Used cars imports plunge but problems linger

By Nancy J. Gonzalez

Even though the used vehicles imports have dropped in the last couple of years due to the Federal Government enforcement and restrictions, the use of “amparos” allows the entrance of salvage and junk vehicles into Mexico, representatives of the Mexican Auto Industry explained. An “amparo” is a temporary protection against the enforcement of the law until a court rules one way or the other.
“More than 90 percent of imports that have been made in recent years arrive via an ‘amparo’. These imports not only make a brutal damage to our environment but also make considerable damage to our country because many of the insecurity incidents in Mexico involve this kind of vehicles.” said Eduardo Solis Sanchez, president of the Mexican Association of the Automotive Industry (AMIA). “These vehicles ensure impunity because they pass through the Mexican border and are not recorded until they reach their final destination.”
He applauded the recent restrictions to import used vehicles from the U.S. because they limit the import of junk vehicles into Mexico.
Guillermo Rosales, deputy general manager of the Mexican Automotive Dealer Association (AMDA), explained that the out of control used auto imports led Mexico into a crisis and it is not over.
“The used car imports represent 43.2 percent of the total annual new vehicle sales in Mexico; therefore, we have an outdated, unsafe, and polluting vehicle fleet on the streets,” Rosales said. “The lack of regulations on physical – mechanical automotive conditions allowed for the past nine years made Mexico the U.S. auto dump.”
In 2006, the number of used vehicle imports jumped from 338,064 to 1,282,990 units. In 2007 this number dropped to 870,785 units and since, every year fewer used cars are imported due to the Federal Government restrictions.

According to AMIA and AMDA statistics from January to November 2014, used car imports reached 433,309 units. This figure represents 23.8 percent or 134,977 fewer units than in 2013.
“Although this reduction is very important, the number of used vehicle imports is still excessive and has a negative impact in Mexico´s environment,” Rosales expressed.
He highlighted the latest judgments in the Supreme Court of Justice of the Nation that manifest the constitutionality of the set of administrative measures regulating the importation of used vehicles and the automotive decree as well as the SEMARNAT (Mexico’s environmental authority) agreement, requiring a valid certificate of emissions no older than six months when importing a used vehicle. Also, the operating rules imposed by the SAT (Mexico’s tax authority) that require an estimated price to avoid under valuation of the vehicles for import tax purposes.
“All these regulations have been declared constitutional and valid by the highest organ of justice in the country. This leaves without legal basis the appeals brought by the importers” Rosales expressed. “Actions remain pending by the Collegiate Circuit and District Courts where the ‘amparos’ are residing to accelerate the process to render them ineffective and unable to be used to import vehicles.”

He said Mexico needs a physical and mechanical regulatory standard to avoid junk vehicles on the road in favor of the environment.
Furthermore, Solis Sanchez highlighted the importance of the automotive decree because it sets the rules for used vehicles imports, not allowing salvage or junk cars.
“This decree is very important because it limits imports to our country of only roadworthy vehicles that meet a certain age between 8 and 9 years old paying a 10 percent import tax and 16 percent value added tax (VAT). Vehicles must meet physical and mechanical eligibility conditions, and comply with Mexico´s emission standards,” Solis Sanchez explained.
On December 31, 2014 the Mexican Federal Government authorized the third extension to the automotive decree to import used vehicles from the U.S. To be in Mexico, these used vehicles must have a certificate of origin, a valid emissions permit, be in good mechanical and physical conditions and not having been declared salvage or stolen in the U.S. This decree will expire on December 31, 2015.
The used vehicle importers not only disagree with this third extension to the automotive decree, but also want the “amparos” to be able to import used cars.
“We want to be able to import our vehicles ourselves like we used to do it, but we need a fair valuation of the vehicle. The prices set by the Federal Government are unrealistic and way too high. Our proposal is to use the bill of sale price to calculate the taxes to be paid,” explained Daniel Cereceres Rosales, president of the Federation of Used Automobile Sellers in the Borderland (Facaf).



He said the importers´ associations already sent a proposal to the Federal Government, but they have been ignored.
In protest, between December 2014 and January 2015 the used vehicle importers´ associations have blocked the international ports of entry three times in the northern Mexican border. The import and export operations have been temporary suspended in Tijuana, Mexicali, San Juan Rio Colorado, Tecate, Juarez, Reynosa, Matamoros and Laredo.
“It is a concern for us to hear the news that some importers are looking to close borders as a measure of pressure to the Federal Government to ease the used cars imports and change the current legislation. I find that attitude and form of protest deplorable,” Solis Sanchez said.
He added his association supports the Federal Government restrictions as a way to ensure the entrance of roadworthy vehicles into Mexico.
The used vehicle importers´ associations said they will block indefinitely the U.S. – Mexico border until the Federal Government issues a favorable resolution for them.