Mexico bans of most used car imports, panicking Texas dealers

[bigdelta]

Tuesday, March 4, 2008
AP
HIDALGO, Texas -- Some are dented, scratched and rusty. Others rattle and belch under faded paint jobs. But the "'98" soaped onto their windshields and a surprise change in Mexican import rules have turned a single year's worth of used cars into the pick of the used-car lot.
Beginning Monday, only cars made for the 1998 model year -- none older and none newer -- can be legally imported into Mexico. Car dealers were given notice only a month ago.
Until now, used cars 10 to 15 years old were scooped up at auction by South Texas used car dealers and rapidly sold to Mexicans hungry for affordable transportation and "la novedad" -- or novelty -- of unfamiliar makes and models.
Cars newer than that were banned from imports as unwelcome competition for Mexican car dealers, and anything more than 15 years old was seen as a potential environmental and safety hazard.
But now, under pressure from Mexico's new car dealers who say "vehiculos chatarra," or jalopies, undercut their sales, the Mexican government is allowing only 10-year-old used cars to be legally imported into Mexico.
All of a sudden, 1998 Luminas, Astro vans and Ranger pickups are sought-after trophies.
The Mexican Association of Automobile Distributors, which pushed for the change, said it was needed to "stop the accelerated conversion of our country into the world's biggest automotive garbage dump."
The Mexican Consulate in McAllen said the change was made "to restrict the entry of vehicles that compete with the Mexican car industry."
A mile north of the Rio Grande, 80 percent of the customers at Walester Auto Sales are Mexican. But this past week, only one out of the 24 cars on the dirt lot boasted the magic "1998."
That vehicle was a white Chevrolet Blazer with a "Redneck" sticker on the windshield and a vanity plate of a silhouetted couple embracing in front of a tropical sunset. It was priced at US$3,200. (euro2,100).
With the sudden change in demand, such 1998 models are appreciating for the first time since they rolled off the lot, their prices rising by US$500 to US$800 (euro300 to euro500), while dealers cut prices on slightly older models in a frantic effort to move them out before Monday's deadline.
"At this point we have a lot of merchandise that was going to Mexico that now will stay," said Elena Garcia, who owns Walester with her husband, Armando Garcia, who was in Florida scouring auto auctions for more vehicles.
At Gutierrez Brothers, a few Mexican car dealers milled about, shaking their heads at the limited selection.
"The worse thing we can do is buy something that we don't know if it can go across (the border)," Juan Gutierrez said. "If a 1997 worth US$3,000 can't cross, it's not even worth US$1,500."
He had to unload about 1,000 cars last month at sharply reduced prices just to avoid getting stuck with them in March.
Gutierrez said his buyers at auto auctions across the country tell him that when a 1998 rolls into the garage, 20 buyers line up where there used to be a handful.

[hlothery]

One of the most common sites you see when driving South to South Padre Island, is a car, minivan or truck with Mexican plates towing a car, minvan or truck with temporary dealer tags heading for Mexico. The tow vehicle, and the one being towed are often loaded down with bicycles and other goods purchased in the US for repatriation in Mexico. Personally, I will not miss the "rolling roadblocks".

[sachiwilson]

Good for Mexico. They are starting to take some serious steps to improve the air quality. It's all good!

[osbornk]

One of the most common sites you see when driving South to South Padre Island, is a car, minivan or truck with Mexican plates towing a car, minvan or truck with temporary dealer tags heading for Mexico. The tow vehicle, and the one being towed are often loaded down with bicycles and other goods purchased in the US for repatriation in Mexico. Personally, I will not miss the "rolling roadblocks".

I see a lot of older rough small trucks towing another headed down I-81 in Virginia heading south driven my Mexicans. They are usually vehicles from New Jersey or states nearby. There are frequently three or four hookups together.

[RJM2096]

This is really what is wrong with our relationships with Mexico. There is little reciprocity. They want to do what every they want to restrict us in their country, yet they want unlimited rights in our country. We cannot go into their country without a visa, we cannot own land in their country, we cannot protect our citizens in their country, and now they limit what we can sell in there country. Yet we are expected to fund their welfare system while their rich prosper and bask in corruption. :usa

[bigdelta]

This is really what is wrong with our relationships with Mexico. There is little reciprocity. They want to do what every they want to restrict us in their country, yet they want unlimited rights in our country. We cannot go into their country without a visa, we cannot own land in their country, we cannot protect our citizens in their country, and now they limit what we can sell in there country. Yet we are expected to fund their welfare system while their rich prosper and bask in corruption. :usa

I do.And that common misconception about not being able to own beachfront property is incorrect also.The visa is issued on arrival and good for 180 days.

[REM07adventure]

