The Mexican government on Monday cleared the way for older cars from the United States and Canada to be imported into the country, opening, the Los Angeles Times said, “a potentially vast new market for US vehicle merchants looking to unload old Detroit iron”.
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The newspaper said the move, part of an amnesty to register as many as three million “scofflaws” driving around Mexico in illegally imported cars, could provide a boon to Mexican consumers who are expected to benefit from lower prices and a better selection.
The paper added that the move is also a godsend for a US market glutted with second-hand cars and trucks.
Used-vehicle prices in the United States have slid in recent years because manufacturers keep offering fat incentives for Americans to buy new vehicles, forcing sellers to swallow deep discounts even on vehicles a few years old, the Los Angeles Times said.
The paper said Mexico’s decision could bring a crowd of new buyers for some of the dustiest inventory.
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By GlobalData“When the Mexican public and Mexican dealers start coming up here to buy, it’s going to raise used-car prices dramatically,” Louie Quezada, owner of Lotaner Motors in Costa Mesa and Stanton, California, told the paper, adding: “Even now, [Mexican] buyers pay my retail price on used trucks, take them down there and sell them for double.”
However, the report noted that not everyone in Mexico is happy about the prospect of a stampede of used vehicles from the United States.
Some new car merchants reportedly are fuming over potential cut-rate competition that they say could harm Mexico’s domestic industry.
According to the Los Angeles Times, they accuse Mexican President Vicente Fox of rewarding lawbreakers and caving in to pressure groups before next year’s presidential elections. Environmentalists reportedly say an influx of smoky clunkers would be a huge blow to Mexico, where big cities, particularly the capital, are beset with some of the foulest air in the world.
“It’s a real setback,” Kate Blumberg, a research director at the non-profit International Council on Clean Transportation in Berkeley, told the newspaper. “Mexico has been working really hard to improve its air quality. Now allowing a wave of used, dirty vehicles into the country just seems crazy to me.”
The Los Angeles Times noted that, before Fox’s executive decree pn Monday, Mexico had severely restricted the importation of used vehicles but the new order now allows large-scale importing of some cars and trucks from the United States and Canada that are 10 to 15 years old. It also reduces taxes on some new Mexican-made vehicles to make them more affordable, and it allows drivers of vehicles smuggled illegally into the country to register them by paying taxes equivalent to 15% of the car’s value.
Industry experts have told the paper that two to three million of these vehicles are currently driven on Mexican roads. Most lack proper licence plates and registration and don’t go through required emission inspections. Known in Mexico as “chocolates,” because, wags say, buyers never know what they’re getting until they try them, these vehicles have long been a source of debate.
The Los Angeles Times said that many Mexicans claim the government forces them to pay inflated prices for vehicles through high taxes and other measures. Motorists have smuggled millions of vehicles from the United States, and people who drive these cars are in constant danger of being ticketed or having their vehicles seized by authorities.
The paper added that activist groups, particularly those representing farmers, say these low-cost vehicles are crucial to their livelihoods and have pressured the government to legalise them, staging massive protests and blocking traffic with the outlawed vehicles in the capital.
Those efforts appeared to pay off Monday when the government granted the second mass amnesty in five years, the Los Angeles Times said.
Mexican used car dealers reportedly were divided on how they would be affected by Monday’s decree.
The LA Times report said some welcomed the chance to carry a wider variety of US cars at lower prices but others were fearful that customers, particularly those in northern Mexico, would skip local dealers and shop for their vehicles across the border in the United States.
The export of high-polluting used cars to developing nations “is a huge problem around the world,” Blumberg told the paper, adding: “We’re seeing the same thing in Asia.”
The Los Angeles Times noted that North American Free Trade Agreement rules require Mexico to begin opening its market to used automobiles from the US and Canada by 2009, so Monday’s decree accelerated that action.
Used car imports change the market landscape
