San Diego Savvy San Diego shoppers seeking slashed rates on paint jobs, window tinting, and upholstery have driven their cars to Tijuana for decades. But you don't hear about gringos heading south to buy the whole car, even though, according to Ken O'Malley, an American who has lived in Tijuana for ten years, "They could find a lot more inexpensive cars here than they could in the United States."
Until recently, for transportation O'Malley relied on his feet, on taxis (which often carry eight fares at a time), and the "Azul y Blanco," the fleet of ancient blue-trimmed white buses that growl through the colonias, usually with names like "Flor de Michoacán" or "El Toro de Sinaloa" or "El Diablo del Norte," painted shiplike on the back of them. But three months ago O'Malley decided to start shopping for a car. He'd been through that unpleasant experience in the United States before. Now he was attempting it as a gringo in Mexico. He started with used-car lots. Having seen the pressure that the salesmen in tourist-area Tijuana shops apply to potential customers, he expected the same to the power of ten from the used-car salesmen. "But I was surprised," he recalls, "that, at the car lots, the people were not all that eager to sell me a car. You know how in the U.S. used-car salesmen have a reputation for being fast-talking and aggressive. In Mexico, they just say, 'Well, what kind of car are you looking for?' 'I'm looking for a minivan.' 'Well, they are over there.' That's it."
O'Malley related the experience to a Mexican friend who was equally surprised. "He said, 'Well, maybe it is because you are an American. They were probably wondering why an American would be buying a car in Tijuana in the first place."
Juanjose Romano has sold Hondas in Tijuana's Rio Zone for the past nine years. The dealership sits on Avenida Padre Kino in Tijuana's Rio Zone, a few blocks from "the [traffic] circle with the giant scissors." Romano says Americans do come in to shop for cars, though not often. And they never buy from his dealership because the cars are not necessarily cheaper and because "We can sell the cars to them, and they can actually go to the States and put plates on the car, but they cannot have an American title on it. You will have a Mexican title and, because of that, you can never sell the car in the States. If you want to put an American title on it, you have got to import the car through U.S. Customs, and you have to pay import fees on it. And in some cases, some cars that were sold here in Mexico don't have the smog rate, which is required in the States. Even the new cars, they are not the same. This is typical. It will happen with cars from all over the world, not just Mexico. You have to remember that California has the highest smog restrictions in the world.
"And then the taxes," Romano continues. "Here in Mexico, customers pay more taxes on brand-new cars than in the States. Basically, there are two different taxes. First, you pay the sales tax, which in this region is 10 percent. If you go further south, like Mexico City or Guadalajara, you have got to pay 15 percent. Then there is another tax, kind of like the one that you call the luxury tax. It is a tax for new cars, and that is around 5 percent extra."
Romano laughs at the notion of an American buying a used car in Tijuana, intending to bring it back to San Diego. "The cars you see down with yellow plates with Front BC on them," he explains, "those cars were bought in the States by wholesalers, imported to Mexico, and then sold. So it would be cheaper [for an American] to buy the car in the States before it came to Mexico," especially when importation fees, title hassles, and smog problems are factored in.
Romano works at the only Honda dealership in Tijuana. The San Diego area, which has roughly the same population, has four. "A brand-new car in Mexico is still a luxury item," Romano explains. "You've got to keep in mind that the minimum wage that a person makes a year here is probably around $1200 a year. So only certain classes of people can afford a brand-new car here, only the upper class and some of the upper middle class."
It's not just lower-income levels that prevent the middle and lower classes from buying new cars in Mexico. Financing is not as generous as it is in the States. "Here," Romano explains, "interest rates on brand-new cars run between 8 to 20 percent, depending on the make, the model, and the year of the car. The typical rate will be about 15 percent. And even if you have good credit, you will still have the same interest rate as the guy who has bad credit. You are not looking at the best times right now in this business in the States, so a lot of makes are offering you 0 percent down and 0 percent APR. You will never see that in Mexico. You have got to put at least 25 percent of the cost of the car down. And the most amount of time you can finance your car here is four years."
