Purchase of new cars given the green light

The government has removed the red light it maintained unchanged for decades on the sale of new cars to private individuals.

With the authorisation to purchase new cars, the government is creating a new option in the domestic market.

 Another prohibition has been lifted in Cuba, with a bigger public stir because of its legal and rational foundations than for its presumed commercial reach. The gradual steps taken by the current process of economic changes and social flexibility scored a new point this week when the government authorised the sale without obstacles of cars and other vehicles to private individuals.

The Council of Ministers, in a meeting held on Wednesday December 18, agreed to liberate “the retail sale of motorbikes, cars, vans and mini buses, new and second hand, for Cuban and foreign natural persons residing in the country, as well as for foreign juridical persons and the diplomatic corps.”

The decision annuls a more than 50-year-old prohibition and the mechanism that came into force two years ago by Decree 292, which only authorised the transfer of the ownership papers of vehicles through the purchase, sale or donation among citizens residing in the country, while the permission to buy a new car was only possible through a “letter of authorisation” stamped by the Transport Ministry. When presenting the Council of Ministers agreement, Granma, the official daily of the Communist Party of Cuba, recognised that the letters’ formula was “inadequate and obsolete.”

Meanwhile, among Cubans rumours were gradually increasing as well as irritation ever since a few months ago the state sale through these documents was stopped without any public explanation. Though they were not very well accepted due to the limited possibilities to get one of them, the letters were at least an option. They were reserved for artists, athletes and what Granma itself defined as “a reduced group of selected occupational categories.”

Moreover, the State’s marketing company barely sold some 200 cars per year and, according to observers, the applicants’ waiting list, with the aforementioned letter in hand, stood at more than 10,000. As a result, a veritable market of letters shot up, becoming a breeding ground for speculation and corruption, all of these anomalies recognised by the official note itself. When taking this new step, the government agreed to prioritise the persons that already have the letter.

With such antecedents, the news immediately created a great stir similar to the one generated by a previous, similar type of step: the liberalisation of the purchase and sale of homes.

However, like on that occasion, the stir expresses more the satisfaction in the face of one more prohibition that is lifted than the real likely access the majority of Cubans will have to that market, with prices way above society’s average purchasing power.

The government notified that the cars will come out in the market with “retail prices similar to those recognised in the market among private individuals.” These are markedly high for second-hand vehicles. A U.S.-made car from before 1959, those known in Cuba as “almendrones” – frequently renovated inside and equipped with modern diesel engines -, can cost as much as a home: several thousands of convertible pesos (CUC) in a country where the official exchange rate is 1 CUC x 1 dollar, while the network of CADECA exchange houses sells the same CUC for 25 Cuban pesos.

Contradictorily, a new modern European car sold by the government with the endorsement of the letter could cost around 10,000 CUC, much less than the famous “almendrones,” the most used taxi alternative in the Cuban capital and a symbolic image of the Havana for tourists.

As an argument for the anticipated high prices, the government announced the creation with that money of “a fund especially dedicated to the development of public transport in the country.” It promises to mitigate in that way one of the weaknesses that awakens the most complaints today among the majority of Cubans, who essentially depend on bus services in the cities where that offer continues.

The new government regulation legalises other interest levels in that market. It authorises “the purchase and sale of internal combustion engines (gasoline and diesel) and bodyworks among private individuals” and extends it to the sale of bodyworks from the disassembling of vehicles to juridical and natural persons as replacements. However, though it maintains the transfer of the ownership papers of cars between private individuals, nationals as well as foreigner, it limits the sale by juridical persons to natural persons.

The Council of Ministers also decided to resume the sale of bicycles in the retail market, including – and here’s another of the novelties – electric bicycles, with the promise of doing so at non-profit prices in order to encourage their use. Though limited now by the real purchasing power of the majority of consumers, the offer opens one more door to revitalise the domestic market, an option that is good for the economy in the face of the persisting difficulties to take off. (2013)

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