Cuban Market Assessment Guide

On the streets of Cuba, you will see a lot of classic American cars, and even though this is an interesting sight, the fact is that Cubans drive these old cars out of necessity rather than choice. In the first part of the 20th century, most new vehicles came to Cuba from the United States. This influx of cars stopped in late 1959 when economic reforms by the Cuban government, led by Fidel Castro, prevented Cubans from buying cars on credit. The subsequent U. S. trade embargo, instituted in October of 1960 in response to Cuba’s seizure of U. S. owned properties ensured that new vehicle exports would stop. As a result, Cubans have become experts at keeping these old cars running-cars that in other countries would long since have been recycled. Over the years, the Soviet Union supplied the island with cars which were mainly for state use and a few cars also came in from Europe and Asia. Since 2009, Cuba has imported cars from the Chinese automaker Geely to serve as police cars, taxis and rental vehicles. With the recent renewing of diplomatic relations between the US and Cuba, and more importantly, the hope that the trade embargo will be lifted, makes this an excellent time to look at what the future holds for the car industry when US/Cuba trade relations resume.

In Cuba today, there are as many as 60,000 American vehicles on the island and almost all are in private hands. In 2010, the Communist party approved reforms to legalize the sale of cars between Cuban citizens- these vehicles could be sold to other Cubans providing the proper certificate was in place but transactions proved difficult. In 2013, the government loosened restrictions on the purchase of new and used foreign made cars. At that point, Cubans did not need a permit issued by the Transportation Ministry to purchase cars from state vendors. As a result, the retail sale of new and used cars for Cubans and foreign residents, companies and diplomats opened up. Despite these changes in policy...