Mexico's 'chocolate' auto overdose
By Lauren Villagran |
 EL SESTEO, Nayarit, Mexico – This isolated town of fishermen and farmers on Mexico’s west coast lies 700 miles from the U.S. border. But from the license plates on cars and trucks, you might guess you were in Washington. Or Virginia. Or Idaho.
In Mexico, they’re known as “chocolate” vehicles – cheap, used cars and trucks bought in the United States with a decade or more to their title, as well as newer vehicles that cross the border with temporary permits only to remain in country illegally for years, with plates that hark to their U.S. origins.
They say “chocolate” because “nobody is paying taxes nor license plates, and for everyone this is sweet,” said Rafael Gutierrez, manager of customs agency SMV in Santiago Ixcuintla, Nayarit – the closest town to the coastal outpost of El Sesteo.
But two major changes to import laws this year have altered the “chocolate” phenomenon: The government of President Felipe Calderón closed the border in March to imports of all vehicles except 1998 models for the rest of 2008 – nothing newer, nothing older – and simultaneously decreed that the millions of “chocolate” vehicles circulating illegally could be legalized through year end.
Calderón’s abrupt closure of the border could be seen as a backlash. Mexico opened its doors two years ago to used vehicles from the U.S. with between 10 and 15 years to their title, a move that anticipated the 2009 opening mandated by the North American Free Trade Agreement.
Millions of used cars and trucks have flooded the Mexican market since, raising the ire of both environmentalists concerned about air pollution and the national auto industry, which saw sales of new vehicles stagnate in 2006 and decline 3.5 percent in 2007.
This year’s temporary import limit is designed to briefly curb the entrance of these “chocolate” autos, and legalize the estimated 2 million to 4 million already here, before the border opens again in 2009. But auto industry representatives here are lobbying hard for fresh limits that would take effect in 2009.
Trash or ‘chocolate’?
In the case of used U.S. autos here in Mexico, one man’s “chocolate” is another man’s “chatarra,” Spanish slang for junk or trash. Environmentalists and auto industry representatives – who share the same side of this debate – say most of these old, used vehicles amount to salvage metal. They’re junkers that don’t make the grade in the U.S., where air quality standards are stricter and better enforced.
“The border opened and all the trash began to come in,” said Alfredo Llorente, general director of the Mexico Association of Automotive Distributors, or AMDA. “It’s not possible that this country converts itself into the trash bin of the United States.”
According to AMDA, of the 14 million cars that Americans sell yearly as salvage for about $200 to $300 apiece, some 1 million end up in Mexico with price tags about 10 times higher. And “Ciudad Juárez is a paradise of chocolate vehicles,” Llorente said.
Manheim, a subsidiary of publicly held media company Cox Enterprises Inc., operates auto auctions nationwide, including one in El Paso. The number of vehicles bought by dealers from Mexico jumped 21 percent in 2006 from 2005 and rose another 7 percent last year, said Pegui Mariduena, Manheim marketing director, in an e-mail interview.
Most of the vehicles sold to dealers from Mexico were 1997 to 1992 models with average prices ranging $1,500 to $2,700, she said. It’s still too early to tell what the effect the 1998 limit will have on sales this year, Mariduena said.
Auto industry representatives concede that such “chocolate” autos are an attractive, economical option for Mexicans for whom a new car purchased in Mexico is a near impossibility – namely farmers and farmhands who live in small towns far from the seats of state and federal authorities, in places like El Sesteo.
And they note that Mexico has a long history of importing used U.S. vehicles, and the federal government has a similarly long history of periodically legalizing such vehicles to appease the farmer vote.
But with NAFTA on the horizon, auto industry representatives are pushing for new restrictions.
“We are not the backyard of the United States,” said Eduardo Solis, president of the Mexican Association of the Automotive Industry, which represents automakers including General Motors Corp. and Ford Motor Co. that manufacture in Mexico. “We have to be sure that those vehicles that enter this country are apt” enough to circulate in the U.S.
Used cars in the fields
Filiberto Gonzalez, 50, makes the trek every year to Washington State to pick apples. He goes by bus, and he comes home after each season in a used car or truck he buys for cheap stateside.
Today he’s back home in El Sesteo, where he’s got a black 1995 Ford Explorer and a canary yellow 1995 Dodge Ram parked under a palm-roofed palapa on the beach. The Dodge is legalized with Nayarit plates; the Ford has no plates at all.
Gonzalez says he’s split about whether the government should tighten its restrictions on used car imports, or loosen them. On the one hand, “many of the cars that end up down here don’t last.” They rust in front yards and in fields. On the other hand, “the salary that we have here is very low, and the price of cars is very high. Here you can’t buy a new car with what you earn your whole life.”
A farmhand working in the U.S. will earn at least $7.50 an hour, Gonzalez said. In Nayarit, the going rate is about $12 a day.
Efraim García, 35, farms frijoles and watermelon in fields in nearby Los Corchos, Nayarit. Farmers in particular depend on the supply of cheap trucks from the U.S. for their work, he said.
“For those that work the fields, it’s important that the border stays open,” he said. “That’s the only way we can have cars.”
Just how open the border will be in 2009 remains uncertain, however. NAFTA rules will permit all vehicles 10 years and older – with no limit to how old – to enter Mexico. Each year, newer and newer vehicles will be allowed in, slowly cracking open Mexico’s well-protected auto industry to competition. But even under NAFTA, Mexico retains the right to set limits on which older cars and trucks can cross or not.
“We don’t want to close the border,” said Joaquín Peraza, economist of the Mexican car dealer association AMDA. “We just want to create rules so as not to have unfair competition.”
Comments or questions about this story? E-mail news@elpasoinc.com
|
|
