The Mexican Association of Automotive Distributors (AMDA) estimates that up to 30% of its member dealerships, around 1,000 establishments and 70,000 direct jobs, are at risk of closure because of the new 96.6% limit on expense deductibility in the Income Tax (ISR) reform, according to Expansión. The sector accounts for close to 180,000 direct jobs in the country.
The limit is part of the fiscal package approved with modifications in the Senate of the Republic and returned to the Chamber of Deputies for constitutional review. The measure was proposed to curb tax abuses such as the use of fake invoices, and its scope includes businesses that operate legally and whose thin margins stem from the structure of their activity, according to the organization. AMDA is asking the Executive for a decree recognizing vehicle distribution as a low-margin activity, Forbes México reported on October 28. For Mexico, the issue touches the operations of thousands of formal businesses whose results depend on a narrow margin between the purchase price from the automaker and the retail price.
In automotive distribution, selling more does not mean earning more. Guillermo Rosales Zárate, AMDA's executive president, noted that "because it is an algebraic formula, the measure does not consider contributive capacity; on the contrary, the lower the margin, the higher the effective rate." The organization places distributors' pre-tax profit at between 1% and 3% of sales. On that basis, a dealership with a 2% margin faces an effective ISR rate of 50% instead of the legal 30%, and at 1% the effective rate reaches 100%, according to AMDA's calculations. Eduardo Sverdlin, director of Grupo Kasa Automotriz, described the business's starting point: the best brands operate with a net margin close to 5%. That gross margin is consumed by salaries, commissions and operating expenses, so the final profit is far from the revenue the business reports.
The reform now returns to the Chamber of Deputies for constitutional review before publication in the Diario Oficial de la Federación, while AMDA keeps its request for a presidential decree open. The timetable for that review and the Executive's response will determine the operating cost with which distributors plan fiscal year 2027.
This article was written with the assistance of artificial intelligence from verified sources and reviewed by a human editor before publication.