Paltry car sales seen as sign of Cuba's priorities

 

Associated Press

It's not your typical car lot.

Just steps from the Florida Straits, dozens of vehicles sit covered in grime and baking in the Caribbean sun. An elderly security guard slumps in a sleepy waiting area, and customers are nowhere to be seen.

A price list hanging on the green chain-link fence hints at why: $85,000 for a 6-year-old Peugeot compact; $46,000 for a tiny 2008 Citroen C3 hatchback that would cost less than a third of that in Europe. Elsewhere, a larger, new Peugeot 508 lists for $262,000, five times its price in Britain — and more than a millennium worth of paychecks in Cuba, where wages average about $20 a month.

The euphoria that greeted a January reform that lets Cubans buy vehicles from the government without a special permit for the first time in decades turned to anger when the prices were posted. When authorities announced recently that just 50 cars had rolled off the lots of state-run dealerships in the first half-year, bringing in $1.3 million in sales, it was tempting to call the policy a failure.

But analysts say it seems the measure was designed to work that way.

"At those prices, they obviously didn't want to sell many cars," said Philip Peters, president of the Virginia-based Cuba Research Center. "And they're not."

Peters suggested officials simply don't see it as a priority and would rather spend what little hard currency the country has on things like food and industrial inputs.

"I think there's only one explanation ... the government does not want to use its foreign exchange reserves to import cars for a retail market," he said. "So therefore the only way that it's worth it to them, to import a car for $20,000 and then sell it retail, is to soak up $50,000 worth of liquidity."

Some islanders initially hoped authorities would adjust prices downward when they got a sense of what the market would bear. That happened when cellphones first appeared in Cuba more than a decade ago.

However, a recent tour of several dealerships in Havana found the same 400 percent markups as before. Not a single potential client was in sight. Employees refused to speak to reporters, though one confirmed that prices have not budged.

There are no publicly available statistics on how many vehicles circulate in Cuba, but visitors to Havana marvel at how empty the streets are for a city of about 2 million people.

Jorge Pinon, a Latin America energy expert at the University of Texas, said Cuba's reluctance to sell cars isn't out of fear of insufficient fuel. The country gets tens of thousands of barrels of oil a day on preferential terms from Venezuela.

But Pinon noted that a huge infusion of vehicles would test the creaky transportation infrastructure of Cuba, where potholes can go unfilled for years and traffic lights are scarce.

In a separate measure in 2011, Cuba legalized private, person-to-person sales of used cars. But those prices started out high and have now shot even higher since January's reform.

"The only Cuban consumers who can afford it are probably musicians that have got some terrific royalty earnings on their latest record, or people who cashed out fabulously when they sold their family home, and I can't think of anybody else," Peters said. "It's a very, very small sliver of the public that could think of affording such prices, and, as we see, an even smaller sliver that actually decides to do it."

For years, the clearest path to an automobile in Cuba was to get a permit to buy one by completing an overseas mission for the government. A typical returnee might have cobbled together around $5,000, enough to buy a used car or a cheap Russian or Chinese model under the old pricing schedule.

Rodolfo Cid's quest to obtain a car began six years ago when the 55-year-old Construction Ministry engineer agreed to work on a mission in Venezuela. He got a $600 cut of the $3,000 a month that Caracas paid Havana for his services.

When Cid returned after three years, he got the letter authorizing him to buy a car and his name went on a waiting list. His plan was to augment his family's meager income by moonlighting as a taxi driver. Two years passed, and in 2013, he left his job at the ministry.

But late last year, word emerged that all Cubans would be able to buy beginning in January, putting everyone in the same boat. The permit Cid toiled three years for was suddenly worthless.

When the new prices were posted, even the used cars were several times Cid's savings.

"They betrayed the trust that people may have in the institutions, even supporters who did what was asked of them," he said.

"That amount of money is absurd," Cid added. "I can't afford even the smallest one."

---

Associated Press writer Peter Orsi contributed to this report.

Andrea Rodriguez on Twitter: www.twitter.com/ARodriguezAP

Read more Business Wires stories from the Miami Herald

  • Audit: NASA doesn't have the money for big rockets

    NASA doesn't have enough money to get its new, $12 billion rocket system off the ground by the end of 2017 as planned, federal auditors say.

  •  
FILE - This april 28, 2011 file photo shows Charles Thompson, of the Humane Society of North Texas, holds an albino reticulated python in Fort Worth, Texas.The U.S. Fish and Wildlife Service has proposed strict nationwide limits on importing and shipping boa constrictors and four other snake species. The rules would prohibit bringing the snakes, including reticulated pythons, into the country and shipping them between states except for scientific and educational purposes. The agency wants to prevent them from being introduced into the wild.(AP Photo/Star-Telegram, Ron T. Ennis, file)  (AP Photo/The Fort Worth Star-Telegram, )  MAGS OUT; (FORT WORTH WEEKLY, 360 WEST); INTERNET OUT

    US wildlife officials propose limiting snake trade

    Federal wildlife officials recently proposed strict nationwide limits on importing and shipping boa constrictors and four other snake species in an effort to prevent them from being introduced into the wild.

  • Tupperware 2Q profit sinks 38 percent

    Tupperware Brands Corp. said Wednesday that its second-quarter profit fell 38 percent from the same period a year ago, hurt by falling sales of its storage containers and cosmetics in North America and Germany and unfavorable currency exchange rates.

Miami Herald

Join the
Discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category