Covering the Industry's Economic, Legal & Financial Issues

MexicanAutomotive covers the Mexican automotive and auto parts industries, and is published monthly in English and Spanish. MexicanAutomotive reports on general Mexican automotive industry topics, as well as economic, financial and legal issues affecting the North American automotive industry. Published by Cacheaux, Cavazos & Newton (CCN), subscriptions to MexicanAutomotive are free. CCN is an international law firm with offices in Texas and Mexico. The firm provides legal services in many practice areas including Automotive law to clients doing business in the NAFTA region.

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Automotive Trivia E-mail

Rush, The Movie

The movie “Rush” premiered prior to the Grand Prix race held in Austin on November 15 – 17, 2013.. In one of the scenes from this movie, Niki Lauda crashes his Ferrari and is trapped in such vehicle as it is engulfed in flames. Incidentally, Lauda had requested that the race be suspended due to difficult driving conditions such as heavy rain, a slippery track and thick fog. The other drivers, led by his British arch rival James Hunt, dismissed his petition, and the judges decided the race would proceed.. After Lauda’s accident, fellow driver Guy Edwards stops to render aid. Edwards is credited with pulling Niki Lauda out of the flaming vehicle and saving his life. Edward’s son Sean Edwards, also a Grand Prix driver, was invited to play the role of his father when he saved the life of the lead protagonist, marking his debut as an actor. Some weeks later, in a test run involving a Porsche, the movie scene would repeat itself, only this time in real life, as Sean wrecked against a wall and his vehicle was converted into a burning coffin, where he died. His father was not there to save him.

Ignition on the Left Side

The Porsche is one of the few automobiles that have the inserts for ignition keys on the left side. This is due to the 24 hours of Le Mans, in France, an endurance race where the drivers begin running on foot and attempt to start the car as quickly as possible. Having the key on the left side allows the driver to utilize his or her right hand on the stick shift and start the car with the left hand.

The Fastest Car in the World

The Bugati Ayton E-B 16-4 runs at 408 km/h (251 m/h). It has a 1.5 million dollar price tag and 1,001 horsepower engine.

The Most Commonly Sold Vehicle in the World

The Toyota Corolla: Since it appeared in 1966, this model has sold 35 million units.

First Woman to Drive a Car

In 1890, Bertha Benz, wife of Karl Benz, founder of the Mercedes-Benz, became the first woman to drive a car.

The Most Expensive Antique Car in the World

A Rolls-Royce (Silver Ghost), manufactured in 1906, is valued at 50 million dollars. It is owned by Rolls-Royce, which received the car from the owner for repair work. Unfortunately, the owner died while the repairs were taking place.

 

 
Auto Recharging Station for Electric Vehicles in Cuernavaca E-mail

Over the next several weeks, Nissan will install nine electric vehicle recharging stationspursuant to an agreement entered into by the government of the state of Morelos, entitled “Mobility without emissions” (Movilidad Cero Emisiones). The program includes the introduction of electric vehicles to be used in public transport and the renewal of the official vehicular fleet. Governor Graco Ramirez Garrido and the Director of International Relations and Governmental Affairs for Nissan-Mexico, Latin America and the Caribbean, Jorge Vallejo Sanchez, have agreed to make Morelos “the first territory in Latin America” to have these recharging stations. The governor of Morelos stated that, contrary to popular belief, Cuernavaca has already been affected by air pollution, and it is important to restructure its public transportation system. According to the agreement, Nissan will install three electric recharging stations along the Mexico-Cuernavaca highway, in addition to four similar stations located in technological and environmental parks and other park areas throughout the state. The government of Morelos will sell around 400 used gasoline vehicles in order to obtain the funds to finance the acquisition of the new eco-friendly vehicles. In addition, the state government will implement direct incentives for electric vehicle owners, such as zero personal property tax fees and reductions in the payment of other fees. The direct beneficiaries of these programs will be motorists, who the government seeks to incentivize in order to renovate and restructure the public transportation system. According to the terms of the agreement, the automobiles that Nissan will supply to the state government and sell in order to renew public transportation or those to be . purchased by private parties will be able to travel 160 kilometers on one charge, and the charging stations will be able to recharge an automobile in approximately 30 minutes.

