Regulation on Chocolate Cars Expands to Sinaloa, Zacatecas

Sinaloa and Zacatecas have been incorporated in the legal framework that will regulate chocolate cars, reads an announcement in the Official Federation Diary published on Feb. 27. Although the regulation stands to benefit some users, it will also affect the formal vehicle market among other sectors.

The program legalizing “chocolate” cars, a common name for foreign vehicles illegally imported into the country, now includes 12 states and will remain active until Sep. 2022. This mandate excludes the intervention of customs agents, agencies or any other intermediate to reduce the costs of their legalization. The Official Federation Diary states that these changes will directly benefit Mexican families.

Nonetheless, Guillermo Rosales, Executive President, Mexican Association of Automotive Distributors (AMDA), said that the decree “will affect the number of vehicles that are granted regularization and thus affect the formal market of used and new vehicles.” He also said that the decree opens the door to vehicle smuggling. Other actors involved have also expressed their discontent at not being considered in the decision-making process.

The vehicle market has been one of the industries most affected by the pandemic and the regularization of these vehicles could represent another obstacle to its recovery. Also, the decree could also hurt financing of new vehicles, said Eric Ramírez, Managing Director for Latin America, Urban Science, as reported by MBN. On this topic, Rosales stated that under these circumstances there is no possibility of recovering “the sales levels that we reached in 2016 nor can the levels of participation in financing reach 80 percent.” AMDA’s Financing and Buyers report by state shows that the automotive financing is on a downward trend as of Jan. 2022. For example, credit placements for new cars between Jan. and Nov. 2021 were 27 percent lower compared to 2019.

Moreover, the Mexican Employers' Association (COPARMEX) said that the regularization of chocolate vehicles will eliminate jobs, affect the environment, reduce tax collection and put drivers and passengers at risk because minimal safety measures cannot be guaranteed.  

Despite the claims of the automotive sector, President Andrés Manuel López Obrador continues to support the decree. “If we do not follow our word, we are demagogues, liars and that is not admissible in any way,” he said in today’s morning press conference in reference to the decree. The president has been in constant communication with the governors of the included states to promote the program, which remains a voluntary process.