AMLO Signed Regularization Decree for Illegal Cars

The Mexican automotive industry’s battle against illegally imported cars suffered a major loss this weekend. Last week, President Andrés Manuel López Obrador informed that “chocolate” cars will be legalized, exactly at a time when the auto sector is suffering. AMDA and AMIA warned that this could fill the market with junk cars, depreciating legal vehicles.

On Saturday, October 16, President López Obrador signed a decree to legalize automotive contraband. This action “represents a prize for mafias that get rich from contraband and a blow to the formal automotive trade that generates jobs and pays taxes,” published on Twitter AMDA.

“The regularization of contraband vehicles will only allow ‘garbage cars' to continue circulating in our country and favor the introduction even more vehicles than those currently circulating illegally, generating an environmental and safety impact,” said José Zozaya, President of AMIA.

Illegal or “chocolate” cars are vehicles from brands or models not commercialized in Mexico that were imported from North or Central America. According to the Federal Income Law of 2020, there are at least 18 million illegal cars in Mexico, representing 25 percent of the country’s total vehicle fleet. These cars cause a wide variety of problems, starting with Mexican automotive industry, which is directly affected in its production and sales. Also, the government cannot collect taxes from illegal transactions done with these vehicles and criminals often use to avoid being tracked by police.

López Obrador said that the legalization of these vehicles would help poor families that need them to get to work. “We are going to legalize all of them, we are going to give them a permit, we are going to recognize them as owners of the vehicle, because there are a lot of people who use these cars because they don’t have the money to buy a new car, and with these cars they take their children to school and carry out their daily activities,” said López Obrador.

Legal car imports were possible in Mexico, but only in certain later-model vehicles that meet pollution and safety standards. However, they must pay import duties, making it a costly alternative.

The 76,930 light vehicles sold in Mexico during the last month represented the worst September since 2011, reported MBN. “The results of September reflect the deterioration of the market, marking the third negative rate so far in 2021 and the first decrease after six consecutive months of progress. These results reflect the restriction faced by the lack of inventory linked to the shortage of semiconductors that impacts various industries globally,” said Guillermo Rosales, Director General of AMDA.