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

  • December 30, 2013 at 11:26 am


    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.

  • December 27, 2013 at 4:08 pm

    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.

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