 

 
Pope Francis I Receives a Compact Automobile E-mail

A few months ago the decision by Pope Francis I to request that high level officials of the Catholic church avoid utilizing luxury autos made news around the world. As a result, a small Renault 4, celebrated for its austere and practical design, was donated to the new Pope. The Pope’s new car is a white compact, registered in Verona, Italy, with 300,000 kilometers, and was given to Pope Francis by an Italian priest. On July 15, 70 year old Father Renzo Zocca from Verona wrote Pope Francis a letter sent to the Vatican stating that he served the working class neighborhood of Saval for over 25 years and drove the Renault 4 through every nook and corner. “And it never broke down on me,” stated the priest. In his letter to the Pope, the priest stated that he would be honored if a humble Pope would accept his car. Several days passed and on August 10, the priest received a telephone call from the Pope. “Blessed be Jesus Christ. This could not be a joke,” thought FatherRenzo. The Pope told him that he had read his letter and appreciated his thoughtfulness, yet he thought it would be better if he would give the car to the poor. The priest answered that the car had already given so much to the poor, and reiterated his intent to give the car as a gift to the Pope. “The Pope asked me whether I had another car and when I replied that I did, he accepted,” said Father Renzo. On September 7, at 3 p.m., Father Renzo arrived at the Vatican with the small, old Renault 4 onboard a tow truck, accompanied by a large number of residents from the Saval neighborhood. The Swiss Guard, which has historically guarded the Pope, only allowed approximately half of the residents of the Saval neighborhood in attendance to enter. When the Pope caught wind of the snub, he appeared at the Vatican gate in order to thank everyone. “I gave him the keys and he started the car,” said Father Renzo, and further stated, “the Pope told me that he also previously had an R4, and that it had never failed him.” The Pope got into the car and drove away in the old automobile as if it were the most natural thing in the world.

 
Mexican Tax Reform and the Mexican Automotive Industry E-mail

Mexico’s government has approved a package of tax reforms, which includes, among other changes, the application of the 16% Value Added Tax on temporarily imported automotive parts and components. Various industry groups, including the maquiladora industry’s name trade association and leaders of the Manufacturing, Maquiladora and Export Services (Industria Manufacturera, Maquiladora y de Servicios de Exportación, IMMEX) industries have fought these changes, and the government has established a mechanism for potentially obtaining a tax credit equal to the amount of Value Added Tax to be paid on such temporary importations. Companies that do not become certified in order to obtain such credit would be required to post a tax bond in order to avoid paying Value Added Tax on their temporary importations. The president of the Mexican Auto Parts Industry Association (Industria de Autopartes, INA) stated that significant investments of at least 100 million dollars would be withheld as a result of the “legal uncertainty created by the tax reform.” Such figures show that approximately 10,000 jobs will be lost. According to the president of this organization, it must be taken into account that the tax measures included in this initiative will increase the cost of final automotive goods between two and three percent, which is a cost the market will refuse to pay because such is not justified by increased value added. For his part, the president of AMIA, Eduardo Solis, stated that not only will taxes imply an increase in cost of production, but also in the cost of investments, including machinery and equipment, and, consequently, a loss of competitiveness. The risk confronting the automotive industry is that automotive assemblers will shelve expansion plans in Mexico and, more seriously, potentially decide to relocate their production lines in other countries, such as Brazil, Canada or the United States of America, because the competitive advantages enjoyed by Mexico would be lost based on the negative tax impact, even though, according to Mexican sources, the quality of production is better south of the Rio Grande.

 

 
High Levels of Used Auto Imports Continue E-mail

The importation of used automobiles from the U.S. to Mexico, known colloquially as “junk cars,” is a serious problem for the Mexican automobile industry and has impacted growth in this sector. It is also a delicate economic and environmental issue. The President of AMIA, Eduardo J. Solis, stated that such imports resulted in high levels of new auto inventories, delayed the natural replacement of Mexican vehicles and depreciate the value of automobiles circulating in Mexico. In addition, such high inventory levels negatively impact air quality and cause inconveniences such as traffic congestion and pollution. During the month of August 2013, 63,764 units were imported into Mexico. This represents a 59% increase over August 2012 when 39,937 used autos were imported from the U.S. into Mexico.

 
Automotive Statistics E-mail

  • Sales of automobiles during the month of September 2013 fell 2% as compared to September 2012. However, sales are up 7.6% overall for 2013 as compared to 2012.
  • Export sales of automobiles grew 11.7% in September 2013 as compared to September 2012. January – September sales showed Mexico exported 1,796,686 units, a 0.125% increase over the same period in 2012.
  • Mexico manufactured 4.6% fewer units in September 2013 (241,740 units) than it did in September 2012. However, over the January – September period, production rose to 2,228,319 units, which is an historic high.
  • Domestic sales reached 755,315 units, representing a 7.6% increase over 2012.
  • During the January – September 2013 period, 11,740,326 light duty vehicles were sold in the U.S., representing an 8.1% increase over the same period in 2012.
  • Auto sales in Asia showed a 9.3% increase, while Latin America experienced a 4.5% increase.

 

According to the Mexican Automotive Industry Association (Asociación Mexicana de la Industria Automotriz, AMIA), the slight decrease in Mexican sales and assemblies was the result of changes in automobile models, which caused adjustments to various automotive product lines.

 

 
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