In Mexico, old U.S. cars find new homes

Things changed in summer 2005 as the Mexican government was gearing up to meet its NAFTA obligations. That trade deal requires Mexico to begin opening its market to some used vehicles from the U.S. and Canada next year. The pact is structured to protect Mexican car dealers from immediate competition against their newest, most profitable models. Only vehicles 10 years and older will be allowed in initially. Those age restrictions will gradually be reduced until 2019, when the used-car market will be completely open.

But in a move that surprised environmentalists and new-car dealers, former Mexican President Vicente Fox sped up the process in August 2005, signing a decree to allow the import of vehicles 10 to 15 years old. That decree was modified this year to allow imports of only 1998 models for the rest of 2008. NAFTA regulations will go into effect Jan. 1, 2009.

The explosion of heavy metal in the last 2 1/2 years has stunned even veteran industry observers. Imported used cars already account for 13% of Mexico's fleet, and that share is growing quickly. Some fear Mexico could end up like Peru, which has been swamped with low-price hand-me-downs from the U.S. and Japan since it opened its market in 1992.

"It's a grave threat" to new-vehicle sales, said Alfredo Llorente, director general of the Mexican Automotive Distributors Assn.

That could be bad news for the Big Three U.S. automakers, for which Mexico has been an important consumer of new vehicles.

Air quality experts are fuming as well. The used imports are supposed to meet smog and safety standards, but Mexico has yet to put a comprehensive testing system in place. Car dealer Zavala said he would get his '74 Ford across the border by paying a small bribe to Mexican customs officials.

Some environmentalists view Juarez as a prototypical "clunker capital" that could be replicated throughout Mexico. Most of the 600,000 cars and trucks circulating here are from the United States, and ownership is much higher than the Mexican average: one car for every two adult citizens compared with 1 for every 5 nationwide.

The fleet is much dirtier than those in other parts of the country, according to a 2006 study by the Mario Molina Center, a Mexico City-based environmental organization.

But it's not just Mexico that's suffering the fallout. Autos are the main source of pollution in the Paso del Norte air basin, which includes Juarez and the U.S. cities of El Paso and Las Cruces, N.M.