Abandoning his search for a minivan in the used-car lots of Tijuana, O'Malley began responding to classified ads and calling numbers written on car windows along with the words Se Vende. Though surly salesmen were no longer a problem, this route presented another pitfall. "You have to be very, very careful that they are not stolen vehicles. You see a lot of cars for sale on the streets here that have expired California tags, expired two or three years sometimes. Before you buy the car, you have to make sure that the registration has been legitimately transferred to the person who is trying to sell you the car."
O'Malley never did find a suitable minivan and settled on a 1993 Ford Escort station wagon. When he went to register it he made a few discoveries. "The first thing I found out is that you cannot register a vehicle in your name unless you have a valid Baja California driver's license. And to get a driver's license [as a noncitizen] you have to have the equivalent of a resident visa issued by the Mexican government. I could have gotten one pretty easily, but I would have had to obtain an American passport, which would have meant that I had to have an address in the U.S., and, for tax purposes, I am not a resident of the U.S. and haven't been for ten years, and I don't want to screw that up by getting a U.S. passport. I just registered the vehicle in somebody else's name. And as far as the driver's license is concerned, I conceivably could get a California driver's license and drive legally down here; they honor them. But I'd need a California address for that. Besides, there is a joke here. A guy told a cop that he didn't have a driver's license. But the cop looked at his wallet and said, 'Yes you do,' and he pulled out a ten-dollar bill."
O'Malley adds, "Something I thought was amusing was, when you first have to wait in line before you actually go to register the vehicle, you have to go to a separate office, where they check to see if there are any outstanding tickets that you haven't paid. You have to pay all that before you can register the car. And then you go to another window, and it is for revisión mechánica, mechanical inspection. But they just ask you straight up, 'Do you want the inspection or do you want to pay the fine?' and the fine is like 100 pesos [around $11] or something. It is not much, and they don't even look at the car; you just pay the fine, and then they stamp the paper, and you go to the next office. And then at the next office it gets complicated because in Baja California they have several different types of license plates. One is the plate you most often see, they say FRONT on them. Those are special tags that only allow you to operate the vehicle in Baja California. If you were wanting to go to Mexico City or Guadalajara or somewhere in the interior of the country, you either have to pay a cash bond equal to the value of the car or get what they call placas nacionales, national plates. And you can tell the difference because the national plates are a different color, white without 'FRONT' on them. With those plates you can drive the car anywhere in Mexico. Of course, they are much more expensive."
O'Malley decided to stick to the local plates. "First of all," he continues, "you have to have the paper evidence that the vehicle has been legally imported into Mexico. Fortunately, the person that I had bought the car from had already done that, or it would have been another expense. The total importation fee on my car, in 2000, was 3285 pesos, which is like $365."
O'Malley was also charged a sort of luxury tax of 431 pesos (about $50) for owning a car less than ten years old. "It's called a 'tenencia federal.' It gets less each year. My '93 was cheaper than a '94 would have been. And ten years after the car's model year, it drops out of the category."
O'Malley found upon registering his car that, just as in California, the Mexican government uses automobile registration as another way to tax the citizenry. Sifting through the pile of paperwork he received upon registering his car, he explains, "The actual registration certificate, the tarjeta de circulación, was 146 pesos and 78 centavos, which is only like $15. But then there's the buy-and-sell fee, which is a fee to have the car officially signed over to me. That was 300 pesos [about $33]. Tax for maintaining public roadways was 79 pesos [around $9]. There was a 15 percent charge for public education, 22 pesos [about $2.50]. And the Mexican Red Cross automatically got 42 pesos and 15 cents [around $5]. The Red Cross in Mexico is a big deal. They run ambulances and free hospitals. The total fees altogether to register my car was 1020 pesos and 98 centavos, which is about $113. That's not bad for most Americans. But imagine how bad that would sound if you made 1000 pesos [$111] a week."