Cubans shocked at prices as foreign cars go on sale

Some would-be buyers have been priced out of the market, as Sarah Rainsford reports from Havana

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Cubans have reacted with shock after foreign-made cars went on sale for the first time since the 1959 revolution at what some termed "crazy" prices.

The state has a monopoly on new car sales and has set massive mark-ups.

A Peugeot 508 is listed at $262,000. Peugeot's UK website puts prices from $29,000. State salaries in Cuba average about $20 a month.

Freeing up car sales is the latest in a series of reforms. A permit to buy new vehicles is now no longer required.

Analysis

There was a good deal of consternation about the situation for those previously granted government permits to buy cars, who have now lost out.

Some artists, athletes or medics who worked overseas were given a permit to buy a car up to a value depending on their foreign currency earnings.

For $5,000 or $10,000 in savings, they could usually acquire a good second-hand car - seen as extra payment for service to the country.

Now those permit letters have been abolished, and whilst in theory people who had earned them, but not used them, will be given priority to buy cars on the free market, the prices have sky rocketed.

Many complain that the state released very few cars for sale in recent months, meaning that those with permit letters couldn't use them.

However, only a minority will benefit.

The BBC's Sarah Rainsford, in Havana, says the stream of people at one used-car store in Havana's upmarket Miramar district were in for a shock.

She says the most commonly uttered phrases were "this is madness" and "what a lack of respect", referring to the government.

One of those outside the dealership, Suzanne, told the BBC: "The prices are crazy. No Cuban who works for the state can buy at that price. They have zero chance of getting a car."

Another, Antonio, said: "We're speechless, it's a big surprise. I don't know what the government's strategy is. Maybe this is just a test phase. But the prices are excessive."

The government argues profits will be placed in a special fund to develop public transport.

Our correspondent says that the money is desperately needed, as there is a dire shortage of transport and what there is is often in a decrepit state.

Cuban repairs car in Havana, 31 Jan Many Cubans will continue to repair their old cars

But one Cuban resident, Daniel Rojas, asked: "At these prices, how many people can buy the cars? So where's the money to invest in public transport if no-one can buy them?"

Nonetheless, some Cubans do appear to have money to spend.

An attendant at one car store in Havana told the BBC it had sold six vehicles by 14:00 on Friday. He said the most expensive went for $50,000.

Until new regulations in 2011, people could only sell cars built before the 1959 revolution.

For new cars, people needed a much-sought government permit - a privilege mainly bestowed on senior officials, top athletes and artists.

The permits were often traded on the black market for large sums of cash.

The latest move is part of a series of reforms driven by President Raul Castro aimed at updating the Cuban economic model.

Raul Castro has championed limited free-market reforms since taking the reins of power from his brother Fidel in 2008.

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