Stricter Auto Registration Rule Hurts Texas’ Economy And Leaves Cars Uninsured: Critics

By Noemi Castanon

Photography By Noemi Castanon

Reporting Texas

The Texas Department of Motor Vehicles board is considering whether to continue its new identification requirement for vehicle renewal and registration despite criticism that it is hurting car sales and vehicle registrations.

The new rules, implemented in November, require anyone registering a vehicle to provide Real ID-compliant driver’s license, a U.S. passport, a military ID or a Texas license to carry a handgun. With any other form of identification, the person must also have proof of lawful presence in the United States. In order to obtain a Real ID, a person must be a U.S. citizen or be of lawful presence and have proof of residency.

Critics have said that the new ID rules make it more difficult, or impossible, for immigrants to register their vehicles.

Small business owners and county tax assessors appeared at a hearing in January to urge the Texas DMV to reconsider the policy, saying that making car registrations and renewals more difficult will make it harder for people to get insurance and even to buy cars, affecting the state economy.

Currently, an estimated 20% of vehicles in Texas are not insured, according to TexasSure, a state program created to reduce the number of uninsured motorists. That number is expected to rise, however, if many Texans are unable to renew their car registration.

Michael Feulner, an insurance agent from State Farm in Austin, said people can insure their vehicles without car registration, but only for a limited time and at increased rates.

Texas has approximately 2 million undocumented immigrants, according to the Migration Policy Institute.

“Unregistered vehicles signify fewer motor vehicles insured,” said Karen Philips, general counsel at the Texas Automobile Dealers Association. “That will be an impediment for law enforcement to identify stolen or abandoned vehicles, those involved in car accidents, and vehicles used while committing a crime such as human trafficking.”

Almost every sector of the vehicle industry has been affected by the new rules.

Hermanos Sanchez Auto Sales in Dallas says it has had more than a 50% decline in car sales since November. It is located in a predominantly Hispanic community where most of its customers only have a passport from their country as identification.

Due to business being down, Emily Sanchez, secretary at Hermanos Sanchez says it has been forced to lay off employees and make major reductions in the services they use, such as part suppliers, towing companies, and mechanical services.

“My title transfers business decreased 45% in November and in December 85%,” said Monica Vazquez, owner of Mona’s Multiservice in Houston.

In 2024, Texas auto sales totaled approximately $68.5 billion. Even a 10% to 20% disruption of vehicle purchases caused by this change represents a $7 billion to $14 billion economic impact.

Patricia Ann Barrera, Webb County tax assessor, said she spoke to several car dealers who say that 30% to 60% of their sales are to people without a Texas ID.

“If we low-ball just Laredo/Webb County, the state of Texas … will lose about $22 million,” Barrera said. “That’s just one county.”

The Legislature passed the stricter ID requirements in 2023 to improve public safety and prevent fraudulent documents.

“The regulations administered by the Texas Department of Motor Vehicles are in place to support the safe operation of vehicles in the state,” said Texas DMV spokeswoman Wendy Cook.

Travis County Tax Assessor-Collector Celia Israel said she is concerned that drivers who are already leery of going to her office may consider illegal black-market resources to help them.

“The proposed rule attempts to change the language from a resident having the ability to complete renewals or registrations to only a legal resident; you are inserting the word ‘legal,’” Israel said. “The Transportation Code clearly states we must determine residency — without any mention of legal residency.”

Sandra Martinez, a title service owner and member of Texas United Auto and Community Alliance, which opposes the new rule, said she used to process 20 transactions on a Monday. “Now it’s about half of that because people are too scared to even try,” she said.

She said 95% of her customers are Latino, and the majority hold a passport but not a visa.

“People come to me to transfer and register vehicles so they can legally drive to work, schools, and medical appointments,” she said.

Octavio Vasquez, owner of Vasquez Auto Sales in Grand Prairie, says car dealers should not be burdened with determining citizenship.

“We are not immigration, and we don’t care if they have papers; that is not my business.” Vasquez said, “All that matters is they pay for the car, we collect the money and give it to the state. That is my job.”

Andre Martinez, a member of Texas United Auto and Community Alliance, has worked in the car industry for over 32 years. He said that when he asked his customers what they would do if this policy were implemented, he received two common responses: “register a vehicle under someone else’s name or register the vehicle in other states.”

Although lack of car registration is a minor infraction in Texas, critics of the new ID rules worry that any interaction with law enforcement could lead to people being turned over to Immigration and Customs Enforcement and deported.

“By allowing this, you will be participating with the federal government in breaking families apart,” Pablo Esteban Higueros, president of Texas United Auto and Community Alliance, told the DMV’s board at the January hearing.

Cecilia Gavia, owner of an Arlington insurance agency, said “It is not just a sticker on a windshield. It’s the fear of being pulled over. It’s the fear of fines that can’t be afforded. If compliance is truly the goal, there needs to be a workable way to prove identity, not a dead end.”