No Country For (new) Cars: Cuba car sales at just 50 units since January
January 2014 saw Government of Cuba lift a ban on procurement of new cars imposed after 1959 Cuban Revolution. This lifting of ban should have got buyers in frenzy as some of them have cars dating back to the 1950s. However, that was not the case as sales since January included just 50 cars and 4 motorcycles which were sold through 11 dealers across the country.
The new purchasing freedom comes into Cuba from January this year after nearly half a century of ban. However these paltry sales are not due to lack of demand but due to the fact that prices of cars are escalated to such an extent that buyers steer clear of company showrooms. In the first six months of this year, dealers earned $1.28 million with an average price of each car at $23,700 (INR 14,14,534) each.
With an average Cuban earning just about $20 (INR 1,193) per month this is an astronomical figure for any car buyer to shell out. A Peugeot sedan in Cuba sells for $262,000 (INR 1,56,50,570) while a 2005 Renault can be picked up for $25,000 (INR 14,93,375).
The state still employs a greater labor force though Raul Castroâ€™s economic reforms now permit limited private enterprise. The government regulates incomes, keeping them really low. The new regulations also allow person to person sale of used cars while prior to January, anyone wanting to purchase a vehicle had to acquire a letter of permission which was only granted to diplomats, technicians, doctors and those on foreign mission.
Source – Reuters
Image credit David deSouza