“No” to Illegal Car Regularization in the Border: AMDA

The long battle between the automotive industry and illegally imported cars was reinvigorated in Mexico following President Andrés Manuel López Obrador’s stated interest to regularize these vehicles, better known as “chocolate” cars, in the northern border. AMDA deeply disagrees with this decision.

Earlier this week, President López Obrador promised that imports of foreign used cars will be legislated and regularized before the end of 2021, leading automaker representatives AMDA and AMIA to protest the initiative. “Unfortunately, President López Obrador insists in implementing a public policy that goes against what has been proven to be the axis of mobility and public safety,” said to El Economista Guillermo Rosales, Director of AMDA.

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.

AMDA’s battle with the present government to prevent the legalization of these vehicles began in 2019, when Guillermo Prieto Treviño, Executive Director, warned about the possible risks of regularizing illegal cars. “It generates informality and illegality. It legalizes the illegal and (the government) would stop collecting IVA and ISAN,” he said back in 2019.

The automotive industry continues to suffer a tough 2021, following a tougher 2020, when the COVID-19 pandemic took production and sales to the minimum. Despite an optimistic 1Q2021 for the whole sector, the semiconductor chip shortage caused by COVID-19’s third wave made car assembly hit its lowest point in the last 14 months. In 1H2021, Mexico produced 815,544 light vehicles, 20.2 percent more than in the same period of 2020. However, the numbers pale when compared to pre-pandemic levels: 2019’s total production reached 2.27 million light vehicles, 20 percent more than 2021’s expected production.

The industry will have to sort all of these problems in 2H2021, but this week, the fight continues to be against the illegal cars’ regularization initiative, which would deeply damage the automotive industry. Rosales thinks that the root causes of the problem start with the absence of public policies regarding public transportation. “The lack of appropriate means of transportation in Tijuana and the rest of the country and (especially) in the border region, comes directly from the neglect and absence of public policies to favor mass public transportation of people. It is incredible that after so many decades and given the economic strength, for example of Tijuana, there is still a disjointed, disorderly public transport system, mostly based on junk, polluting buses imported from the US,” added Rosales.

Fausto Cuevas, Director of AMIA, also spoke out this week, saying: “(Regularize illegal cars) would be legalizing the illegal. There is a way to import (those cars), described in the decree valid through 2024 and that is the path. We do not need different regularization schemes.”