Image credits: Minki Cho
News Article

Regularization of “Chocolate” Cars Negative for Industry: AMDA

By Rodrigo Andrade | Mon, 09/12/2022 - 12:40

The Mexican Association of Automotive Distributors (AMDA) and the National Auto Parts Industry (INA) warned that the program to regularize “Chocolate” cars has led to a worrying increase in the number of used vehicle imports. In July 2022, imports of second-hand vehicles grew by 33.9 percent to ‌123,686 imported units, which is equivalent to 20.6 percent of the total new vehicle sales during this period, according to AMDA.

Guillermo Rosales, Executive President, AMDA, also pointed to an increasingly worrying number of legal vehicle imports from the US and Canada. The association estimates that almost 500,000 additional units have been added to the vehicle fleet because of the decree. “We say ‘almost’ because it is an estimate, due to the fact that there is no formal information from the Federal Government, the Ministry of Public Security or the Ministry of Economy on the results of this regularization, let alone if there will be any extension [of the program],” said Rosales. 

Rosales labeled the result of this decree as “negative” and informed that the Mexican automotive industry already presented a petition requesting that the program is not extended. The industry is also calling for further restrictions to control the importation of illegal vehicles. 

"Our evaluation of the Decree that promotes regularization is negative, since it has not achieved the objective of putting an end to illegality, nor has it put an end to criminal acts with this type of units. This has an explanation and it is that while almost half a million irregular units have been legalized, smuggling has not been interrupted, on the contrary, it has increased and it is no longer exclusive to the entities authorized for its legalization, which has impacted the vehicle fleet with foreign units that can now be marketed without restrictions," said Rosales.

The program to regularize illegally imported vehicles, known as “Chocolate" cars, started on March 3, 2022, and will last until Sep. 20, 2022. It aims to regularize these vehicles through an MX$2,500 (US$125) fee. This program only applies to cars older than five years and initially aimed to register 2.2 million of those vehicles in Mexico, as reported by MBN. 

Retail vehicles sales  increased by 17.4 percent in August 2022 compared to the same period last year, according to the National Institute of Statistics and Geography (INEGI). This is the 13th consecutive month with an increase in sales since August 2021. However, the cumulative numbers are still 11.2 percent lower than during the same period in 2019, which was the highest point in recent years. 

Photo by:   Minki Cho
Rodrigo Andrade Rodrigo Andrade Journalist & Industry Analyst