400% markups reported as Cuba opens new/used car sales for first time since 1959
One could hardly blame Cuban consumers for suffering from a bout of 'sticker shock' when new car shopping this week – after all, they haven't had the opportunity since 1959. But it isn't just a half-century of inflation that buyers are having to wrap their heads around this week, it's massive markups.
Reuters is reporting that with the Cuban state opening up the sale of new vehicles without special dispensation, price markups of 400 percent and more are turning away would-be shoppers in droves. In a country where average monthly wages total just $20, you can imagine the shock and incredulity that is accompanying word of a state-run Peugeot dealer asking $262,000 for a 508 – a D-segment model that typically lines up against cars like the Ford Mondeo.
And it's not just new cars that are suffering from the markups – Reuters interviewed Cuban artist Cesar Perez, who was looking at an unspecified 2005 Renault. The used car lot's price was $25,000, where similar models trade for just $3,000 outside of the island nation. "These prices show a lack of respect for all Cubans. What is here are wrecks. I now have no hope of getting a car for my family," he said.
The price gouging is being viewed by at least one analyst, John Kirk, a Canadian academic expert on Latin America, as a "luxury tax imposed by the government on the nouveau riches of Cuba." No matter what it is, with such heady prices, Cuba's venerable culture of keeping old automobiles alive by whatever means are available seems unlikely to change any time soon.
