Sunday, November 6, 2011

575. Relenting on Car Sales, Cuba Turns Notorious Clunkers Into Gold

By Victoria Burnett, The New York Times, November 4, 2011

A classic Chevy on the Malecon
HAVANA — Until a few weeks ago, Erik González’s decrepit car did little more than devour his tiny income. He spent hundreds of dollars fixing the car, a 30-year-old Moskvich that his grandfather passed down to him in 2000. Even when it worked, Mr. González could rarely afford to buy gas.

Then, overnight, the Soviet-made rattletrap became his nest egg.
Mr. González put the car up for sale last month when the government published rules allowing Cubans to buy and sell used vehicles freely for the first time in half a century.
The axle may be wonky, the carburetor shot, the battery on its last legs and the headlights inoperable, but he believes his royal-blue Moskvich will fetch at least $5,500, a small killing for a waiter whose state salary — before tips and extras — is just $15 a month.
“This car has been bleeding me dry,” Mr. González said. “Now it’s an asset that I can sell, and do something else with the money.”
Like the new law permitting home sales going into effect this week, the changes headline President Raúl Castro’s efforts to remodel Cuba’s hobbled economy and spur the private sector. After decades in which ownership of such big-ticket items was frozen, the efforts promise to flush money into the market at a time when Cuban officials are trying to stimulate private enterprise and move hundreds of thousands of workers off the public payroll.
“The state has no business getting involved in a matter between two individuals,” Mr. Castro told the National Assembly last December, criticizing complex rules and “irrational prohibitions” that he said bred corruption.
“If I have a little car,” he added, “I have the right to sell it to whomever I want.”
But like several of Mr. Castro’s other changes, the new law created a pocket of economic liberty in a market that remains tightly controlled. Cubans can purchase and own more than one used vehicle, and they will no longer lose their car if they emigrate.
However, the right to buy a new car is still limited to a narrow group of Cubans who earn some foreign currency, including doctors, artists, musicians, members of airline flight crews and the handful of Cubans who work at the American naval base at Guantánamo Bay.
“There’s no logic to these rules,” said Leopoldo, a taxi driver who works the road between Havana and Güira de Melena, about 20 miles away, in a shiny 1985 Tatra. He asked that his full name not be used because he feared angering the authorities.
“But there’s no logic to anything in this country,” Leopoldo added. “They have kept so many restrictions in place for so many years, you wouldn’t expect them to lift them all in one go.”
Still, the new rules have created a buzz on an island where owning a car is a rare privilege and the number of vehicles per capita is among the lowest in the hemisphere.
For-sale signs have begun appearing in car windows. Many people who had bought cars illegally are scrambling to validate the trade. And Revolico, Cuba’s answer to Craigslist, is replete with people promising to pay tens of thousands for a used Hyundai or Kia.
But the tight grip on imports means cars will remain scarce and command eye-popping prices, whatever their condition, economists and car brokers say.
“A car that in another country you’d pay to destroy, you can sell here for $14,000,” said Paul Gómez Valladares, a mechanic who was fixing the bushings on a 1996 Lada Combi in a workshop shaded by mango trees.
Previously, Cubans could only legally trade cars that predate the 1959 revolution, hence the iconic American cars that still cruise the island’s roads. But those are only a small fraction of the nation’s used cars.
Islanders bought and sold cars on the sly, but it was a risky business that put off people like Mr. González and made buyers wary of paying large sums for a vehicle they would not legally own.
Emilio Morales, president of the Miami-based Havana Consulting Group, said the new rules — like earlier decisions to let Cubans own cellphones and computers or work in the private sector — simply legalized what many Cubans were already doing illicitly and would neither increase Cuba’s antiquated stock of vehicles nor alleviate the country’s crushing transportation problem. The move was intended to placate people, not stimulate the economy, Mr. Morales said.
“This is one of their political pressure valves,” he said.

No comments: