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October 6, 2004
Donate That Car
There was another interesting article on the front page of The Wall Street Journal this past Monday entitled: "How Donated Cars Wind Up Helping Mexican Smugglers". The article touches on various topics from immigration to taxes to NAFTA... and of course how donated cars are involved in the whole process.
Listening to the radio here in San Diego you are bombarded with ads from various charities asking you to donate an old car to their organizations. I had always thought the same ads were being played across the country. After reading the article I have my doubts:
Nearly 50,000 former charity cars are sold at the border each year, and the majority end up in Mexico, local auction operators say. Thousands more come to Mexico from charity auctions elsewhere in Southern California.
and...
This scenario has come about largely because one border state -- Baja California -- enjoys Mexico's most liberal rules on importing used U.S. cars. Virtually any car made before 1999 can enter Baja duty-free, a regulation that dates to the 1930s. Under rules governing the North American Free Trade Agreement, in 2008 the entire U.S.-Mexico border will be open to traffic in used, duty-free cars.
and one more quote...
Ms. Garcia buys five or six cars a week at the Otay Mesa auctions and considers Father Joe's lot a boon to poor Mexican consumers who can't afford to buy a car from a regular dealer in Tijuana or the U.S. She pays about $500 per vehicle and usually turns it over the same day to customers who request specific models. She deals only in cash, occasionally "financing" a sale by holding a car for up to six months while a buyer makes weekly payments.
It looks like charities are exploiting a pretty unique market in order to fund their organizations. It's interesting stuff and you should read the whole thing if you get a chance.
On a side note of the article, it's shocking to think about the fact that some immigrants are paying around $2000 to ride in the trunk of a car whose total value is $500.
Update: In response to an email I received regarding this post, I wanted to make clear when I say above: "It looks like charities are exploiting a pretty unique market..." I don't mean it in a negative sense. The charities are doing a good thing raising money for their organizations and doing nothing wrong in the process. Probably should have said "utilizing" instead of "exploiting" to clear up any confusion.
Posted by Peter Mork at October 6, 2004 5:42 PM
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