Car theft incorporated: transnational gangs do big business in hemisphere's largest urban jungle.

When radio announcer Sergio Sepulveda drove his shiny new Volkswagen Golf down to his local Mexico City hamburger stand, he got more than just a nice cut of beef.

As he was sinking his teeth into a double cheeseburger, two well-dressed men approached the stall and asked who owned the VW.

"It's his," said the burger man, thinking the car must have been in the way of something, and he pointed a greasy finger at Sepulveda.

The men marched up to the radio announcer, whipped handguns out of their pants, and pointed them to his head. One of them said: "Give us the car keys right now or you're dead."

Two minutes later, Sepulveda was standing in a state of shock with half a burger and no brand new Golf. He never saw his car again.

Sepulveda's story is typical in Mexico City. On an average day, 101 vehicles are nabbed in the capital, many under the threat of violence. Thirty-five percent of these cars are never recovered, according to the Mexico City Judicial Police.

Security issues are a concern for anyone living and doing business in Mexico. Armed robberies, assaults, muggings and kidnappings threaten residents and frighten away foreign investors. Car theft is a particular hassle for the business community, forcing insurance prices up and prompting vehicle owners to splurge on expensive security equipment.

"Auto theft is one of the most lucrative criminal businesses in Mexico," said Jon French, director in Mexico of security consulting firm IPSA International. "Everybody is at risk. You are not protected no matter who you are."

In 1997, then Mexico City Mayor Cuauhtemoc Cardenas had his car stolen.

TRANSNATIONAL CAR GANGS

If every day in Mexico City 35 vehicles are stolen and never recovered, then roughly 13,000 cars disappear into thin air yearly.

Ricardo Gutierrez Vargas, director of the International Police (Interpol) in Mexico, said authorities are getting closer to finding where these vehicles are going.

"We are doing more work with foreign police departments than ever before and getting more intelligence on the gangs that are moving these cars," Gutierrez Vargas told BUSINESS MEXICO in an interview at Interpol headquarters in an industrial section of northern Mexico City.

According to Interpol statistics, 49 vehicles stolen in Mexico in 2001 were found in four foreign countries: the United States, El Salvador, Guatemala and Nicaragua. Last year, thanks to improved police intelligence, 182 stolen Mexican vehicles were located in these neighboring countries.

Gangs moving the cars operate internationally with small cells dedicated to robbing the vehicles, changing their plates and papers, transporting them to foreign countries and selling them, Gutierrez Vargas said.

Stolen cars most commonly cross international borders at Tijuana in the northwest, Reynosa in the northeast and Chiapas in the south. It is also believed that stolen cars pass through the port of Veracruz on the east coast, where they are shipped to Europe.

Flaviano Juarez Reyes, who is referred to as "The Godfather" in the Salvadoran media, was believed to be one of the top gang leaders who ran the stolen car trade in North and Central America.

In January, a heavily armed unit of Salvadoran police raided a warehouse in San Salvador and grabbed Juarez, 35 local gang members and 27 Nissan vans that had been stolen in Mexico.

Gutierrez Vargas said Juarez--a 42year-old native of Mexico City--will be brought back to Mexico where authorities have enough evidence to lock him up for 50 years.

Since his arrest, police picked up another 23 Nissan vans stolen by Juarez's gang in Mexico and sold in El Salvador for between US$5,000 and $10,000 each.

"It is an extremely profitable business. Perhaps the second-most profitable criminal activity after drug trafficking," Gutierrez Vargas said.

ABOVE THE LAW

While Juarez may spend the rest of his life behind bars, most car thieves are free to walk the streets and steal with virtual impunity.

Speaking at a news conference earlier this year, Mexico City Assemblyman Rafael Luna criticized police for failing to crack down on car crime, saying their inefficiencies have encouraged car thieves and allowed the stolen vehicle trade to develop into big business.

"It seems some of these gangs are above the law," said Luna, a member of the Institutional Revolutionary Party (PRI).

Central American governments rarely prosecute citizens who have purchased stolen cars, nearly always accepting that they bought them in good faith. This even when in one case, a year-old Nissan Pathfinder (with a sticker price of about US$35,000) was purchased for US$4,500, a deal most people would think was far too good to be true.

And while car thieves are walking free, the rate of violence accompanying vehicle thefts is increasing.

According to data collected by Inter-Con, an international security firm that protects top foreign executives and diplomats in Mexico, violence was used in 19% of car robberies in 1994. In 2001, it had risen to 70%.

