Until now. Earlier this year the governor of Chihuahua state, Patricio Martinez, embarked on his own plan: register and tax the “chocolates,” as the illegal cars are known. The move has made him a hero to owners who once feared their vehicles could be confiscated as well as to peasant organizations lobbying for legalization nationwide. And it has locked him in a political war with the federal government and the auto industry. To protect the local market for automakers, the North American Free Trade Agreement bans nearly all imports of used cars until 2007. With other states poised to follow the governor’s example, the federales have challenged the law in Mexico’s Supreme Court.
Martinez’s defiance breaks the age-old tradition that all rules in Mexico flow from the capital. Even as a member of the ruling Institutional Revolutionary Party, he says he had no choice. More than a quarter of his state’s cars were illegal. They were vital to the economy. But without license plates, they were also the vehicles of choice for criminals. “[They] were part of a very large universe of anonymity,” says Martinez, “in which people could steal, crash, run over people and kill without being identified.” The law he pushed through offered a window–January to May–for owners to register their cars before the government impounded them. Some 198,014 were put on the books. And for now, federal and state authorities have reached a truce: the cars can be seized only outside state lines.
That was never much of a risk. In the United States, the cars are usually bought at auctions or used-car lots; some are stolen (increasing smugglers’ profits considerably). In Mexico, only a tiny fraction–8,000 last year–are seized. Not all illegal cars start out that way. The government does allow Mexicans who reside within 18 miles of the border to own certain types of used cars imported from the United States. But many of those cars have been sold illegally or left with relatives deeper in the country.
Some Mexicans simply go shopping up north. Two months ago, Martin Pinon needed a car. He sent his cousin, who has work papers that allow him to enter the United States, to a used-car lot in El Paso, Texas. He bought a 1992 Ford pickup for himself and a 1991 Ford Explorer for Pinon. With 72,588 miles, it is a high-end chocolate–and a bargain in Mexico. He registered it just before the deadline. “A car like this you couldn’t buy for $7,000 here,” he says.
Such deals worry automakers. Several of the world’s biggest manufacturers have factories in Mexico, which produces about 1.5 million vehicles a year and provides hundreds of thousands of jobs. They say that smuggled cars have already cut into their sales. “If those 2 million illegal vehicles had been sold in Mexico, we’d be in better shape,” says Ruben Ojeda, director of governmental affairs for Ford Motors, which has three plants in Mexico. But proponents of a national version of Chihuahua’s law say most chocolate owners could never afford to buy a legit car in the high-priced Mexico market. More than 99 percent of the cars registered in Chihuahua were made before 1993.
The ones complaining now are the smugglers. “It used to be a good business,” says Aguirre, who operates from a parking lot under a bridge, alongside most of Chihuahua’s dealers, selling newly registered cars. Among the gems there are a 1985 Oldsmobile with wire wheels for $700 and a 1990 Nissan pickup for $3,000. But registered vehicles are dwindling fast, and no one wants the ones smuggled in since the amnesty. In June, the state government confiscated 105 illegal vehicles. But that’s only in Chihuahua. And with the likelihood of being busted still small in the rest of the country, illegal imports will remain the best car bargain in Mexico for a long time.
