U.S. clunkers irk environmentalists, dealers in Mexico
(02-24) 04:00 PST Ciudad Juarez, Mexico -- While some Americans are congratulating themselves on switching to fuel-sipping cars, their old gas guzzlers just won't die. U.S. trade policy is giving them new life south of the border.
Thousands of used vehicles from as far away as Colorado and Missouri jam tiny car lots and auto salvage yards in this gritty border city. An estimated 25,000 families make a living here hustling U.S. castoffs. Among them is Jose Zavala, a used-car dealer with a trucker's cap and an eye for bargains.
At a recent auto auction in neighboring El Paso, Texas, he snagged a decrepit 1974 Ford Gran Torino that brought snickers from the crowd. But it's Zavala who might have the last laugh. He figures he can sell the wizened muscle car to some Starsky & Hutch wannabe in Juarez for at least four times the $100 that he paid for it.
"If it's cheap and it runs," it will find a home in Mexico, Zavala said.
That's precisely what's worrying environmentalists and new-car dealers, who say falling trade barriers are fueling an invasion of smoky junkers. More than 3 million late-model vehicles have rumbled legally south of the border in the past 2 1/2 years. Millions more are on the way, thanks to the North American Free Trade Agreement.
The vintage metal is rattling Mexico's retail car market. Sales of new autos have stalled at around 1.1 million a year as imports of used vehicles have overtaken them. Sales of new subcompacts - the most popular class of cars in Mexico because of their price - skidded 16.4 percent last year as buyers snapped up cheaper, roomier used vehicles from the United States.
Factory worker David Ortiz was checking out SUVs recently on Calle Carlos Amaya in Ciudad Juarez. The public street doubles as an open-air auto bazaar with hundreds of high-mileage, late-model vehicles parked bumper-to-dented bumper. He said used cars from the United States are more desirable than those from Mexico because they tend to be bigger and to have spent less time on pitted, unpaved streets such as those in parts of Juarez.
"They've got good roads over there," he said of the United States.
For decades, Mexico restricted imports of used vehicles and slapped hefty taxes on new ones, which meant Mexicans paid more than American consumers for the same vehicles. That spawned a huge black market in jalopies, particularly in the border region.
Things changed in the summer of 2005 as the Mexican government was gearing up to meet its NAFTA obligations. That trade deal requires Mexico to begin opening its market to some used vehicles from the United States and Canada next year. The pact is structured to protect Mexican car dealers from immediate competition in their newest, most profitable models. Only vehicles 10 years and older will be allowed in initially. Those age restrictions will be reduced gradually until 2019, when the used-car market will be completely open.
But in a move that surprised environmentalists and new-car dealers, former Mexican President Vicente Fox sped up the process in August 2005, signing a decree to allow the import of vehicles 10 to 15 years old. That decree was modified this year to allow imports of only 1998 models for the rest of 2008. NAFTA regulations will go into effect Jan. 1.
The explosion of heavy metal in the past 2 1/2 years has stunned even veteran industry observers. Imported used cars already account for 13 percent of Mexico's fleet, and that share is growing quickly. Some fear Mexico could end up like Peru, which has been swamped by low-priced hand-me-downs from the United States and Japan since it opened its market in 1992.
"It's a grave threat" to new-vehicle sales, said Alfredo Llorente, director general of the Mexican Automotive Distributors Association.
That could be bad news for the U.S. Big Three automakers, for which Mexico has been an important consumer of new vehicles.
Air-quality experts are fuming as well. The used imports are supposed to meet smog and safety standards, but Mexico has yet to put a comprehensive testing system in place. Dealer Zavala said he'll get his '74 Ford across the border by paying a small bribe to Mexican customs officials.
Some environmentalists view Juarez as a prototypical Clunker Capital that could be replicated throughout Mexico. Most of the 600,000 cars and trucks circulating here are from the United States. Vehicle ownership here is much higher than the Mexican average: one car for every two citizens compared with one in five nationwide.
The fleet is much dirtier than that in other parts of the country, according to a 2006 study by the Mario Molina Center, a Mexico City-based environmental organization. But it's not just Mexico that's suffering the fallout. Automobiles are the main source of contamination in the Paso del Norte air basin, which includes Juarez and the U.S. cities of El Paso and Las Cruces, N.M.
"There's no glass window shielding the border," said Alma Leticia Figueroa Jimenez, the former head of ecology for Ciudad Juarez. "The U.S. sends us junk, and Mexico sends back pollution."