SAN DIEGO (Border Report) — There are currently 115 used car lots in Tijuana, but just a few years ago, there were more than 1,000 according to Julián Palombo, president of the city’s chamber of commerce.
Palombo blames the state’s policy on so-called “chocolate cars,” or unregulated vehicles imported from the United States.
For years, many residents in Tijuana purchased vehicles north of the border and used them in Mexico without registering them or paying for Mexican license plates.
In theory the cars were illegal to drive south of the border, but in practice no one really checked or enforced the law.
Three years ago, Mexican officials offered a grace period allowing owners of these unregulated cars to register their vehicles for a low fee, making them legal.
Hundreds of thousands have taken part in the program in states such as Baja California where local governments have made millions of dollars.
Seeing the revenue-generating potential, the Mexican government has extended the deadline several times allowing for more cars to get registered.
At the end of last month, it issued yet another extension through the end of September 2026.
This has led to the importation of additional cars from north of border. In fact, some have made it a business to buy used cars in California and then sell them for a profit in cities such as Tijuana.
This has been detrimental to the used car lot industry, according to Palombo.
“As of the end of last month, when the deadline was coming up, car lots were already being critically impacted by these public sales of cars that were brought into the state,” said Palombo. “Now many have gone, or are going out of business, costing jobs.”
Palombo said car lots are a vital cog in the state’s economy.
“A lot of other businesses were benefitting like autobody shops, garages, mechanics, the employees and many others, now we only have 115 in operation this is all due to the extension of deadlines.”
Palombo would like to see a real end in sight to the “never ending extensions” otherwise, as he puts it, used car lots will cease to exist.
“This has been the tip of the spear for each one of these lots, which also face high tariffs to import their own cars, it’s become unaffordable to stay in business,” said Palombo. “With the extension to register chocolate cars and the high tariffs, the remaining lots will likely go out of business in two to three months.”
The term “chocolate cars” is a play on words from the word “chueco,” which means crooked in Spanish.
According to the Mexican government, through the end of September, 2.6 million of these cars had been registered in 14 different states within Mexico earning $346 million for road-infrastructure projects throughout the country.
In Baja California alone, 400,000 chocolate cars have been registered.
