KGNS - Decline in Used Car Sales

News Article

By Valerie Gonzalez

Buying cars in the U.S. and importing them to Mexico has become less common and in doing so, affecting the economy along the border.

Prior to NAFTA, Mexico did not allow car imports. Through the agreement, certain cars have been eligible for import.

However, Mexico could charge an import duty for cars that do not meet certain requirements.

It's that tax that has increased and drastically decreased U.S. imports.

A couple of years ago, Royal had Mexican customers buying cars by the bundle and in cash.

Buyers would buy here, save money and turn a profit by reselling them in Mexico. Now, not so much.

Royal had even set up shop in Nuevo Laredo, but that's changed when regulations shifted in Mexico resulting in higher import duty taxes.
Tamaulipa's representative Yahleel Abdala is concerned on the effect to the majority of her constituents.

"On the border, about 80-percent of citizens have a car that's imported or nationalized, it's not from a dealership", said Abdala.

On the U.S. Congressman Henry Cuellar will be checking to see if these changes brought by Mexico's 2011 decree on car imports violates the NAFTA agreement portion requiring imported cars have a certificate of origin.

"Mexico right now, the way I understand it, is asking for a certificate of origin, which means that if you have an old car, it's going to be hard to find the original one. So, the question is, is there a non-tariff barrier that has been created", said Congressman Henry Cuellar.

Meanwhile, representative Abdala is asking for changes from mexico's ministry of finance.

"We are presenting a resolution where we are asking the authorities of the ministry of finance that they respect the agreement of free trade. What does this mean? It means we can import vehicles according to their value, and that the taxes are based on it", said Abdala.

Just this week, Nuevo Laredo's city secretary reported they are looking for ways they can provide a discount for importing vehicles.
That could help drive business back up here too.

Representative Abdala is also asking for more changes to facilitate import.

She's asking for Mexican customs to extend their hours of operation from three to eight hours.

She'd like to have the zone in which to drive regularized cars expanded from just the border to the entire border state.

Used car sales to Mexican clientele has been diminishing recently.

Buying used cars here and taking them into Mexico for personal use or resale was a common occurrence, but not so much lately.

That's because importing them has become too expensive.

The tax has increased significantly since 2009 when Mexico changed regulations.

This has affected the regional economies along the border, but has also affected personal budgets.

"On the Mexican side, people who don't have resources are saying, hey, if we can pay for a car $5,000, we want that car because that's all we can afford. The Mexican auto industry is saying no, no, no. It's going to pollute our environment, and we should have something that's newer than a used car", said Congressman Henry Cuellar.

Mexico's car industry has benefited and seen an increase in sales.

However, critics feel imported cars would not negatively affect its growth.

Congressman Cuellar says he is working with the U.S. Trade representative to try and see if the changes made by Mexico are a violation of the NAFTA agreement.

Tonight on KGNS News at Ten, what's being done in our sister city to facilitate imports.

As many as 80-percent of residents on the Mexican side of the border are said to use imported or nationalized.

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