Mexico Gives Amnesty to Illegal American Cars

Last week, Mexican President Andrés Manuel López Obrador made a pledge to legalize millions of vehicles being illegally imported from the United States. While it sounds like a phenomenal way to help the nation to contend with product shortages that are driving up vehicle prices around the globe, all of the cars had been smuggled previously and many were presumed to have been stolen.

This has created a lot of tension. Despite there being evidence that these vehicles frequently end up becoming workhorses for criminal cartels, illegally imported beaters also provide a cheap alternative to poorer residents right when automotive prices (new and used) have started to disconnect from reality. Times are tough and destitute families aren’t going to care where a car comes from when it’s the only one they can afford. So López Obrador has officially launched a new regularization program designed to bring these automobiles into the fold.

“We are going to legalize all of them, we are going to give them a permit, we are going to recognize them as owners of the vehicle,” López Obrador said ahead of signing the amnesty agreement. “Because there are a lot of people who use these cars because they don’t have the money to buy a new car, and with these cars they take their children to school and carry out their activities.”

Importing cars into Mexico has always been legal, provided it meets the latest regulatory standards and individuals pay the necessary fees. But there are millions of automobiles currently operating within the country that were snuck in, most of which originated in the United States. Known as “chocolate cars,” they’ve been the preferred steed for organized crime. But they also make their way into the hands of regular people as an affordable alternative to secondhand goods found on dealer lots. Due to taxes and fees, smuggled vehicles can be found at roughly half the price as a government-certified secondhand jalopy.

The amnesty arrangement would allow these illegal imports to be registered in Mexico after paying a fee of 2,500 pesos ($123 USD). Though local authorities have to come up with their own unique strategies to encourage those in possession of chocolate cars to comply. For now, the plan is being limited to states that border the U.S. (Sonora, Chihuahua, Coahuila, Nuevo León, Tamaulipas, and Baja California) since they’re the ones presumed to contain the largest number of illegal imports. Baja alone is estimated to have 500,000 cars, despite having a population of less than 4 million.

President López Obrador stated that the plan could be used to help El Norte’s six municipalities fund roadway repairs with tens of billions of pesos flooding into states that saw health compliance numbers. But not everyone shares his enthusiasm. Guillermo Rosales Zárate, the Director of Mexico’s Association of Automotive Distributors, has claimed the strategy effectively rewards criminal behavior and could cut new vehicle sales by over 30 percent.

“It is a mistake to legalize smuggled vehicles,” he said. “It will have an impact on the economy, as well as create concerning environmental pollution and insecurity that threatens people’s lives.”

While the sales estimate sounds plausible, any claims that this will negatively impact the environment are absolutely ridiculous. It’s always obnoxious to see pollution tacked onto every argument. But it’s particularly nonsensical in a scenario where the end goal results in older autos staying around longer and there is a lessened need for new vehicle production. Distributors have been asking the government to stop people from smuggling vehicles into the country for years and are willing to make whatever claims are necessary to get the public on their side.

Guillermo Rosales Zárate later went on to call the measure a victory for organized crime.

However, he’s hardly alone in his outrage. Numerous officials have cited that automotive smuggling has become a major industry for cartels operating along the border. Some even operate legitimate businesses on both sides of the fence to help facilitate the process while also serving as fronts for human trafficking and drug running. Worse yet, these groups have become the de facto government in some areas and often bribe corrupted officials so they’ll turn a blind eye.

This really clouds the argument on what’s to be done. If cartels have amassed sufficient power along the border to avoid prosecution, then it becomes hard to argue for the continuation of policies that have resulted in black market automobiles and increased violent crime. You either have to enforce the law or attempt to normalize the grayer aspects of criminal organizations to a point that they’ll hopefully go legit. I cannot presume to know which strategy is best for Mexico but the hands-off approach certainly hasn’t been working — and I don’t just mean in Mexico.

One of the consequences of smuggling being so lucrative has resulted in elevated car crime and smaller inventories north of the border. American states closer to the Mexican line often see per-capita vehicle thefts at quadruple the frequency as those located along the Atlantic Ocean. While some of that has to do with their proximity to shipping containers waiting to shuttle stolen goods across the Pacific, vehicles being illegally imported into Mexico remain a significant factor. However, plenty of the vehicles being funneled southward are purchased legally from dealerships or through vehicle auctions (often as salvage titles).

Then there is the Mexican Employers Federation, which has suggested President López Obrador’s measures will ultimately load up Mexico with old, unsafe vehicles right when the automotive sector needs a boost. The nation’s new vehicle sales were down 20 percent over the first half of 2021 vs the same stretch of time in 2019.

Mexican media outlets have also been critical of the plan. But they don’t necessarily represent the people in possession of these cars, many of whom will probably be glad to ditch U.S. plates so they can formally register their vehicle. Still, much of the above holds little relevance when the Mexican government doesn’t seem to be in control of the border.

“We need to recognize that we don’t have control over the passage of these cars along the border,” Fidel Villanueva, the director of Anapromex, which defends the owners of illegally imported cars, told The Washington Post. “The Americans don’t want them, so they’ll keep coming, [good, nice and cheap.]”

Considering how much used vehicles are going for in the United States these days, it’s hard to claim we don’t want them. We just aren’t holding onto them and there’s not much being done about it.

[Image: Chess Ocampo/Shutterstock]