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Flooding the Market: Concerns raised over surplus of illegal imports in Mexican used market

Toronto, Ontario — The director of an organization representing Mexico’s auto parts industry has spoken out with concerns about his government’s handling of illegally imported used vehicles, as well as new policies that could hurt the local vehicle sales market.

Alberto Bustamante, director of Mexico’s National Parts Industry (INA), spoke to reporters from Reuters about the prevalence of used vehicles sold at auction in the U.S. making their way down to Mexico, thereby pushing down domestic used vehicle prices and indirectly benefiting criminals.

The bulk of Bustamante’s concerns stem from a newly introduced government policy that encourages Mexicans living in states bordering the U.S. to register their used vehicle in Mexico, even if it was purchased at auction across the border—a practice that Bustamante alleges amounts to the support of “car smuggling” on the part of the Mexican government.

State security minister Rosa Rodriguez told Reuters in October that the state of Baja California is home to more than 500,000 unregistered vehicles, many of which are used by gangs, she said.

As well, the Mexican Association of Automotive Distributors (AMDA) predicted that new car sales would fall by more than 30 percent as a result of the new policy. It called the move “a reward for criminal mafia and corrupt bureaucracy,” Reuters said.

“It is a mistake to legalize smuggled vehicles… It will have an impact on the economy, as well as create concerning environmental pollution and insecurity that threatens people’s lives,” AMDA director Guillermo Rosales told Mexico’s Radio MVS.

As the auto parts supply chains of Mexico and Canada are highly integrated, many industry experts on our side of the continent are watching this issue closely to see if or how this glut of used vehicles affects the overall North American supply chain.

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