There was an interesting article in the LA Times about two weeks ago regarding this very topic. The author had interviewed some individuals stating that we (people of US citizenship) were sending the offending vehicles to Mexico. On the contrary... it has been the owners of car lots along the "frontera" (Mexican citizens) who have personally, or through their agents, frequented US auto auctions and purchased these older vehicles and then taken them to Mexico to sell to Mexican citizens living in the frontera. The accusation had falsely claimed that we have been dumping these old wrecks in Mexico helping to improve our air quality while contributing to their pollution problems.
In years past, you might have noted two different styles of license plates in Mexico: the standard ones indicating the state of registration and those which noted the border states (Baja California Norte, Sonora, Chihuahua, etc.) and the word "frontera". The frontera plates indicated the "free zone" (zona libre) portions of the border states which usually was about a twenty plus kilometer demarcation south of Mexico's northern border. These registrations allowed the introduction of used cars from the exterior, i.e., the US or even Canada at a much lower tax rate than what the same car would cost to register in a non-fronteriza locale. Now a days, with NAFTA and so forth, these restrictions have been eased and the importation of older US cars facilitated. The present situation just mandated ('98's only) is largely a result of the new car dealers' outcry due to lost sales. This mandate will be a double edged sword for the Mexican people: yes, their air pollution situation could conceiveably improve (on paper) but will also likely keep a lot of older cars in circulation since a slightly older, cheaper alternative will not be readily available.
With respect to land ownership in Mexico by foreigners, the Mexican constitution clearly states that a foreigner may purchase land in Mexicoin the interior;however, it also clearly states that land ownership by a foreigner may not occur if that land is within 50 km of the coast or 100 km of an international border (or the other way around, I don't remember exactly). Americans have purchased property in any number of coastal areas but usually through a third party or so I have heard.
Having been remonstrated by the website monitor in the past, I will forgo any political comments with respect to illegal immigration, etc.

[RJM2096]

Do we know if we can own land in Mexico city or other urban areas? Most of us cannot afford land on the coast unless it is through a time share. But in higher elevations the weather is beautiful all year round.

[sachiwilson]

Do we know if we can own land in Mexico city or other urban areas? Most of us cannot afford land on the coast unless it is through a time share. But in higher elevations the weather is beautiful all year round.
Yes, you can own land in Mexico City (or any other inland site). I am typing this in our condo in Mixcoac right now, in fact.

There are limitations on owning property along the waterfront. It's been a while since I looked into it, but as I recall there are areas in Mexico where you cannot get a fee simple ownership of the land if you are not a citizen. You can however get a long term "lease" of sorts. As I recall it is 100 years.

[sachiwilson]

This is really what is wrong with our relationships with Mexico. There is little reciprocity. They want to do what every they want to restrict us in their country, yet they want unlimited rights in our country. We cannot go into their country without a visa, we cannot own land in their country, we cannot protect our citizens in their country, and now they limit what we can sell in there country. Yet we are expected to fund their welfare system while their rich prosper and bask in corruption. :usa

My. Opinionated any?

[bigdelta]

Yes, you can own land in Mexico City (or any other inland site). I am typing this in our condo in Mixcoac right now, in fact.

There are limitations on owning property along the waterfront. It's been a while since I looked into it, but as I recall there are areas in Mexico where you cannot get a fee simple ownership of the land if you are not a citizen. You can however get a long term "lease" of sorts. As I recall it is 100 years.



THE FIDEICOMISO (TRUST)
FOR REAL ESTATE INVESTMENTS

WHY: For historical reasons, in 1917 the Mexican Congress considered it a matter of national security to limit foreigners from owning property within 100 kilometers
(62 Miles) of the borders, and 50 kilometers (31 Miles) from the coast, this has hence been included in the Constitution. Currently, even though it is true that foreigners still cannot record direct title in the so-called "Restricted Zone", as of 1971 they can establish a Trust of Ownership using a Mexican bank's trust services (in Mexico, only financial institutions can act as trustees). Also, Mexican companies in which foreigners hold stock no longer need a trust as long as the property is for business purposes (commercial, industrial, agricultural, etc.) HOW: On the one hand, the bank holds the title but by law it can only act under instructions of the Beneficiary ("owner", for practical purposes) of the trust. On the other hand, the owner can act just as if he had recorded direct title, with the only "limitation" in case he/she sells the property,to have the bank sign the transfer documents to the new owner. Of course, all real estate rights, obligations and profits belong to the owner.


HOW MUCH? The bank charge for (first) establishing and (yearly) maintaining the trust, varies from one institution to another, ranging from flat fees to 1 - 1.5% on the assessed value at the time of purchase. These charges are usually in Pesos and can be updated yearly.


HOW LONG? Trusts are contracted for up to 50 years and the cost to establish it is now the same regardless of the specified period; thus the bank automatically drafts a conract for the longest term, unless the client instructs otherwise.


WILL IT CHANGE? Given the trend of new laws and Mexican politics, it is almost sure that in 15 years or less, this procedure will not be mandatory. When this happens, canceling the trust will take only some paperwork that can be handled by mail plus a small notary fee.


and 487' deep.:p

[bigdelta]

The Real Estate Trust and Mexican Property Investment

New rules that provide stability and legal certainty for all foreign real estate investments in Mexico were put into effect in 1993. These rules are apparently not widely understood, and have been confused further by recent situations that predated and were not covered by these rules. The 1993 rules outline guaranteed methods by which foreign entities can safely invest in real estate along Mexico's coastal and border areas, including Pedregal de Cabo San Lucas.

How Foreign Individuals Can Purchase Property in Mexico
With a Fideicomiso Transaction:

* The Mexican bank holds the title to the property in trust for the beneficiary/foreigner who retains the exclusive right to use and control the property.
* The bank serves as a trustee or legal owner of the property while the foreign investor is the legal beneficiary of the Trust.
* The bank acts on behalf of the beneficiary in all transactions involving the property held in trust.
* The beneficiary controls and makes all decisions regarding the property including the decision to transfer, assign or otherwise dispose of his or her interest in the property.

A Fideicomiso is a contractual arrangement, which is almost identical to the type of Trust commonly used in the United States. These Mexican Bank Trusts are established for an initial 50-year period and can be renewed in perpetuity.

With a Fideicomiso Transaction:

* Use, occupy and possess the Trust property.
* Build upon the property, while subject to applicable regulations.

Foreigners who decide to invest in Real Estate in Mexico agree, because of such action, not to invoke the protection of their governments with respect to the property or Trust.