Car Sales in Cuba, a Market Opening

By Fernando Ravsberg*

After 5 decades of prohibition, Cubans can buy tens of thousands of cars.
After 5 decades of prohibition, Cubans can buy tens of thousands of cars.

HAVANA TIMES – With the annoucement making possible the “retail sale of new and used motorcycles, cars, vans and minibuses,” for Cubans and foreign residents in the country, the government removes a restriction that remained for half a century.

New cars are considerably more expensive on the island than in other countries because they are taxed at 100%. However, with the revenue, the government announced it will create a national fund for the promotion of public transport .

To date in Cuba there were three markets for vehicles with a price difference of up to 500%. Paradoxically, the most expensive vehicles were second-hand and sold among the citizens of the island.

For decades, for a State dealer to sell a car to a Cuban required the personal approval of the Vice President. Foreigners also needed authorization signed by “the agency that serves them” in Cuba.

“Everything that eliminates stupid prohibitions is welcome,” said the former model, María Teresa González. Her view is shared by many in a country where, in the words of novelist Lisandro Otero, everything that is not compulsory is forbidden.

“I think it’s a good move even if I won’t be one of those to benefit. It will contribute to there being less crimes, inventions and the falsehood that has surrounded this issue for decades,” said detective story writer Luis Adrián Betancourt.

Due to the US blockade, for over 50 years Cubans have had to invent their spare parts for their old American cars. -
Due to the US blockade, for over 50 years Cubans have had to invent their spare parts for their old American cars.

Ema Ferran, who runs a parking lot, assures “the more freedom a human being has the better. For me it will be difficult to buy one because I live on my salary but more power to those who can, the person who has saved, he/she with the money to buy.”

The government announcement said the prices will be “similar to those recognized by the market between individual owners.”  However electronics technician John D. Gonzalez believes that “it would be very unfair to sell at market prices to those who already had their letters of authorization and expected to buy cheap cars.”

Letters of authorization and automobiles

For many years a car was the largest “stimulus” that the Cuban government gave in return for a person’s political, work related, sports or artistic merit. The matter was of such importance that those benefiting would said “They gave me a car,” even though they had to pay for it.

With the legalization of the dollar in 1993 they also began to sell them to those who could prove they had obtained their money legally – artists, diplomats, sailors, etc. Yet they still needed an official government letter certifying their right of purchase.

Through this mechanism they used to sell 200 cars a month creating a line of about 10,000 people letter in hand waiting for the opportunity to purchase one, which implies that the last on the list might have to wait over five years.

In April of this year they suddenly stopped selling cars via the letters of authorization, without giving any explanation and leading to many rumors. Luis Silva, a popular comedian, wrote a funny monologue that celebrates the first birthday of his “Letter”.

The official statement acknowledges that the Letter requirement is “obsolete” and had generated “discontent, dissatisfaction and, in many cases, besides being excessively bureaucratic, became a source of speculation and enrichment.”

Due to the ban, a convertible 50s car in good condition with a diesel motor, cost up to US $60,000.
Due to the ban, a convertible 50’s car in good condition with a diesel motor, cost up to US $60,000.

The Cuban car market

Until 2010 Cubans could only legally buy used cars that dated to 1959 or before, something that wildly raised prices. A jeep from the 40s, fitted with a modern diesel engine, can cost up to US $50.000.

While between foreigners a French vehicle with 10 years of use could cost around US $3000, on the Cuban market they soared to US $18.000 and were sold without changing the name on the registration since that was forbidden.

In 2011, Raul Castro authorized the buying and selling of used cars among Cubans. However that first opening maintained the letters of authorization for Cubans trying to buy a used vehicle from the State, prohibited the sale of new vehicles and limited to two the number of vehicles a foreign resident could purchase throughout his/her stay in the country.

It’s expected that the sale of new vehicles will lower the prices of used cars, to date the only option for most Cubans with sufficient financial resources. But you really never know in Cuba.
(*) See Fernando Ravsberg’s blog (in Spanish).

