Mexico Has Good Reason To Give Millions Of Illegally Imported American Cars Amnesty

It's estimated that as many as one quarter of cars on Mexican roads are in fact unregistered American cars illegally imported to the country, driven with perhaps retired U.S. plates or counterfeit ones. They're nicknamed chocolate cars, so named because of the word's similarity to the Mexican word for crooked, "chueco." This week, the Mexican government gave owners of chocolate cars a reprieve by allowing them to pay a one time fee of 2,500 pesos ($124) to formally legalize and register their vehicles in the country.

It's a controversial move that's sparked national debate. Those protesting the new law have cited adverse effects on the local economy and the devaluing of legal Mexican cars. Others argue that it will essentially allow organized crime to launder American cars already in their possession, with the Mexican Association of Automobile Distributors calling it "a prize for the mafia."

But chocolate cars aren't exclusively criminal domain — not by a long shot. In many cases, they belong to the most vulnerable members of society, a fact the Washington Post highlighted in a recent story:

[Mexican President Andrés Manuel] López Obrador, a populist leader who has described his governing philosophy as "first, the poor," appeared to see a political victory in the auto amnesty. He described the owners of illegal cars as the victims of an unjust, neoliberal economy.

"They use these because they can't afford to buy a car from an agency," he said. "With these cars, they take their kids to school."

Juan Pérez Reyes, a ranch worker from Baja California, was eager to regularize his 2004 Honda Accord. He bought it as an auto chocolate several years ago, to save money.

"We'll be able to drive with a feeling of reassurance, without the constant fear that we might run into a [customs] checkpoint or a police officer," he said.

Obrador stated the money collected from registrations will be put toward road improvements — which, it must be said, is money the government would've never had otherwise because taxes and fees have never been paid on these cars. To the crime concern, registration would ideally also make chocolate cars easier to track.

Given Mexican taxes and permit fees and the vast pool of used cars in the United States, a used car purchased legally in Mexico can cost more than twice as much as the same model imported illegally (and tax-free) from the United States. For decades, that has made autos chocolates a gift to Mexico's middle class, which would otherwise have been locked out of the car market.

The issue lends itself to comparisons with the decriminalization of drugs, something the Post points out. I asked our José Rodríguez Jr. for his take on all this, as he's lived in both Mexico and Texas and witnessed, quite literally, both sides of the trade. He affirmed that selling cars in Mexico is big business for South Texans who retain business or family connections south of the border; he also made the drug allusion totally unprompted. "The cartel is going to keep operating the way it does," he wrote me in a text. "It's like legalizing marijuana, it should be OK."

The key difference between drugs and cars, though, is that almost everyone needs a car. When you consider all the otherwise law-abiding owners of smuggled cars living in fear, this law would appear to be a net positive. And imperfect though this approach is, it's not like Mexico hasn't tried others. In 1999, drivers entering Mexico from the U.S. had to leave a deposit of up to $800 that would be refunded to them upon leaving the country. That law lasted all of two days before it was suspended, mostly because of complaints from American tourists.

There's also the suggestion that the Mexican government should actually be removing stolen cars from its roads and reuniting them with their lawful owners on the other side of the border. A third of all recorded car thefts in the U.S. in 2005 happened in California, Arizona, New Mexico and Texas, even though those states only accounted for 23 percent of registered cars in the country, according to Arizona State University.

It's a nice but ultimately unenforceable idea, as former Chamber of Deputies member Manuel López Castillo succinctly and hilariously put it when legalization was being discussed two years ago:

"The cars are already here, tell me if the [United Nations] Army or what power will be able to take them out and send them, where are you going to send them? The cars are already here. I think it would be a very favorable solution to be legalized," Castillo said last week in the Chamber of Deputies.

Initially, the new measure will only be granted to northernmost Mexican states: Baja California, Baja California Sur, Sonora, Chihuahua, Coahuila, Nuevo León and Tamaulipas. It's worth noting that the decree targets regulation of "the definitive import of used vehicles that are in national territory upon the entry into force of this agreement," according to Google Translate. In other words, the law applies to only existing contraband cars in the aforementioned states, not all cars smuggled into those territories in the future. Considering the metal's never going to stop flowing over the border and the entire planet is currently starved of new (and used) cars, the timing seems right.