Cubans aghast at car prices as new law kicks in
A change in the law making it easier for Cubans to buy cars is undermined by high prices
Cubans are flocking to Havana car dealerships as a new law takes effect eliminating a special permit requirement that has greatly restricted vehicle ownership in the country. To their dismay on Friday, the first day the law was in force, they found sharply increased prices, some of them light years beyond all but the most well-heeled islanders.
A new Kia Rio hatchback that starts at US$13,600 in the United States sells for US$42,000 here, while a fresh-off-the-lot Peugeot 508 family car, the most luxurious of which lists for the equivalent of about US$53,000 in the UK, will set you back a cool US$262,000.
“Between all my family here in Cuba and over in Miami, we couldn’t come up with that kind of money,” said Gilbert Losada, a 28-year-old musical director. “We’re going to wait and see if they lower the prices, which are really crazy. We’re really disappointed.”
Cuba’s Communist-run government traditionally has placed huge mark-ups on retail goods and services paid for with hard currency, a policy that amounts to a tax on people who can afford such goods. The practice applies to everything from dried pasta, to household appliances, to internet access.
The astronomical prices on the cars will probably mean fewer sales and the state leaving money on the table, noted Philip Peters, a long-time Cuba analyst and president of the Virginia-based Cuba Research Centre.
“There’s a lot more money to be made at lower price points,” Peters said. “It’s a short-sighted tax-man’s mentality. ... Paradoxically, they mark it up so much that they’re not going to make any money. But that’s the mentality.”