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A cause and effect of the decrease of used car imports in Costa Rica, threatens businesses and will probably hike used car prices.  Costa Rica is one of the few countries were used cars appreciate in value.

According to the Cámara Costarricense Automotriz (Automobile Association of importers and exporters), used car imports fell 40% this year, threatening some 2.000 local importers having to close down their business, resulting in the loss of some 50.000 jobs.

Related: Buying a Used Car in Costa Rica

The decrease is measured against imports for the same five month period in 2012.

The reduction in imports also affects the government coffers, as the Ministerio de Hacienda (Finance Ministry) stands to lose some ¢48 billion colones (US$96 million dollars) in tax revenue.

Businesses say the decrease in imports is directly a result of a recent government policies that include an increase in the taxable value of vehicles , approved at the end of last year. Owners of new cars currently pay a 53% tax, while owners of used cars pay a 79% tax.

Another measure affecting used car imports are changes to the Traffic Law that went into effect last October. The new traffic law prohibits the import of vehicles totalled in accidents. In the past, importers would visit car auctions in Florida, for example, buy clunkers, damaged cars and cars written off by insurance companies in the United States, import them into Costa Rica and fix them and resell them or used for spare parts.

The cost of labour to repair a vehicle is much lower in Costa Rica and since car prices are high, the business of importing wrecks was a viable one.

Other problems facing used car imports are red tape. The Vehicle Association says new processing procedures have caused delays, up to two weeks or more, for owners to retrieve the vehicles from customs. Meanwhile, processing procedures for new cars takes only a few days.

It is expected that representatives of the Association and Hacienda will meet later this month to evaluate possible solutions.


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