Magazine article SourceMex Economic News & Analysis on Mexico

Automobile Industry Opposes Legislation to Register Illegally Imported Cars

Magazine article SourceMex Economic News & Analysis on Mexico

Automobile Industry Opposes Legislation to Register Illegally Imported Cars

Article excerpt

The automobile industry, which set a record in total sales of new vehicles in 2000, is campaigning intensively against legislation that allows the registration of used vehicles imported from the US by returning expatriates.

The Mexican Senate last November unanimously approved a measure allowing the legal registration of foreign cars, known as "autos chocolates." The measure was approved by a much tighter margin in the Chamber of Deputies in December.

The legislation would legalize between 1.5 million and 2 million vehicles introduced into the country by Mexicans who work in the US. It would apply only to imported vehicles manufactured between 1970 and 1993.

Under the measure, owners would have 120 days to register their vehicles from the date the legislation goes into effect. Some legislators have proposed extending the registration time because of the large number of cars and trucks involved.

Former President Ernesto Zedillo's administration resisted legalizing these vehicles on the grounds that it would hurt the Mexican motor-vehicle industry (see SourceMex, 2000-05-03, 1999-12-18).

Zedillo's opposition to the measure threatened the electoral chances of the Partido Revolucionario Institucional (PRI) in the 2000 presidential, forcing the former president to promote a more limited measure allowing the registration of pickup trucks for use in agriculture. The measure was aimed at helping agricultural workers, traditionally the base of the PRI, to obtain affordable vehicles (see SourceMex, 2000-03- 22).

Some legislators have also raised concerns that the legislation to register the autos chocolates is only a stop- gap measure, since Mexicans continue to introduce vehicles into the country at a rate of 200,000 per week. These cars are not covered by the legislation.

Still, legalization of the autos chocolates is seen as a temporary measure, since Mexico is obligated under terms of the North American Free Trade Agreement (NAFTA) to eliminate all restrictions on imports of used automobiles by 2009.

Legislators concerned about Fox veto

President Vicente Fox has yet to sign the legislation passed by the Congress to legalize the autos chocolates. Last year, Fox's own party, the pro-business Partido Accion Nacional (PAN) generally supported registering the used cars, but it is now deeply divided. Almost all members of the PAN, along with allies from the Partido Verde Ecologista Mexicano (PVEM), voted against the measure during the vote in the lower house in late December. The PAN, however, overwhelmingly supported it in the Senate in November.

Fox has not indicated whether he will sign the bill, even though he promised during his campaign that he would support registering the autos chocolates. Presidential spokeswoman Martha Sahagun told reporters in late January that Fox and Economy Secretary Luis Ernesto Derbez needed more time to study the ramifications of the measure.

The president is under pressure from the Asociacion Mexicana de la Industria Automotriz (AMIA), the Asociacion Mexicana de Distibuidores de Autos (AMDA), the Asociacion Nacional de Comerciantes de Autos y Camiones Usados (ANCA), and other organizations representing the motor-vehicle industry, which claim that the imported vehicles could jeopardize Mexico's motor-vehicle sector. …

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