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Cuba's car owners, famous for preserving American cars more than half a century old, will have a slightly easier time buying a car after the communist government said that private citizens and residents will now be able to buy new and used cars without first needing government permission. The cars will be sold by the state and individuals still must get clearance to import their own cars, new or used. The reason for all that old American iron is the only cars that the Cuban regime allowed to be freely bought and sold by private parties were those that were imported before the 1959 revolution.
Two years ago, Cuban president Raul Castro, serving in place of his infirm brother Fidel, introduced reforms that permitted Cubans to buy and sell used cars from each other, but they still had to request government authorization to buy new or used vehicles from state owned retailers who typically sell cars formerly used as rentals for tourists.
The Communist Party newspaper, Granma, said the government approved new regulations on Wednesday that "eliminate existing mechanisms of approval for the purchase of motor vehicles from the state… the retail sale of new and used motorcycles, cars, vans, small trucks and mini buses for Cubans and foreign residents, companies and diplomats is freed up."
Most post 1959 cars are in state hands and are typically sold used at relatively low prices to favored individuals who travel abroad like Cuban diplomats and doctors, who then can resell that at four or five times the purchase price. Many of those cars are Ladas and other Russian automobiles imported when the USSR was Cuba's patron.
The Cuban state continues to hold a monopoly on the retail sale of new cars, and it said that about 30% of the cars sold with government authorization were quickly resold, causing what the government called "speculation and enrichment," two things looked up with disfavor by the communist state. The new regulations will set a minimum retail price for auto sales, effectively a tax which the government says will be used to fund better public transit.
A physician named Antonio, who asked not to be further identified, told the Bloomberg news agency, "It took me months to get a famous letter of authorization to buy a car after going on two international missions, and I had to see a number of people. Now it will be much easier to buy a car, and this eliminates the corruption that regulations and controls always spawn."
The new regulations are seen as helping the tens of thousands of small private businesses that have sprung up in Cuba after some liberalizing reforms, as well as helping farm, construction, transportation and other types of cooperatives. A member of an agricultural cooperative in the Camaguey province said, "Of course this will help us. We have members who want to buy a Jeep or pickup truck, and now they do not have to wait for authorization from anyone"
Bert Hoffmann, a Cuba expert at the German Institute of Global and Area Studies in Hamburg, Germany, said the reforms were a positive step but the car market is still controlled by the state, resulting in artificially high prices.
"The state monopoly on retail remains sacred, and this means high prices. If cars are for private use, these high prices function as an understandable 'luxury tax.' But as cars and vans are widely used for business purposes, these high costs also are a strong brake on more dynamic development," he said.
from The Truth About Cars http://www.thetruthaboutcars.com
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