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Consumers to Benefit from the Elimination of Import Rates on Imported New Cars
After ten years of waiting, import rates on imported new cars will be eliminated, beginning in January of next year. But consumers have been enjoying the benefits of a gradual lifting of import tariffs on new cars since the North American Free Trade Agreement (NAFTA) was signed in 1994. Among the benefits of this gradual lifting of tariffs as prescribed by NAFTA are that Mexican consumers have access to more brands at lower prices.
For example, in 1993 in Mexico, one could only choose between five different car companies, 10 different trucks, and 8 semi trucks from only 23 companies. Now 20 different car companies operate in Mexico in addition to 17 truck companies and 11 semi truck and bus companies totaling 46 firms all together.
The following car companies started operating in Mexico after 1994: Mercedes Benz, BMW, Honda, Porsche, Audi, Jaguar, Peugeot, Volvo, Land Rover, Renault, Seat, Rover, MG, Toyota, and Mini. Also since 1993, the number of models increased from 192 to 929 today. GM for example increased the amount of models for sale in Mexico by 16, and Volkswagen went from 5 models in 1993 to 11 today. From 1989 to 1993 only 2.9 million cars were sold, while from 1994 to 2001 over 4.8 million units were sold in Mexico.
Prices have also gone down since 1993, making it easier for more people to afford cars in Mexico. For example, in 1993 the Ford Mustang cost 617,440 pesos, now it costs 272,430 pesos. The price of the Volkswagen Jetta also made a drastic reduction of close to 33 percent in the same period. Early predictions for this year indicate that prices will increase by 2.7 percent due to an expected inflation rate of 4.4 percent. But the benefits of this gradual opening have not only been felt by consumers, the automobile industry has also been one of the most dynamic in terms of investment.
The fact that Mexico has become one of the world's largest suppliers of auto parts over the last ten years speaks to the effectiveness of NAFTA. Investment in this important sector of the industry went from $7.6 billion dollars from 1989 to 1993, to $21.4 billion dollars from 1994 to 2001.
Source: www.maquilaportal.com, January 2003
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