"Now most new vehicles have security devices and some car thieves think it is easier to go in with guns while the driver is at the wheel than disable the alarm and crack the steering lock," said Jack Whalen, the director general of Inter-Con in Mexico.

CRIMINALS AT THE HELM

One of the biggest and most publicized blows to the public's faith in law enforcement in this area came when the National Vehicle Registration program (Renave) turned out to be run by an international fugitive.

Renave was launched in 1998 and presented to the public as a dynamic public-private sector initiative that would help monitor all vehicles in the republic and slash car theft. However, two years later, it was discovered that Renave director Miguel Angel Cavallo was wanted by both the French and Spanish governments for his role as an officer in the Argentine Navy during the country's bloody military dictatorship that ruled from 1976-1983. At least 20,000 people were killed or disappeared under this regime, and Cavallo was allegedly part of it all.

After the dictatorship collapsed, he morphed into a legitimate international businessman, eventually heading the team that was to run Mexico's car registration program. Interpol finally discovered his criminal past, thanks to some help from an investigative piece by Reforma newspaper, and he was nabbed in Cancun trying to leave the country.

With Cavallo in the middle of an international extradition case, Renave was dissolved in December2002, amid further charges its executives had been skimming public money and defrauding vehicle owners. On June 10, the Supreme Court ordered Cavallo's extradition to Spain, where he is accused of killing Spanish citizens in Argentina.

PAYING THE COST OF CAR CRIME

The burden of car crime's cost inevitably falls on vehicle owners and is usually paid out in sky-high insurance premiums.

"Auto theft is a real problem here. It pushes the prices right up," said Israel Gonzalez, a sales executive for Seguridad Juridica Para Automovilistas (SJPA), a Mexico-City based car insurance company.

SJPA rates the Volkswagen Golf, the Nissan Pathfinder, the Chrysler Durango and the Ford Explorer as high-risk vehicles and prices the premiums accordingly: A Nissan Pathfinder costs up to 31,300 pesos a year to insure against theft, according to Gonzalez.

He said any theft insurance claim is thoroughly checked before payment is made, as car owners have been known to fake robberies and sell the cars to criminal gangs who, in turn, move them abroad.

Last year, police busted a family in Ciudad Juarez who reported having seven Jeep Cherokees stolen in just three months.

"When seven cars get stolen in three months, you know there is something suspicious going on," Gutierrez Vargas said.

The vehicles were later found in Texas where they had been sold for a fraction of their market value.

CAR PARTS JUNGLE

Many cars stolen in Mexico City never leave the metropolis, but simply have their components ripped out and resold back to the city's motorists.

"You have the organized gangs who target specific vehicles and sell them in one piece, often abroad. Then you have small-time crooks who steal a car because you give them the opportunity, and then they see what they can do with it," said Whalen of Inter-Con.

With tens of thousands of independent stores, market stalls, junkyards and guys on the streets vending car parts, it is impossible for authorities to keep track of what is being sold.

Most Mexico City residents view Buenos Aires, a neighborhood thick with auto-part stores and workshops, as a den of car thieves and stolen merchandise.

But Buenos Aires salesman Juan Carlos Aguilera argues the neighborhood offers a good service in used parts and its reputation is unfair.

"The problem is the big companies charge too much for car parts, so people come here where they can get parts at a competitive rate. Then the big companies complain about us," said Aguilera, who has been doing business out of small workshop in the neighborhood for nearly 20 years.

Auto parts in Buenos Aires sell from between 40% and 60% cheaper than their ticket price, a discount low-end dealers like Aguilera attribute to tireless bargain hunting rather than collusion in the booming auto-theft trade.

Specifically, Aguilera said one of the best sources of quality used car parts are junkyards in the United States.

"You go to a junkyard in Los Angeles, and it's incredible. There are loads of cars just a couple of years old that have been scrapped," Aguilera said. "So, we bring the parts down here and sell them as almost new."

Cab driver Eduardo Gonzalez thinks Buenos Aires is full of thieves. But he said he goes there when he needs parts for his Nissan taxi because it is so much cheaper than buying them from registered Nissan dealers.

"It is crazy. [Big dealers] charge huge amounts for simple parts. They are responsible for the stolen car market," said Gonzalez.

Representatives of the Mexican Association for the Automobile Industry (AMIA)--which represents all the major car companies in Mexico including Nissan and Volkswagen--refused to comment.

However, Carlos Arturo Gomez, president of the National Association of Automobile Vendors that represents small car dealers, said Buenos Aires sells many illegal goods and that the trade in stolen parts and vehicles is forcing honest car traders out of business.

