Mexican citizens can legally import cars, but only later-model cars that meet pollution and safety standards. When they do so, they must pay import duties.
To get around this, many people bring in used vehicles from the U.S. on the sly. These vehicles are known as “chocolate” cars.
Now President Andrés Manuel López Obrador has published a decree to legalize these cars coming from the U.S. He said the owners would have to pay a fee to register the vehicles. Mexico will start the program soon in the northern border states and will later expand it to other states.
Mexico’s auto sector has criticized the move, saying it allows "car smuggling."
The new policy, published in the government's official gazette, allows local authorities to craft plans that encourage residents to officially register vehicles that were driven into Mexico from the United States.
Baja California alone claims over 500,000 unregistered vehicles, which state security minister Rosa Rodriguez says are often used in crimes.
The Mexican Association of Automotive Distributors (AMDA) predicts an over 30% drop in new-car sales will result from the decree and stressed the move was “a reward for criminal mafia and corrupt bureaucracy.”
AMDA called on President Obrador to adopt policies and dedicate funds to address the root causes of contraband cars.
“It is a mistake to legalize smuggled vehicles ... It will impact the economy, as well as create concerning environmental pollution and insecurity that threatens people's lives," AMDA Director Guillermo Rosales said in an interview with Mexico's Radio MVS.
The Mexican Employers Federation, a business group predicted the measure will fill Mexico with unsafe, dirty cars. The business association stresses it will further damage car sales in Mexico after sales dropped 19.8% in the first five months of the year.
Because these vehicles are mostly unregistered, the industry lacks hard numbers on how many “chocolate” cars have been imported into Mexico. Some estimates put the number as high as 18 million cars and pickups.