The Managing Director of Honda Automobile Western Africa, Daisuke Mita, has identified persistent foreign exchange volatility and the failure of the Nigerian government to implement its automotive policy as major obstacles hindering growth in the country's automotive sector.
In an interview with The Guardian in Lagos, Mita stated that these challenges have made investment in the sector unstable. He noted that while foreign exchange has shown signs of improvement recently, the exchange rate remains excessively high, negatively impacting business operations.
Policy Inconsistency and Investor Concerns
Mita highlighted policy inconsistency as one of the most significant concerns for investors. He pointed out that the automotive policy introduced in 2014 was designed to run until 2024, but another policy covering 2023 to 2033 was announced without a proper evaluation of the first one. He lamented that neither policy has been signed into law, creating uncertainty for investors.
The lack of a legally backed framework has been particularly problematic as government attention shifts toward emerging technologies like Compressed Natural Gas (CNG) conversion and electric vehicles, while local assemblers still struggle with challenges surrounding conventional internal combustion engine vehicle production.
Underutilized Factory and Longstanding Presence
Mita added: “We have not seen the level of clarity or support initially promised. We began local assembly with a 10-year growth plan, but that vision has not been fully realised. Our factory remains underutilised due to an unconducive operating environment. While some assemblers have exited the market, we have sustained operations.”
He emphasized that Honda has been in Nigeria for about five decades, with its automobile business dating back to the 1970s. The company also has a motorcycle business under Honda, which began operations around 1970 and has been active for over 46 years as a subsidiary.
Call for Comprehensive Policy and Government Support
Mita maintained that investor confidence can only be restored through the enactment of a comprehensive automotive policy that provides long-term protection for investments and encourages local manufacturing. He also called for stronger government support through patronage of locally assembled vehicles and the introduction of affordable vehicle financing schemes.
He further advocated a gradual and structured approach to regulating used vehicle imports, particularly accidented vehicles, to support the growth of domestic assembly plants.
Optimism Amid Challenges
Despite the mounting challenges, Mita expressed optimism about Nigeria's long-term potential. He explained that the country's population continues to grow, offering strong market opportunities, but noted that there is still a huge transportation gap that needs to be addressed.
Mita said the company intends to expand its operations and introduce new products, but progress will depend largely on improvements in the policy and economic environment.
