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Exporting Cars from the USA to Mexico

Date: 10/26/2015 |Category: Exporting Cars

Market Overview

The used car market is not as wide open as it once was. Under pressure from dealerships and manufacturers, the government recently tightened restrictions on used-car imports, cutting the number of vehicles brought in across the border from around 70% to 64,000 through May of this year, compared with 228,000 in the first five months of 2014. (1)

In total, there are about 22 million used cars in the country. The imported cars are what critics call garbage or junk cars – often more than 10 years old and not roadworthy in the US, they are sold in bulk at auction and come to Mexico for a new lease of life because there are fewer restrictions for cars on the roads. (2)

According to the blog, Best Selling Cars Nissan still holds the greatest market share with 25.6% share above Chevrolet (18.2%), Volkswagen (13.2%), Ford, Honda and Toyota. With the split of FCA Mexico into brands, Mazda (+24%) now ranks 7th above Dodge (+39%) and Hyundai (+95%) while Ram is up a spectacular 86%. (3)

Pros

  • A Large population in need of quality used cars due to the market being flooded with marginal products.
  • Proximity to the United States
  • Favorable ease of trade from the United States due to NAFTA

Cons

  • Quantitative restrictions on the import of used cars.

Documentation Requirements

The United States Department of Commerce outlines the process for the registration and importation of a used vehicle into Mexico. The process is as follows:

  1. Confirm that the vehicle meets NAFTA requirements. The vehicle must not be older than ten years. The vehicle must have been manufactured in the U.S., Canada or Mexico).
  2. Assemble the following documents:
  • Title
  • Document stating value of the vehicle
  • Name of the person legalizing the vehicle
  • A copy of the customs official’s identification
  • A copy of the purchase receipts
  • Vehicle Identification Number of an NAFTA country
  • 10% base tariff, plus 3% in border zone
  • ISAN tax
  • Tenencia tax (Vehicle Usage Annual Tax) will be removed in 2012
  • DTA payment (Custom’s Paperwork Fee)
  • Reference price: If the reference price is higher than the price listed on the shipping invoice, the seller will be required to pay a deposit for the difference. If the seller can justify that the vehicle is properly valued on the shipping document price within three months; the deposit will be returned. (4)

Other Requirements 

  • To qualify, an imported used vehicle must be between five and ten years old, and manufactured in the NAFTA region (the U.S., Canada or Mexico). The vehicle can be for use by the importer for up to twelve months without the requirement of an import license.
  • Importers can import an unlimited number of used vehicles as long as they are registered at the Padron de Importadores, which is Mexico’s official importers registry and have an RFC (Federal Taxpayer’s Registration). In addition, they are mandated to provide import records on a monthly basis to the Mexico Government Entity of Taxation (SAT). (5)

Other restrictions:

Used vehicles of a condition which are restricted or prohibited from circulating in their own country of origin, will be prohibited from importation into Mexico.

Other Import Procedures 

Additional import procedures for Mexico.

Import Duties and Taxes

Mexican import duties on cars and trucks produced in the United States or Canada that meet the NAFTA rule of origin were reduced to zero on January 1, 2003, one year ahead of schedule.

Mexico maintains a 50 percent tariff on used vehicles on U.S. and Canadian vehicles not meeting the NAFTA rule of origin and on vehicles from all other countries that do not have an FTA with Mexico. (6)

Overview

Import duty and taxes are due when importing goods into Mexico whether by a private individual or commercial entity.  The valuation method is CIF (Cost, Insurance and Freight), which means that the import duty and taxes payable are calculated on the complete shipping value, which includes the cost of the imported goods, the cost of freight, and the cost of insurance.  In addition to duty, imports are also subject to sales tax, customs processing fee (DTA), and in some cases to excise.

Duty Rates

0% if under NAFTA

Sales Tax

VAT is levied on imports at a standard rate of 16% calculated on the sum of the CIF value, duty, DTA, and excise if applicable.   Some products can be imported free of VAT.

Other taxes and custom fees

DTA or Customs Processing Fee is applied to all imports at a rate of 0.08% of the sum of the CIF value and duty.

Local Customs office and contacts

More information on import declaration procedures and import restrictions can be found at the Mexican Customs website.

Market Guides For Additional Countries.
Explore our Vehicle Auctions, Buying With Us and International Shipping Rates.

References

(1) http://www.wsj.com/articles/mexican-new-car-sales-rebound-as-used-car-imports-from-u-s-dwindle-1436217153
(2) http://www.bbc.com/news/world-latin-america-32738725
(3) http://bestsellingcarsblog.com/category/mexico/

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