Legalization of chocolate cars, a prize for corruption: Guillermo Rosales

The recent announcement by the President of Mexico, Andrés Manuel López Obrador, on the regularization of illegal vehicles, would put the Mexican automotive industry. Although it is true that at the moment the Secretariats of Economy, Public Security and Finance are in charge of defining the conditions to “put in order” the units coming from the United States, the truth is that the consequences could – in the worst scenario – Lethally hit sales of zero kilometer units.

Negative history

The development of sales for several months has been very far from what was expected. “We have the crisis context from July 2017, when this phase of decline in the sales cycle begins. Although throughout this year we have had six positive results, this is in comparison with the homologous month of last year in which we were affected by the pandemic in a more serious way, and in such a way that when making the comparison with 2019, with 2018, 2017, they are much lower numbers and therefore we circumscribe them within this prolonged phase of crisis facing the automotive market in Mexico, ”said Guillermo Rosales.

The automotive market as well as the production and export of light units have faced adverse conditions, both external and internal, for some years.

“First because of the changes we had within the relationship that was with the United States, that from the risks that the arrival of Donald Trump to the presidency of the United States represented and what the renegotiation of NAFTA meant, which decreased the pace of investment, the creation of new formal jobs, this coupled with the fact that in 2017 we faced the change in the price policy for fuels and that was reflected in a significant increase in inflation in that year, all this in This set had an influence on us having more adverse conditions in the automotive market than in 2018.

“Nor can we forget the same factors of influence in the relationship with the United States, the arrival of the electoral process that generated uncertainty, delay in investment decisions and towards the end of that year, which is already the cycle linked to the administration of President López Obrador and the decision to cancel the Texcoco airport, which, although it was still made in the previous administration, is a decision that already corresponds to the current president and which markedly influenced the decrease in investment.

Impact on 0 kilometers

Although the final rules for the legalization of illegal units, the deputy president of AMDA warns about the negative effects that it will have once the decree enters into force, which could range from registering those who are already in national territory and who can only circulate in the border states to opening the northern border and allow the entry of more waste vehicles of American origin.

“What the president signed was an agreement by which he instructs the Ministry of Economy, to Secretary of Finance Yet the Secretariat of Security and Citizen Protection, to elaborate the illegal vehicle regularization program. Within what can be a very negative situation in which there is a regularization program that covers the entire national territory that, as President López Obrador has proposed, is extremely easy to be able to prove the possession of a car and that facility for us becomes a lax process in which any vehicle can be regularized.

“The fact that there is a tolerance, so that beyond the objective set by the president of regularizing the vehicles that are already in the national territory prior to the signing of his agreement, this lack of application could allow much more vehicles to enter the country. that they were already there and therefore the impact is much more serious ”.

However, the manager points out that the repercussions could be less if a regularization program is undertaken that only considers the states that have initially been framed in the agreement, that is, those of the border plus Baja California Sur, and even so, not be it for all its territory but only in those localities where the problem exists.

Danger in the third most important square

“The example is the metropolitan area of ​​Monterrey. Nuevo León is included within the territories framed in the regularization agreement, however the metropolitan area of ​​Monterrey does not have a serious or even notable problem of the presence of irregular vehicles.

“What would happen if it opens up to regularization in that area, is that it would become attractive for many people to take advantage of this opportunity and acquire illegal vehicles that are already circulating in the border area or, even more serious, to be aware of the situation to introduce vehicles and thus flood the metropolitan area of ​​Monterrey, which is the third most important car market in the country for both new and used cars, and that with that we have a very serious impact on the balance of the formal market both as new as pre-owned ”.

Historical data

The history of the national automotive market does not hesitate to clearly show the deep crisis that it experienced some years ago when the last legalization program was in force. The setbacks slowed growth and impacted the rest of the economy as the blow to new car sales was catastrophic.

“With the massive entry of used vehicles from the United States in the period from 2005 to 2009, the national market fell almost 30%, the introduction of these vehicles was 40% higher than domestic sales in 2006, also studies They carried out ordered by the Ministry of Economy in 2011 and 2014, showed an approximate of 250 thousand new vehicles that were stopped selling due to the saturation of the market caused by the introduction of vehicles from the United States.

“These conditions can be repeated in terms of impact and those levels can occur again with the measures that the president has ordered, even though everything will depend to a large extent on how the decree to be issued and the general rules that will guide the legalization remain. ”.

Brake to recovery

The moment that the new car distribution sector is experiencing will have with this decree one more uphill step. Guillermo Rosales indicated that with regard to vehicle distribution, in 2020 between 6,000 and 7,000 jobs were lost, which have not been recovered because sales have not returned to pre-pandemic levels and that at the same time they face the problem of the scarce supply. He added that these jobs could hardly be recovered in 2022 or 2023 if regularization occurs.

“Regarding the part of the production of auto parts and vehicle assembly, I see a lower degree of exposure as a risk factor for this measure. The greatest impact touches on the link in the chain that is represented by AMDA, which are vehicle dealers ”.

Fronts where they would impact

Damage to the environment is almost on a par with the economy, the most affected by this decree. Pollution, in its broadest sense, will encompass not only the air, but also the soil, subsoil and aquifers. This scenario is a reality in the border strip, which is classified as the most polluted in the country and is due to the age of the vehicles that circulate there, their poor mechanical conditions and negative practices such as the elimination of the catalyst (before putting them for sale), to resell the materials with which they are made and that are highly appreciated.

“In addition to air quality, the soil and the groundwater table are also affected, because when these vehicles are repaired, most of the time it is done in informal conditions, on lands that have no control over the disposal. of hazardous waste such as oils, liquids, fuels, and which are dumped directly into the ground or, even more serious, into the drainage, polluting the water and soil. In addition, it stimulates the proliferation of businesses that are the same or more polluting, such as the introduction of used tires and vehicles for scrapping or spare parts.

“The most worrying thing is that those who introduce these vehicles for the aforementioned purposes are groups that are controlled by organized crime, which is a mockery of the rule of law and a punishment for citizens who are aware of their property taxes. and the use of a vehicle, and all this is a flow of economic benefits that favor corrupt officials who tolerate and benefit from these criminal practices ”.

Actions

Without the possibility of stopping the work of conformation of the decree of legalization of irregular cars, Rosales Zárate warns that in the actions that the Mexican Association of Automotive Distributors (AMDA), the possibility of resorting to legal instances is not ruled out.

“We are working in the first place to maintain the call to the federal government so that our proposals are heard and that there is sensitivity to incorporate them through control measures in the regularization program, seeking to mitigate the impact for our sector. Whichever way the regularization decree comes out, it will be a negative decision for the automotive sector, however the range of impact is very large and that is why we seek to mitigate it. In no way does participating in the dialogue with the federal government mean giving our endorsement to the regularization, but only and simply the objective is to mitigate the impact.

“Finally, once the decree is published, we do not rule out making use of any legal instrument that is within our reach to stop these provisions.”

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