The Department of Economy Proposes Amendments to the Automotive Decree

October 12, 2009
The Department of Economy Proposes Amendments to the Automotive Decree

In order to support Mexico’s final automotive assembly industry, the Department of the Economy proposed aseries of amendments to the Decree for the Support of the Final Automotive Assembly Industry’sCompetitiveness and for the Stimulus of the Domestic Automobile Market (“Decreto para el Apoyo de laCompetitividad de la Industria Automotriz Terminal y el Impulso al Desarrollo del Mercado Interno deAutomóviles”) or Automotive Decree. The Automotive Decree, published on December 31, 2003, providesincentives to foreign automotive assembly companies operating in Mexico, so long such companies meet certaininvestment requirements, notably the annual production of at least 50,000 units within Mexico in order tomaintain such incentives. The proposed amendment to the Automotive Decree, which is currently under publiccomment before the Federal Commission of Regulatory Improvement (“Comisión Federal de MejoraRegulatoria” or “COFEMER”), proposes to renew the registration to such incentive program for companies thatproduce new light vehicles that meet, among other requirements, a production of 50,000 units or more during anyof the previous 3 years of the year on which a registration renewal is sought, and provided that such company hasnot suspended its manufacture of vehicles in Mexico for more than 3 consecutive months during the previousyear, and that such manufacture in Mexico does not show an annual decline that is larger than the decline incumulative sales of the market where at least 90% of the units produced in Mexico are destined. Furthermore,such company must have manufactured in Mexico 30,000 units or more in the immediately previous year. Theautomotive industry has expressed its approval of such amendment, thus, the expectation is that the ExecutivePower will approve the proposed amendments and announce their immediate implementation in the OfficialGazette of the Federation (“Diario Oficial de la Federación”).

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