10 thoughts on “Car Sales in Cuba, a Market Opening

  • JG,

    Let me start by saying that I agree with you. The exponential growth of technology will eventually lead to a better “age” than the one we live in; I just think your time frame a bit optimistic, irrespective of Moore’s law. …By the way, many are now questioning the continued validity of “Moore’s law”, which, despite it’s name, is no real law at all. You see, even though Moore’s decades old observation has become a self fulfilling prophecy, there is no fundamental rule in the universe that guides how powerful a newly made integrated circuit will be at any given time.

    I haven’t heard of ‘Abundance: The Future Is Brighter Than You Think’, but have perused a similar book, ‘Radical Abundance: How a Revolution in Nanotechnology Will Change Civilization’ (similar in concept I would assume) The danger however is to read too much, too soon into these optimistic visions of the future.

    Also I, Like Ray Kurzweil, see this future as creating more capitalism (if of a different sort) with more entrepreneurs having the ability to create many new and marvelous things.

  • IC,
    I fully understand your thinking that the future of which I am speaking will be a century or more off.
    What you are not taking into account is that we are approaching what is called the knee of a technological explosion . The “knee” is the bend on a graph where it starts to go from a plane /level line to one that is vertical .
    Moore’s Law dictates that computing power doubles every 18 months and this is actually accelerating itself as more and more resources are being poured into the development of human-level machine intelligence.
    Last year the Chinese announced a 12 petaflop array .
    Human level is 1000 petaflops .
    Doubling that 12 petaflops every 18 months brings us to human level AI in just ten years.
    You are thinking in a LINEAR rather than the exponential/logarithmic fashion in which technologies are developing.
    Here’s an example of linear vs exponential .
    Were you to take 30 linear (single 1+1+1+1+1+1+1) ) steps out your front door , you’d perhaps reach the other side of the street.
    But were you to take 30 exponential steps( 2X1X2X4X8X16X32X64X128 etc) you’d go around the world.
    Computing power and AI and all associated technologies are growing in an exponential and not in the linear fashion that human nature ties most of us into.
    I do urge you to read both Ray Kurzweil’s ” The Singularity Is Near ” and Diamandis and Kotler’s ” Abundance: The Future Is Better Than You Think”
    In both books the authors start out with a long explanation of linear vs exponential because it is precisely this hang-up with linear that prevents most people from understanding the exponential pace at which this is all developing.
    Absent an understanding of the huge difference and why Moore’s Law is dead on will keep you from seeing what actually is happening right under your nose.
    I can’t possibly hope to transmit all that is behind the thinking on this and you really have to do the reading yourself .
    I sincerely believe that it will change your outlook on a great many things just as it changed my outlook both socially and politically.
    What’s really good about this exponential growth is that it does not matter whether IC and most people believe it because it is happening right now .
    You will not have to wait more than 8-10 years to see the results in ways that you are now unable to foresee.
    It’s a very good future.

  • The future may indeed, in fact probably will, bring about that and much more. The time frames you indicate however are a bit short. Probably closer to a century than a couple of decades.

  • IC,
    The future in the 2030’s is one in which smarter-than-human machines will replace nearly all human labor.
    If you think people will not rejoice at not having to do anything other than what their desires and natural talents take them to, you misjudge human nature and every study that shows that an overwhelming majority of workers do not like what they now have to do 40+ hours a week to earn a living.
    Were you an aspiring artist, would you REALLY choose to work as a waiter in order to eat and pay the rent or would you want to pursue acting ?
    It will take very little convincing to have people switch from wage-slavery under capitalism to the total freedom in a near future where such drudgery is unnecessary .
    Yes, it will be utopian and whether you choose to denigrate that future by calling it communist : a poisoned word that few understand , there will indeed be that direct and bottom-up democracy integral to communism that we are all denied under an oligarchic government and under capitalism .
    Do pick up a copy of “Abundance: The Future Is Better Than You Think” .
    It will provide most of the information you will need to be able to see what I see .
    The book is not at all political and based on solid science .

  • Moses is simply suggesting that human nature and the evolution of our “selfish gene” will take a bit longer to catch up with your intelligent machines. And unless your communist utopia is forced upon man, he will reject it.

