Importing a used car into Mexico can be a frustrating and potentially confusing process. Over the past year, Mexico has passed a variety of rules which make importing cars even more restrictive than it used to be. This is particularly true for people interested in permanently importing vehicles into Mexico. Some state that recent changes in the law governing what can be imported into Mexico are fairly clear that there has been very little communication from the Mexican government to the broader community. There are additional layers of complexity as multiple administrations are involved in the process. This includes immigration, customs, border control, and of course state and local tax offices.
There is Still a Demand for US Used Cars in Mexico
Many people are still willing to go through the necessary process in order to import cars into Mexico because the demand for US used cars is still extremely high. Industry experts note that the Mexican auto industry is currently stuck in terms of local sales in comparison to the amount of vehicles they export. The production of cars in Mexico solely for export is a booming business but domestic styles have remained stagnant. A primary cause of the local slackened sales is loopholes which allow older US cars to be sold inexpensively in Mexico, however many of these loopholes are being eliminated
In the short term, these rules will likely not stem the tide of old US cars being imported into Mexico. One of the biggest changes is the addition of a mandatory 10% tariff as well as an omissions check at the border. Another reason the demand remains high for US used cars is because local residents received a significant cost advantage. The average cost of a new vehicle and Mexico is nearly $24,000 while local used cars cost an average of $6000. To make matters worse for the sale of new Mexican produced cars is that US used cars often sell for an average of $3000. This creates a unique profit opportunity for people who want to import cars into Mexico.
Is an Import Permit Always Necessary?
The first step is deciding whether or not you will need an import permit. Generally, there is no special permit needed to drive a personal and car across the border as long as it remains within the borders of. This zone extends approximately 25 miles and Mexico. Additionally, the vehicle can only remain in Mexico for less than 72 hours. Beyond the borders them the Mexican customs agency strictly regulates the entry of vehicles. This means that if you want to import and sell a US used-car Mexico a permit will be required. Currently there are two types of permits available – temporary import permits and permanent import permits.
Temporary Import Permits
The first strategy which can be used to import a car in the Mexico is the temporary import permit or TIP. Any car showing US tags must have a TIP hologram on the inside of the vehicle windshield. It essentially acts as an entry document for the vehicle. To obtain this, car owners need to clear the title of the vehicle, provide proof of insurance both in Mexico and the United States, have a current passport, and a valid driver’s license. Additionally, a $400 deposit (which is refundable) if the vehicle stand Mexico is shorter than 100 days is required. One thing to keep in mind is temporary import permits are limited to one per person.
If someone wants to sell the vehicle they imported into Mexico using a temporary import permit they must return to the border checkpoint to de-import the car and complete the sale. The buyer will be able to then register the vehicle and Mexico.
Permanent Import Permits
There are a number of benefits to using a permanent import permit rather than a temporary import permit. The biggest advantage is you can sell the car directly in Mexico without going back to the border. Additionally, the car can stay in Mexico as long as you want. Finally, you will not have to go to a local customs office every year to reregister for a new temporary permit.
One thing to keep in mind is permanent import permits come with several key restrictions regarding what type of vehicle can be imported. Typically, vehicles imported into Mexico are limited to cars and non-dually pickups which are 8 to 10-years old. Additionally, the vehicle must be manufactured or assembled in a NAFTA country. It is easy to see where a vehicles manufactured by checking the VIN number. If it begins with the number 1, 2, 3, 4, or 5 than it is a NAFTA vehicle. Once the imported vehicle is sold in Mexico a 10% capital gains tax will be charged to the seller.
Another set of factors to keep in mind is whether or not you would even be able to get a permanent import permit. In order to receive this you must have permanent resident status. This status is only granted to those who want to stay in Mexico for six months or more and fulfill one or more of the following criteria:
• Have a family in Mexico
• Apply for retirement with sufficient assets to support yourself
• Temporary resident for 4 years or 2 years as a spouse of a Mexican national
• Satisfy the minimum score under the immigration points system
• Have humanitarian grounds for residency
Options to Simplify the Process
There are a variety of freight, shipping, and importation related businesses which are happy to streamline this process for a small commission. This can be particularly beneficial if you are unable to get the necessary importation permits. As an added bonus, since they are constantly importing and exporting products and vehicles into and out of Mexico they know exactly what needs to be done in order for you to get your vehicle into the country and sold.