Cuba 2017. Tourism sector launched the new cars market

Cuba vehicles market is born in the 2016 thanks to the rapid development of tourism sector and despite the huge prices for new and used vehicles, taking off from near zero to near 4k driven by public fleet for taxi and rental vehicles. The huge level of price is the limit to further market growth.

“Time-worn but magnificent, dilapidated but dignified, fun yet maddeningly frustrating – Cuba is a country of indefinable magic” cit.Lonely Planet.

During the decade of Castro’s administration, Cuba’s macroeconomic performance has been deeply disappointing—but this malaise obscures the emergence of a more complex, diversified economy. The private economy has taken off, providing jobs and income to as many as four out of 10 Cubans of working age. Qualitatively, the private economy has advanced from fragile microenterprises to more ample small-scale businesses engaged in substantial capital accumulation. Furthermore, international tourism, with the active cooperation of global partners, is another bright feature.

In the tourism sector, the creative hybrid blend of state enterprise, international partner, and national private entrepreneur is, in its proportions, uniquely Cuban. It suggests a model—tripartite-guided growth à la Cubana—that could be applied profitably elsewhere in the economy, particularly in two prominent if lagging sectors: energy and agriculture. Currently, non-discretionary spending on essential imports of energy and foodstuffs consumes Cuba’s already meager hard currency export revenues. Yet, the island has the natural capacity to develop more sustainable national models in energy and food. (Richard E. Feinberg).

Cuban automotive industry is unique in the World. Death in the 1962, at US embargo, it remained unchanged for decades, with vehicles on the road becoming older, then blocked by parts shortage, then abandoned before to become vintage and classic and be restored when boundaries had been re-opened and now traded at thousand dollars to collectors arriving from all over.

In the country all vehicles can be sold just by governative companies and until the end of 2013, a private wishing to buy a car, had to produce a specific certificate obtained for “special reasons”. A 2014 reform lets Cubans buy vehicles from the government without a special permit for the first time in decades turned to anger when the prices were posted. Indeed, the huge cost of products (near 5 time the correspondent price in US) compared with the lowest pro capita income in the Latin America allowed to press defining the industry changed from “forbidden to prohibitive” and just more than 100 units were sold in the 2014 and a little more in the 2015.

The real start of the market arrived in the 2014 and was driven by tourism with the growth of over 800 private renting companies purchasing vehicles (mainly small cars) to welcome near 5 million people (estimated for 2017) coming from all around the World to see the rest of the real communism in a charming environment.

The market immediately reached a level near 4.000 units in the 2016 and was flat the last year.