Nidec's Collapse: A Cautionary Tale for Investors in Japanese Industrial Giants

In the annals of corporate governance failures, few stories have unfolded as dramatically as Nidec Corporation's 2025 stock collapse. The Japanese industrial giant, once a darling of global investors for its dominance in precision motors and electric vehicle (EV) components, has become a case study in how opaque accounting and lax compliance can unravel decades of trust. For multinational investors, particularly those targeting the Japanese industrial sector, Nidec's downfall underscores a critical lesson: governance and transparency are not just ethical imperatives—they are existential risks.

The Unraveling of a Global Powerhouse

Nidec's troubles began with a scandal that exposed the fragility of its global supply chain. Between 2018 and 2023, its Italian subsidiary, NIDEC FIR INTERNATIONAL S.R.L., systematically mislabeled Chinese-made motors as “Made in Italy” to evade U.S. tariffs. This practice, uncovered in May 2025, triggered a 12% single-day stock plunge and exposed potential penalties ranging from $32 million to $224 million. The company's delayed fiscal 2025 securities report—pushed to September 26, 2025—only deepened the uncertainty, as investors were left guessing about the true scale of the financial and reputational damage.

Compounding the crisis, Nidec's Chinese subsidiary, Nidec Techno Motor (Zhejiang) Co., Ltd., admitted to a 200 million yen lump-sum discount in July 2025, raising suspicions of earnings manipulation. An internal probe revealed potential management complicity across multiple entities, while an independent third-party committee—established to investigate accounting irregularities—has yet to release findings. The lack of transparency has left investors in a limbo, unsure whether the company's financial statements can be trusted.

Technical Indicators Mirror Governance Chaos

The stock's technical performance has mirrored its governance woes. In August 2025, Nidec's shares fell -6.46% on September 3, 2025, marking the third consecutive day of declines and a -7.34% loss over two weeks. The stock's volatility—swinging 7.16% intra-day—highlighted a market in freefall. Key resistance levels at $5.39 and $5.00 have failed to hold, while the critical support level at $4.77 looms as a potential inflection point. Analysts have downgraded the stock to a “Sell Candidate,” citing divergences in volume and price, as well as sell signals from both short- and long-term moving averages.

Broader Implications for Japanese Industrial Investors

Nidec's collapse is not an isolated incident. The Japanese industrial sector, long celebrated for its efficiency and innovation, has increasingly faced scrutiny over governance practices. Companies like Toshiba and Olympus have weathered similar scandals, yet Nidec's case is particularly alarming due to its role in high-growth sectors like EVs. With margins already under pressure from global competition, any erosion of trust in financial reporting can amplify vulnerabilities.

For multinational investors, the lesson is clear: governance and accounting transparency must be non-negotiable criteria. Nidec's delayed Q1 2026 financial report, announced in August 2025, exemplifies the risks of investing in firms with opaque internal controls. The company's recent admission of a material weakness in its internal controls—stemming from an overstatement of 2023 sales—further erodes confidence.

A Path Forward?

Nidec has taken steps to address the crisis, including forming audit, compliance, and risk management committees. However, these measures lack the independence and rigor required to restore credibility. The third-party investigation, while a positive gesture, has yet to produce actionable insights. Investors must ask: Will these reforms address systemic issues, or are they merely damage control?

The September 26, 2025, securities report will be a pivotal moment. If Nidec discloses a comprehensive restatement of its financials and outlines concrete governance reforms, it could signal a path to recovery. However, if the report is vague or evasive, the stock may face further declines.

Investment Advice: Proceed with Caution

For now, Nidec remains a high-risk proposition. The stock's technical indicators, coupled with its governance challenges, suggest a bearish outlook. Investors should avoid speculative bets and instead monitor the company's progress in restoring transparency. Those with existing positions should consider hedging against further declines, given the uncertainty surrounding potential penalties and restatements.

In the broader context, Nidec's collapse serves as a wake-up call for investors in the Japanese industrial sector. As global markets become increasingly interconnected, governance and accounting practices must be scrutinized with the same rigor as financial performance. For multinational investors, the stakes have never been higher.

In the end, Nidec's story is not just about a stock price—it's a reminder that in the world of multinational corporations, trust is the most fragile asset of all.