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 Business News | August 2005 
Mexico Creates New Avenue for Used-Car Sales
 Marla Dickerson & Sam Enriquez - Florida Today
| | North American Free Trade Agreement rules require Mexico to begin opening its market to used automobiles from the United States and Canada by 2009. The US is home to nearly 100 million vehicles at least 10 years old and could provide a huge pool of imports into Mexico. |
Mexico City - Wanted: millions of pre-owned vehicles. Inquire south of the border.
The Mexican government last week cleared the way for older cars from the United States and Canada to be imported here, opening a potentially vast new market for U.S. vehicle merchants looking to unload old Detroit iron.
The move, part of an amnesty to register as many as 3 million scofflaws tooling around Mexico in illegally imported cars, could provide a boon to Mexican consumers who are expected to benefit from lower prices and a better selection.
It's also a godsend for a U.S. market glutted with second-hand cars and trucks. Used-vehicle prices in the United States have slid in recent years because manufacturers keep offering fat incentives for Americans to buy new wheels, forcing sellers to swallow deep discounts even on vehicles a few years old.
Mexico's decision could bring a crowd of new buyers for some of the dustiest inventory.
"When the Mexican public and Mexican dealers start coming up here to buy, it's going to raise used-car prices dramatically," said Louie Quezada, owner of Lotaner Motors in Costa Mesa, Calif., and Stanton, Calif. "Even now, (Mexican) buyers pay my retail price on used trucks, take them down there and sell them for double."
But not everyone in Mexico is happy about the prospect of a stampede of heavy metal from the United States.
Some new-car merchants are fuming over potential cut-rate competition that they say could harm Mexico's domestic industry. They accuse Mexican President Vicente Fox of rewarding lawbreakers and caving into pressure groups before next year's presidential elections. Environmentalists say an influx of smoky clunkers would be a huge blow to Mexico, where big cities, particularly the capital, are beset with some of the foulest air in the world.
"It's a real setback," said Kate Blumberg, a research director at nonprofit International Council on Clean Transportation in Berkeley. "Mexico has been working really hard to improve its air quality. Now allowing a wave of used, dirty vehicles into the country just seems crazy to me."
Previously, Mexico had severely restricted the importation of used vehicles. But the new order allows large-scale importing of some cars and trucks from the United States and Canada that are 10 to 15 years old. It also reduces taxes on some new Mexican-made vehicles to make them more affordable, and it allows drivers of vehicles smuggled illegally into the country to register them by paying taxes equivalent to 15 percent of the car's value.
Industry experts estimate that 2 million to 3 million of these vehicles are currently driven on Mexican roads.
Mexican used-car dealers were divided on how they would be affected. Some welcomed the chance to carry a wider variety of U.S. cars at lower prices. But others were fearful that customers, particularly those in northern Mexico, would shop for their vehicles across the border.
Environmentalists also are concerned. Mexican officials say the imported older vehicles will have to meet Mexican air-quality standards for their particular model year. Still, pre-1995 vehicles emit twice the pollutants permitted for new cars in Mexico, according to Blumberg of the International Council on Clean Transportation. |
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