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Cuba [Finally] Embraces The Automotive Age

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On: Mon, Oct 3, 2011 at 9:16AM | By: Chris Salamone


Cuba [Finally] Embraces The Automotive Age

When President Raul Castro assumed control of his brother’s communist-inspired island government, the world took a collective gasp—wondering just what would happen next. As it turns out, Raul seems to be opening Cuba’s restricted economy in an effort toward greater marketplace freedom. Back in April, more than 300 different reforms were put forth by the newly minted President at a congress of Cuba’s Communist Party. Among those reforms was a proposal to allow the buying and selling of cars made after the Cuban Revolution of 1959.

Previously, only cars that were in Cuba prior to 1959 could be legally bought or sold, which is why there exists such a plethora of pre-1959 cars in Cuba.

An official government decree, released last Wednesday, stated that Cubans and foreign residents could now buy and sell cars of any generation “without any prior authorization from any entity.” There is, however, one catch. Apparently ‘without any prior authorization’ actually means that the new regulations will allow only Cubans with government permission and foreign residents to import cars, while everyone else will be limited to cars already on the island.

Despite government permission being required to import vehicles, these new regulations are considerably less stringent than the previous ban on post-revolution vehicles. Not to mention, Cubans migrating from the island can sell their imported vehicles or give them to family members—which should allow non-permitted car buyers some freedom in buying used, imported modern vehicles.

So far, reactions to President Castro’s reforms have been warmly accepted. “It’s a law that should have been approved a long time ago,” said taxi driver Fabio Brito. “This exists in all countries in the world. Why should we be different?”

Although the opening of a new market should stimulate the economy and eventually lead to greater overall prosperity, some transaction costs are expected. For example, there used to be a large black market in illegally purchased car licenses that will no doubt suffer or disappear because of the sudden legality of modern automotive transactions. Also, an unexpected side effect might be the sudden reduction in value of pre-1959 cars that have been sold in Cuba for generations. Apparently a 1951 Chevrolet could sell for almost $25,000 just a week ago. What will people do when they compare an old, beaten Chevy with modern day autos listed at the same price?

Another major obstacle is money. The average Cuban earns a monthly salary of almost $20. So buying that first Hyundai might be a lifelong pursuit… but, at least it’s an option now.




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