as acquisitions require prior government notification under Japanese law.

Despite the setbacks, some analysts highlight Nidec’s robust technology and market position in precision motors as valuable assets. The company’s history includes rapid growth and strategic acquisitions, driven by Nagamori’s hands-on management, which made Nidec a leading player in its field. However, succession missteps and clashes at the executive level in recent years have contributed to operational and reputational challenges.

Following a failed hostile bid for Makino Milling Machine in 2024 and the emergence of accounting issues in mid-2025, Nidec now faces a critical juncture as it seeks to restore trust, stabilize governance, and define its strategic direction amidst mounting pressures from investors and regulators.