In spite of continually changing auto import laws, red tape as long as the border itself, and limited designated times for processing car imports at the border, thousands of used cars and trucks still make it across the US – Mexico border each day where American used car sales makes for big business.
Get our news delivered to your inbox every morning. Click here to signup
Due to tougher regulations and more scrutiny of paperwork with Mexico’s tax administration (SAT) implemented this year on imported “junk cars” or “chatarras”, imports have declined nearly 38% compared to 2013, a trend that Mexico’s auto dealers welcome.
From January to August of 2014 used car imports declined compared to the same period last year from 63,764 to 39,826.
However tougher regulations come at a time when even more cars will be eligible for importation into Mexico next year. In 2009 American used car imports were only possible for cars ten years old or older. Under NAFTA the age restriction for used cars has dropped to eight years, and in 2015 the age of an import vehicle to Mexico will be lowered to four years old. However the reduction in age limits is being challenged in courts as unconstitutional.
The fees for importing a used vehicle into Mexico can range between $800 – $1200 USD depending on the make, model, year, and value of the car being imported. While the cost of importing is significant for a used car, the cost at resell is still attractive to Mexican buyers and usually much less expensive than Mexican used cars in the market.
People importing and reselling used cars in Mexico say many cars are damaged from accidents where the owner didn’t carry sufficient insurance on the vehicle so they are sold at a low cost. The automobiles are then imported into Mexico where auto bodywork can be much cheaper than in the United States. Many say that the once damaged cars are still in better condition than the used cars in Mexico because the road’s infrastructure in Mexico causes a rapid decline in auto suspension and other issues, and many feel that Americans take better care of their cars with proper maintenance.
Eduardo Solis, president of the Mexican Automotive Industry Association, said that Mexico is turning into the waste bucket of American junk cars.
Also fueling the used car industry is a lack of financing, or eligible individuals, in Mexico for automobile purchases, where only 52% of cars are purchased using financing, compared to over 75% in Brazil and other similar economies in Latin America.
The border cities between Mexico and the United States are lined with import agents and import lots full of cars waiting for clearance to be important for sale and usage in Mexico.
Many retiring Americans and Canadians choose to import their vehicles using agents to avoid the process of purchasing a car as a foreigner in Mexico.