  • Daniel,
    Think about it.
    In a socialist-minded society, fair sharing is central .
    So sharing a community -owned car is a natural outfall of a socialist mentality.
    In a poor country where resources are scarce , this car-sharing method makes all the more sense .
    Cuba is both socialist-minded and poor .
    If you are just saying that Cuba is behind in technology , is a backward country because of the 1950s cars that are still in use,
    you haven’t looked at the technological developments in medicine accomplished by the Cubans .
    Further, this automobile technology will be built into every car sold within ten years or so and Cuba buys its cars from around the world ; it has no automobile manufacturing industry.
    They are buying 2013 cars now and will continue to buy cars that will all have the new technologies built in.

  • Moses, you presume that: a) capitalism will continue to exist after intelligent machines have obviated the need for any human labor , this by the 2030s and
    b) that humans will not evolve socially beyond the selfishness and social isolation that is enforced by capitalism once capitalism’s inhumanities can no longer be enforced .
    In fact a socialist society is the best and most logical place for the development of SHARED cars and a poor socialist society even more so.
    That future is coming at us at a pace and for reasons most people can’t understand >
    For those who love the inequities and illogic of capitalism it goes beyond understanding to a putting on of blinders so as to not have to see the end of capitalism in their lifetimes.
    You subscribe to the false theory of social Darwinism which even Darwin himself rejected.
    Humans were a cooperative species and practiced what is called mutual aid for millennia before it was suppressed by the totalitarian forces of the states and feral capitalism.
    Humanity will return to that mutual aid society once their true natures are no longer suppressed.
    You’d need to read Kropotkin’s “Mutual Aid: A Factor Of Evolution” in order to understand why this is human nature and the selfish, isolationism under capitalism is an aberration.
    Or, ask your wife since you have stated that she is the source for all your information when you were asked that question. .

  • At what time in the recorded history of mankind have human beings not sought to differentiate themselves from each other? Your fantasy of a generic interchangeable car is laudable but not realistic based on observed human nature. We have generic airliners but we separate ourselves into classes. We have generic grocery stores, but we sell ‘premium cut’ steaks. Gold, platinum and now the ‘black’ credit cards? Get real, technology challenges aside, human beings like show off. BTW, you obviously don’t know any Cubans well. Culturally, Cubans are among the most ‘presumido’ people on the planet, if given the resources. The last place your interchangeable cars will work is in Cuba.

  • after the whole world adopt this technology you still will have to wait about a hundred years for cuba to do so.

  • This will be considered a bit sci-fi minded by many but the exponentially developing technologies that have NOW created driverless cars can , in the very near future , be used to make car ownership outdated.
    This is the scenario:
    At present most cars sit parked doing nothing unless they are taxis or a car used all day for some kind of work. The majority are used a few hours a day at most and then sit idle.
    In a future society , the need for everyone to have one and two cars will be eliminated by these driverless cars .
    When a car is needed by someone , a call or computer request is made to a central garage where sufficient numbers of cars are stored for that community’s needs.
    The car drives itself to the home , picks up the passenger(s) and takes them on their errand or trip . It returns them to their home and then goes either to its next job or back to the central garaging area .
    This system will eliminate the need for each person or family to have a vehicle yet make automobiles available to all who need them.
    Better yet, if you need a truck to carry large loads , you’ll have access to that. if you just need a subcompact to take you to the doctor’s office , that’s what you’ll get .
    It is far less expensive to any society but it will serve a socialist /sharing society especially well and will really serve the needs of the people in poorer societies.
    We don’t need Bentleys or Rolls Royces or Lamborghinis in the world .
    These are only look-at-me-I’m-rich toys for the wealthy.
    Hondas, Toyotas and other highly reliable cars are as good as a Cadillac to the poor in societies where car ownership is not a possibility for the majority and such a system provides cars for all.
    That’s my thoughts on cars.
    Mine is a now badly rusting (12 years of driving on winter salted New England roads) Nissan Sentra which has served me well but then unlike many whose personal image is tied to how expensive a car they have , to me a car is just a means of getting from one place to another that is to far to walk to.

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