Where Will All the Preowned ICE Vehicles From Bigger Markets Go?

We have been driving vehicles since 1886, when Karl Benz registered his first combustion engine vehicle. Vehicle characteristics have been evolving ever since . As I have mentioned in previous articles, we are having the opportunity to experience an Era Change (from Industrial to Digital) and quick technology advances have had great impact, accelerating changes and new developments.

Today, some studies show there are around 1.600 m billion vehicles in use worldwide, and 82 million sold last year. Just in the US, our neighbor up north, there are more than 255 million vehicles (approximately 2.5 million hybrid or electric) driven daily. 

For a number of years now, we have been experiencing incremental sales in hybrid and electric vehicles all around the world. For example, last year, 90% of the vehicles sold were ICE (Internal Combustion Engine) and 10% were hybrid or electric. This market share is rapidly changing and alternative fuel vehicles have been gaining participation, mainly in developed countries like China, Europe (all countries) and the US. 

Governmental restrictions and a new way of thinking have been moving consumers, mainly in those countries, from ICE vehicles to hybrid or electric vehicles. Although it will take several years to fully change ICE vehicles worldwide, some of these countries are moving faster and preowned ICE vehicles will be depreciated in those markets. Also, more restrictions will be added for using those cars in main cities and roads, among others. For example, in China, if you are from another province, you cannot drive your ICE car on some freeways or main roads in the city you are visiting. These restrictions will surely become increasingly strict in the coming years. Governments from countries like the USand China have already launched some laws prohibiting ICE vehicle production in 2035. That is a reason why vehicle manufacturers are rapidly developing new product platforms and adapting their production lines and processes to comply at that point in time with those laws. 

The US state of California  has the greatest  focus on these regulations and laws. To understand the context, California sells in one year almost the same number of vehicles we sell in Mexico (the whole country). They have proposed the Advanced Clean Car II Regulations, starting in stages, that require 35% of new-car sales to be zero-emission vehicles (ZEVs) in 2026 and 68% in 2030 before reaching 100% five years later. Some other US states will follow suit, and in seven years, 100% of the vehicles sold will be 100% EV (electric vehicles).
 

What will surely happen in the near future is that old ICE cars in the US will lose value due to the new restrictions, becoming cheaper and more attractive for Mexicans to import them.

Manufacturers worldwide will be only producing cleaner engine vehicles (PHEV, and mainly EV), according to their bigger market’s needs, regulations and restrictions, and slowly all ICE vehicles will be pushed out of those economies and naturally relocated in smaller, evolving markets where restrictions and regulations are not so strict.

Meanwhile in Mexico last year, our market bought 1.1 million new vehicles. On the other hand, to date, in addition to those illegally imported vehicles, more than 1.2 million imported pre-owned vehicles (autos chocolates, as they are known) were legally registered in our country. Most of these vehicles are old ICE vehicles that worsen pollution and are not helping our environment. 

In the near future, maybe our new vehicle market size will continue to be around 1.3 million vehicles, but, in addition to our natural pre-owned vehicle market, we may become a very attractive market for old ICE vehicles from US., That may grow the number of ICE vehicles in use around our country and boost all the environmental effects involved if government regulations do not evolve at the same speed and in the same direction as the rest of the world. 

Therefore AMDA, (Asociación Mexicana de Automóviles) is constantly fighting for better regulations in this matter, not only to protect new cleaner-technology vehicle sales, but to avoid our industry becoming  a troublemaker for our environment and health.  

Electric vehicles may or may not be the best option for future mobility, but that is the trend we are following at the moment. New problems and situations will arise that may also affect our environment some years from now, such as managing old batteries disposal, or supplying the growing energy requirements countries will need daily when 100% of the new vehicles in use will be EV. We will surely address these in a professional and ethical way.

Let’s accept that the worldwide automobile industry is evolving, markets will change and pre-owned ICE vehicles will follow their natural path in each country. Regulations will also adapt to all these new requirements and needs. We just need to be sure we will not become the dumpster for the oldest ICE vehicles of North America, and be ready for the new EV Era.