Introduction to the Issue
The supply of vehicles in Mexico is experiencing a clear decline, despite competitive pricing due to low inflation and viable financing options. However, the issue of “chocolate” (aged) and “chatarra” (junk) vehicles is causing significant damage to the well-established automotive sector in the country.
Government Support and Regulations
The Mexican government, under President Claudia Sheinbaum’s leadership, is working with the automotive industry to address the illegal entry of vehicles. This collaboration aims to maintain regulations that prevent the influx of unauthorized vehicles, which have been a problem since January 2022. The issue affects light vehicles, cars, and SUVs, with over 3 million regularized vehicles reported so far.
The Problem of Aged and Illegal Vehicles
The Association of Mexican Distributors of Automobiles (AMDA), led by Guillermo Rosales, has identified numerous irregularities in the process of legalizing “chocolate” vehicles. These vehicles, often more than 15 years old, enter the country illegally from various Asian countries and, to a lesser extent, the United States. They arrive with loose customs requirements, without proper verification of their physical and mechanical conditions.
Scale of the Issue
The national association has recorded over 3.2 million units this year, causing excessive pollution, particularly in the northern regions of Mexico. This situation is exacerbated by corruption among public officials and limited control by criminal organizations facilitating the contraband’s introduction, commercialization, and transportation.
Impact on Sales and the Economy
Used car sales have dropped by more than 20% in Mexico’s border states, with new car sales declining by 5% in Q4 2024. Meanwhile, the national average increased by 10%. Chihuahua, one of the top three states for contraband regularization alongside Tamaulipas and Baja California, has a 15-point difference from the national average due to these automotive irregularities.
Government Action and Collaboration
The Secretariat of Economy, led by Marcelo Ebrard, has received evidence from concerned sectors like AMDA and the National Association of Producers of Buses, Trucks, and Tractors. They aim to address these irregularities soon, as the current uncertain economic climate and U.S. President Donald Trump’s decisions have negatively impacted production and export data.
Key Questions and Answers
- What is the main issue? The illegal entry of aged vehicles, known as “chocolate” or “chatarra,” is causing significant damage to Mexico’s automotive sector.
- How many vehicles are affected? Over 3.2 million units have been reported this year due to these irregularities.
- What is the impact on sales? Used car sales have dropped by more than 20% in border states, while new car sales declined by 5% in Q4 2024. The national average increased by 10%.
- What is the role of the Mexican government? The government, under President Claudia Sheinbaum’s leadership, is collaborating with the automotive industry to address illegal vehicle entry and maintain regulations.
- How are economic factors affecting the situation? Uncertainty in the economy and U.S. President Donald Trump’s decisions have negatively impacted production and export data.
