Automotive Blog

How used cars are hindering Mexico's potential

Since January, Mexico has been able to import American and Canadian vehicles that are Model Year (MY) 2007 or older. Up until December, the limit was MY04 or older and in 2009, it was MY99 or older. In 2019, any used vehicle can be imported from the U.S. and Canada, regardless of its age. This is not a new problem: in 2006 and 2007, Mexico imported more used vehicles then it sold new cars.

New vs Imported Cars in Mexico

Although the imports cooled down last year, they gained strength again earlier in 2013. There was an average increase of 44.3% during Q1 2013 compared to Q1 2012, with a peak of 64.5% in January.

Growth of Imported Vehicles

The main problem of imported used vehicles is that they make Mexican used vehicles cheaper. So when Mexican customers go to the dealer network willing to use their car as a down payment, they have to face higher monthly payments. Or, maybe even worse, save more money because only about 50% of new vehicles sales in Mexico are financed. As a comparison, 61% of new light vehicles are financed in Brazil.

With several free trade agreements, Mexico has become an important export hub. Last year, the U.S. bought 52.1% of all light vehicles produced in Mexico. Adding Europe, Brazil and Argentina to the math, 67.9% of Mexico's production was exported last year. Mexico is exporting nice, newer vehicles while importing older ones.

Polk's new light vehicle forecast for Mexico this year is a little over 1 million units, which has not happened since 2008. Highly dependent on the American economy, Mexico saw its market slump 26.3% in 2009 and has slowly recovered. Perhaps without the competition of imported used cars, the 1 million mark could already have been reached again.

Augusto Amorim is senior analyst, South American light vehicle production forecast, IHS Automotive

Posted on May 10, 2013

About The Author

Augusto creates our South America light vehicle forecasts. With a background in journalism (he worked in the Brazilian press for 12 years) and a master's degree in consumer behavior, in addition to an MBA, Augusto is a great fit at IHS Automotive. Add to that his passion for cars and you have the perfect forecaster (not to mention blogger!) Augusto uses his eye for detail – double and triple checking his forecasted volumes and ensuring our data is the best available in order to help bring market success to our clients. He likes to get his work done on time and get it done right! As part of his forecasts, Augusto also writes reports about Brazil and tries to make the clients understand the reality down there. The government keeps changing the rules and that can be very complex for a foreigner.

Augusto first came to the United States in 2010 to work on his MBA in Boston. Augusto's family is located in Brazil but thanks to Skype, they remain in close touch. Although born and raised in Sao Paulo, Augusto is unusual because he doesn't care for soccer, doesn’t dance the samba and claims that the sun and his skin are not friends. When he's not working hard on his forecasts, Augusto loves to travel and is always amazed by how much he learns on his trips. So far, he has visited 27 different countries. A self-proclaimed "foodie," he also enjoys discovering new restaurants and coffee shops, where he regularly orders a cappuccino.