WHEN the Cuban government said in December that it intended to let the population buy modern cars without requiring permits, many suspected there would be a catch. They were right.The cars, which can only be bought through state-owned suppliers, cost a fortune. A 2013 Peugeot 508, marketed in Europe as an affordable saloon car costing around $30,000, has a price tag of more than a quarter of a million dollars at a rundown showroom in Havana. A Chinese Geely, with more than 80,000 kilometres (50,000 miles) on the clock, is on sale for around $30,000. The average salary in Cuba is less than $20 a month. “What do they think they are selling? Aeroplanes?” jokes Erik, a handyman, as he looks at the price-list. “They don’t want to sell any cars. It’s all a show,” agrees Ernesto, a mechanic.The prices certainly seem designed to deter purchasers. Some even wondered whether there had been a clerical error and prices had been listed in Cuban pesos, Cuba’s local currency, which is worth 24 times less than the dollar-pegged convertible peso (CUC). Another theory is that the high prices are a preview of a widely predicted devaluation of the CUC as part of the government’s commitment to unify the island’s two currencies.A further explanation may lie in the immediate effect of the reform: the elimination of a thriving black-market trade in the permits to buy new cars. For decades these...
via The Economist: The Americas http://www.economist.com/news/americas/21593492-road-capitalism-does-not-run-smooth-seat-belt-mirrors-brake?fsrc=rss|ame
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