"It's terrible, with so much car theft ... the business of the honest used car salesman has dropped 60% in the last three years," Gomez said.

KEEPING IT IN PERSPECTIVE

Media reports on crime often sensationalize the situation to make exciting stories, and end up leaving readers shocked and scared. Countless U.S. media accounts of kidnappings and car jackings in Mexico City have painted a picture of a metropolis that seems like a war zone. However, anybody who has lived and done business here knows that everyday life carries on as it does anywhere else, and that a few sensible precautions can safeguard people from most hazards.

Security analysts remind us that while crime statistics are high in Mexico City, they are not so different from big cities of the United States.

Last year, 65,243 motor vehicles were stolen in Los Angeles--the auto-theft capital of America--and 46,709 cars were nabbed in New York, compared to 43,644 in Mexico City.

Of course, some law enforcement officials cite that there are substantially more luxury cars cruising around Hollywood than Mexico City's Iztapalapa, and if you are one of the few who can afford to tear around the continent's biggest city in an expensive set of wheels, you have to take care.

Gonzalez of SJPA insurance encourages his clients to adhere to basic preventative measures, the same lines of protection advocated by U.S. insurance associations. Use common sense (be sure to remove the keys and lock the doors); install visible and audible security devices (such as steering wheel locks or alarms) and immobilizing mechanisms (namely smart keys or kill switches); and invest in tracking systems.

Whalen tells his clients to keep their guard up at all time--even when they have finished work and are kicking back in front of the television; many cars are stolen from right outside people's front doors.

"People get home, relax, and they drop their security alert. But they need to remember that home can be a dangerous place," he said.

He also suggests steering clear of buying the more popular models among the region's car gangs, specifically Volkswagen Golfs and luxury Nissan vans.

"Ironically you can spend more money and be more at risk. If you are driving a luxury van, there is more chance of a violent carjacking," said French of IPSA.

French also advises clients to minimize travel through high-risk neighborhoods, such as the Iztapalapa district, and drive at a safe distance from other vehicles.

If one finds themselves the target of car thieves, security experts recommend that if a gun appears, it is best to give up the vehicle peacefully and not use any Formula-1 racing tactics to try to speed away.

When business executive Juan Luna Rodriguez was held up in his Nissan Maxima in Mexico City in March, he tried stepping on the gas to accelerate to safety. A terrified local resident watched an assailant fire a fatal bullet into Luna's head.

Compare that to Sepulveda who gave up his car voluntarily and came home without a scratch.

"He lost his new car, but he came home to me in one piece and that's the main thing," said Sepulveda's wife Sol Cortes. "What is a car compared to a human life?"

Cost of insuring car thieves' favorite targets

Volkswagen Golf      13,128 pesos
Nissan Tsuru          5,894 pesos
Volkswagen Jetta     15,683 pesos
Chevrolet Chevy Pop   5,215 pesos
Nissan Pathfinder    28,181 pesos

Sources - Mexico City Judicial Police and top insurance companies polled
by Business Mexico (figure is annual)

Recovering the Goods

Number of stolen automobiles nationally and number recovered

     Recovered  Stolen

'84      4,008  11,037
'85      7,828  15,321
'86      7,448  16,941
'87     11,028  22,369
'88     13,313  25,883
'89     11,177  16,909
'90      6,651  11,583
'91      6,138  11,578
'92      4,897  13,471
'93      6,956  19,026
'94     11,388  21,770
'95     11,102  32,686
'96     14,707  41,314
'97     14,959  45,725
'98     17,214  43,210
'99     16,781  41,424
'00     19,760  46,433
'01     22,140  44,778
'02     22,901  44,939

Source: AMIS (Mexican Insurance Association)

Note: Table made from bar graph

Place of theft

Home              27%
Work               4%
Random            51%
On a daily route  18%

Source: AMIS (Mexican Insurance Association)

Note: Table made from pie chart

Car Theft

By day of the week

Mon.   12
Tues.  17
Wed.   17
Thur.  19
Fri.   17
Sat.    9
Sun.    9

Source: AMIS (Mexican Insurance Association)

Note: Table made from line graph

Robbery by Type

Violent or non-violent across years

      Parked,      Armed
     unattended  carjacking

'94      80          19
'95      67          31
'96      63          37
'97      61          39
'98      52          48
'99      54          46
'00      55          45
'01      56          44
'02      56          44

Source: AIMS (Mexican Insurance Association)

Note: Table made from line graph

Ioan Grillo is a freelance writer based in Mexico City.