Cuba sold only 50 cars in the last 6 months!

Since the Cuban government introduced some measures of “deregulation” in the vehicle market, there were only 50 cars and 4 motorcycles sold. That number is embarrassingly low and shows that there is still a massive amount of work that must be done if the market-opening measures are to be taken seriously.

A report from the Cubadebate website said that the total revenue generated from the sale of the 54 vehicles was about 1.3 million convertible pesos (CUC), which are valued at parity to the American dollar. The average selling price of the vehicles was $23,800.

But, it is important to note that almost all of these vehicle purchases were for used cars, not new ones.

In order to understand exactly what is going on, we must consider the back story of the Cuban vehicle industry. Since the implementation of the American embargo against Cuba, importation of new vehicles to the island has been severely limited. While some cars from Russia and more recently, China and Korea, have trickled into the island, the vast majority of cars on the road are still the original American vehicles which date from the 1950’s and 60’s (pre-embargo and pre-revolution). Cubans have been forced to repair and maintain these old vehicles since it was nearly impossible to purchase new ones.

Several years ago, the Cuba government passed legislation to legalize the buying and selling of these used vehicles, from one citizen to another. These older vehicles, due to their usefulness and money generating ability(mostly as taxis), can be very expensive to purchase. Old jalopies, some barely functional, can cost over $15 000. In order to alleviate the continued transportation crisis, in January 2014, the Cuban Government opened the possibility that anyone could purchase new and used vehicles from certain state controlled automotive retailers.

The news was greeted with much fanfare and anticipation. People with the means would finally be able to get their hands on newer cars! Many Cubans awaited this moment, eager to purchase automobiles, but they were soon stunned to find out that, despite the purchase of new cars being legal, the actual prices charged by the government would make it almost impossible for anyone to purchase a car. Run of the mill Peugeot 508’s (a standard sedan) were priced at $262,000. The same vehicle could be purchase anywhere else in the world for about $53,000. A cheap Kia Rio would cost about $42,000, while the same car could be purchased overseas for about $13,000.

Will Cuba Car Prices Fall Soon?

The government was artificially inflating the prices of the automobiles, seemingly to either reap a windfall in profits, or to simply prevent the widespread purchasing of cars. Well, for whatever reason the government had, even they must be surprised by the embarrassingly low sales figures. Imagine, in a country of 10 million people, only 50 cars being sold in 6 months. And, the majority of those cars were low priced, second hand vehicles. Almost none of the imported, new cars were sold through state run auto dealers.

Maybe it’s time for some real reform in Cuba? I think we can expect an announcement from the government shortly and some modifications to the retail auto industry laws. The dealerships I noticed in Havana do in fact have a good inventory of vehicles. Maybe we can expect some year-end sales, as the government tries to liquidate older models and spur demand? Only time will tell.

 

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