Mexico City — Welcome to La Estrategia del Día (The Daily Strategy), the number one News podcast in Mexico, Colombia and other Latin American countries, as per Chartable and Spotify charts.
Mexico’s automotive sector is warning that a new degree to legalize vehicles imported into the country illegally could serve as a defense of contraband. In other news, Squid Game has set a new record, and Elon Musk is looking to abandon California.
Good morning, today we are going to explain these themes of Mexico’s illegal cars, and who is most nervous about them; a new record for Squid Game, and the property in California that Elon Musk is seeking to divest.
What We Are Talking About
The controversy over illegal cars in Mexico has arisen again. Here is a brief explanation: Nobody knows exactly why we refer to cars that are imported illegally into Mexico as ‘chocolate’ cars, and which are not sold by dealerships. The majority enter the country from the U.S., although there are cases of cars imported from Central and South America. And they are not declared at customs, but are driven in with license plates replacing the original ones. They are driven in by people carrying a U.S. driving license, who are known as ‘couriers’ and who charge between $50 and $70 to make not one but several crossings per day. Mexico’s President Andrés Manuel López Obrador this week announced that he would sign a decree on October 16 that would allow the regularization of those vehicles that have already been brought into the country and are circulating in Mexico’s border region.
The idea is to start in Baja California and from there extend the scheme to the other five northern states. The strategy behind the idea is tax collection. The president says that the money collected would go to local government coffers to be used for public works improvements, such as streets. What is the justification? He says it is for security reasons. Normally these ‘chocolate’ cars are brought into the country and used for economic purposes by low-income people, although in deplorable mechanical conditions and which can be noticed quickly, because they are cars that have had several stages of use. But certain groups also take advantage of the vehicles’ illegal status to commit crimes, because they are not registered with the authorities and no tax is paid, or license plates or for any emissions-verification process. The issue is not new, as attempts by the president or the Chamber of Deputies have been made since 2019, AMLO’s first year in office. The concern among the automotive industry in the face of illegal imports is that it will not stop the increase in imports, the volume of which has sometimes been higher than total vehicle sales. This happened for example in the first two months of 2020, just before the pandemic.
Throughout Mexico’s presidential six-year terms, modifications have been made regarding the entry of these vehicles into the country, but on this occasion alarm bells are ringing among the associations representing the automotive industry. Yesterday, in an immediate reaction, the Mexican Association of Automotive Distributors (AMDA) considered the President’s decision to support the legalization of contraband. The issue has been warned about before. In September, AMDA director Guillermo Rosales told Bloomberg Línea about López Obrador’s intentions, and that all that was needed was the decree, although the authorities involved in the issue, such as customs or associations, have not yet been called upon to establish clear rules.
Added to this concern is the fact that the decree comes at a time when the automotive sector has not awakened from its nightmare, because since long before Covid-19 it has been struggling with new car sales. Today they are almost 20% below pre-pandemic levels.
Data of the Day: Squid Game
Magic number: Can you guess how many times ‘Squid Game’ has been viewed? The Netflix series has had 111 million views since its launch on September 17, in less than a month. This was confirmed by Netflix yesterday in a tweet. That beats its previous record holder, Bridgerton, with 82 million views in its first month.
One for the Road
Elon Musk is selling his Hillsborough mansion in California. The news is that he is lowering the price and is now offering it for $32 million. Just a few days ago we were talking about the Tesla and SpaceX CEO moving his operations to Texas, and he no longer wants to put down roots in California, a state that is cracking down on the income of the richest people. He is also selling the mansion after having announced his plans to get rid of most of his tangible assets to appease critics of the size of his wealth. Today, according to the Bloomberg Billionaires Index, Elon Musk has a fortune of $225 billion.
Goodbye for Now
It’s Thursday, and let’s not lose track of what will happen during the day at BloombergLínea.com.
This was The Strategy of the Day. Written and narrated by Jimena Tolama, and produced by Arturo Luna. Have a very productive day!
