Nidec’s automotive exposures: receivables, cancelled projects…

the questionWhich automotive problems were accounting misconduct, and which were control failures?

1Receivables and unrealistic plans

analysisThe NAMA receivables account concerns a US selling company and Mexican manufacturing operations that were often treated as one operating unit. The August 2024 inspection identified US$32.1 million overdue, of which US$16.3 million was considered uncollectible. Later narrowing of structural reforms left required provision deferred. Kishida acknowledged awareness of the problem but said he relied on accounting specialists and had not anticipated omission of necessary corrections; he also acknowledged that closer scrutiny was warranted. ¹

attributedThe committee described overdue receivables in the US NAMA business and its Mexican manufacturing operations. An August 2024 inspection identified US$32.1 million overdue, including US$16.3 million considered uncollectible; necessary provision was later deferred when the scope of structural reforms was narrowed. ¹

qualification: The report sometimes uses NAMA for a combined operating unit, but distinguishes the US seller from the Mexican manufacturing subsidiary. Different dated receivable totals are not separate losses to be added.
response: Kishida said he knew the receivables were problematic but left accounting decisions to specialists and had not expected required disposals to be omitted. He said, in retrospect, he should have scrutinised the details and discussed them directly with Nagamori.

analysisThe traction-motor case depended on the sales assumptions used to test asset value. The committee found that uncertain or lost projects were included and adverse information was not shared with the auditor. Its estimate of impairment required for FY2024 differs from the amount later booked in the first quarter of FY2025; the figures are period-specific, not cumulative amounts to add. ¹

attributedThe committee found that traction-motor impairment testing included a low-probability Guangzhou project, a lost project and further projects the sales department considered unlikely. It estimated that approximately ¥8.6 billion impairment should have been recognised for FY2024, compared with ¥6.6 billion subsequently recorded in the first quarter of FY2025. ¹

qualification: These are different period-specific estimates, not additive losses. The committee says the adverse project information was not conveyed to the auditor; customers and projects remain anonymised.

2An inverter cancellation and changing obligations

analysisFor the inverter business, the committee says an agreed product cancellation was not disclosed to PwC and an older two-product plan supported the impairment test. It estimated earlier impairment and contract-loss provision at about ¥21 billion and ¥43 billion, compared with later booked amounts of ¥24.3 billion and ¥35.9 billion. Further investment and costs incurred between the dates explain why the categories and periods must stay attached. ² ¹

attributedThe committee found that an agreed cancellation of one inverter product was not disclosed to the auditor and an older two-product plan was used in impairment testing. It said approximately ¥21 billion asset impairment and ¥43 billion contract-loss provision should have been recognised earlier; later first-quarter FY2025 accounts recorded ¥24.3 billion and ¥35.9 billion respectively. ² ¹

qualification: The earlier and later amounts differ in period, further capital expenditure and costs already incurred; they must not be added. Elesys merged into Mobility in April 2025, and Nidec assumed the inverter business in May, so the business and legal-entity histories differ.
response: Headquarters accounting personnel told the committee they avoided the adverse explanation because of concern about the work and performance pressure impairment would trigger.
outcome: The September annual filing reports a later contract amendment shortening supply obligations, with related provision reductions and possible supplier claims still being assessed. It does not quantify a completed reversal of all losses.

analysisThe business moved through the April 2025 Elesys–Mobility merger and the May transfer of the inverter business to Nidec. A September 2026 contract amendment then shortened obligations, but the annual filing said the related provision reductions and potential supplier claims were still being assessed. That later development does not establish that all earlier losses disappeared. ² ¹

3PSA eMotors: a settlement with a narrower finding

analysisThe supplier’s original US$465.3 million demand against PSA eMotors was not the eventual settlement amount. The committee records a €137 million agreement and an actual €116 million payment after price adjustments, followed by a ¥19.001 billion booked liability. Currency, demand, settlement and accounting measurement are different concepts. ¹

attributedNidec PSA eMotors faced a supplier demand for US$465.3 million in October 2024 after order volumes fell below contractual thresholds. The committee records a November 2025 settlement for €137 million in compensation and other expenses, with actual payment of €116 million after price revisions, and a ¥19.001 billion liability recognised in the revised first-quarter FY2025 accounts. ¹

qualification: Demand, settlement total, actual payment and booked yen liability are different measures. The committee expressly did not classify this issue as improper accounting: it criticised the missing contingent-liability disclosure and reporting controls.
response: NPe disputed the demand and considered the proposed amount unrealistic and difficult to estimate before settlement. The committee did not call that estimation judgment unreasonable, but said a contingent-liability note was required.
outcome: The claim was settled on 1 November 2025. The committee said headquarters had not reviewed its accounting impact or informed PwC before that settlement because it was absent from subsidiary reporting packages.

analysisThe committee expressly did not classify this dispute as improper accounting. It accepted that estimating a provision before settlement was difficult, but criticised the missing contingent-liability note and the failure to escalate the dispute through reporting packages. Keeping that distinction prevents a settled commercial disagreement from being relabelled as another established fraud. ¹

Sources (2)

Research source · s-d11 identified by category only · Research
Company statement source · s-d10 identified by category only · Company statement