MEXICO CITY A
tax reform proposal by Mexican president Enrique Peña
Nieto "puts our operations at risk," local automotive
associations warned this week.
The proposed tax
changes "would mean an increase in production costs and a
competitiveness loss" for the whole Mexican automotive
industry, the associations asserted.
automakers association Amia, automotive distributors
group Amda and auto parts manufacturers association Ina are
among those raising the issue, criticizing the proposed
creation of an automotive tax that would establish a
value-added tax (VAT) on imports of machinery, equipment and
The current 11-percent
VAT rate applicable at the Mexican-U.S. border would increase
to 16 percent, which would affect the sales of new cars and
increase imports of used vehicles into Mexico, the associations
Imports of used
vehicles increased 52 percent in the first half of the year to
306,826 units, equivalent to 61.1 percent of total new car
sales in Mexico, according to Amda.
government also wants to establish an additional tax of 10
percent on the payment of dividends abroad, which could reduce
future foreign investment in the Latin American country, the
measures that look to reduce the minimum price of cars for tax
deduction matters would "have an impact on new car sales in our
country, in a scenario where domestic sales are at similar
levels as 10 years ago," the groups said.
complaints, the Mexican automotive industry "has established an
important dialogue with the Mexican government" on the issue,
the associations said. They will now "seek that the measures
included in the tax reform do not affect the automotive
The tax reform bill
presented by the Mexican government looks to boost government
revenue by about 240 billion pesos ($18.3 billion).
have already criticized the bill, noting that they were seeking
to negotiate the "modification or elimination" of some
Mexico was the
eighth-largest automotive producer in the world last year and
the fifth-largest auto parts manufacturer.
industry, which is expected to invest about $16 billion over
the next few years, is key in Mexico as it drives the
countrys steel sector, which will invest $11.5 billion
over the next four years.
A version of this
article was first published in AMM sister publication Steel