Cubans dismayed to see car prices rocket

Cubans inspect cars for sale. Picture: Reuters
Cubans inspect cars for sale. Picture: Reuters
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CUBANS flocked to Havana car dealerships as a new law eliminated a permit requirement that has restricted vehicle ownership in the country.

But to their dismay on Friday – the first day the law was in force – they found sharply hiked prices, some of them beyond all but the most well-heeled islanders.

Havana legalised the sale of used cars by private individuals in 2011, but longstanding rules remained in place requiring Cubans to obtain a Transportation Ministry permit to purchase a new or used car from state-run dealerships.

Permission took months or years to obtain, resulting in a black market in which car buyers would often quickly flip them for a big profit.

The new law eliminates the need for a permit, but does not allow Cubans to import vehicles directly.

As the law came into effect, however, prices were high. 
A new Kia Rio hatchback that starts at £8,200 in the United States sells for £25,000 in Cuba, while a new Peugeot 508 family car, the most luxurious of which is priced at about £32,200 in the UK, will set Cuban buyers back £160,000.

“Between all my family here in Cuba and over in Miami, we couldn’t come up with that kind of money,” said Gilbert Losada, a 28-year-old musical director. “We’re going to wait and see if they lower the prices, which are really crazy. We’re really disappointed.”

Cuba’s Communist-run government has traditionally placed huge markups on retail goods and services paid for with hard currency. The practice applies to everything from dried pasta to household appliances to internet access.

The astronomical prices on the cars will probably mean fewer sales and the state leaving money on the table, noted Philip Peters, a longtime Cuba analyst and president of the Virginia-based Cuba Research Center.

“There’s a lot more money to be made at lower price points,” Peters said. “It’s a shortsighted taxman’s mentality. Paradoxically, they mark it up so much that they’re not going to make any money. But that’s the mentality.”

The Ferrari prices for even mundane new cars are a signal that vehicle scarcity and high demand are likely to continue to reign in Cuba, which is famous for the 1950s American cars that still rumble through the streets long after they became museum pieces elsewhere.

Because replacing a car is so difficult, those lucky enough to own a finned Detroit classic or a boxy Russian import go to great lengths to keep them on the road as long as possible, swapping in makeshift parts and resorting to creative soldering.

At a used-car dealership in western Havana on Friday, there were few relatively affordable options.

A 1997 BMW was the cheapest vehicle and the first to sell after the dealership opened at 8am. It went for $14,457 (£8,800) to a young man.

But many of the used cars had eye-popping asking prices, such as a 2009 Hyundai minivan priced at $110,000 (£67,000).

“Let’s see if a revolutionary worker who lives honourably on his salary can come and buy a car at these prices,” said Guillermo Flores, a 27-year-old computer engineer. “This is a joke on the people.”

Alfredo Boue, a 25-year-old cook, said: “With these prices, those who will be able to 
buy are the privileged or the bandits.”