Talks that could open U.S. trade with Cuba could result in a fresh market for inexpensive new and used cars in the beleaguered island nation. And it could give American car collectors a chance to cherry-pick from the trove of 1950s and earlier cars that still ply Havana streets.
"There certainly is pent-up demand for modern cars," says Michelle Krebs, senior analyst for AutoTrader.com. "Anyone who has been to Cuba can attest that in terms of cars, time stood still. Beat-up classics from the '50s and '60s are on the streets."
"But," Kreb adds, "Cubans can't afford today's cars until their economy is revived."
High-level trade talks are expected to start between the U.S. and Cuba following President Obama's decision Wednesday to try to normalize relations, open some trade and eventually lift the U.S. embargo.
More than 11 million people live in Cuba, but only a tiny fraction of households own a vehicle because of complicated bureaucratic rules about buying and selling both new and used cars. And the average wage in Cuba is just $20 per month.
Even though the U.S. government today authorized the expansion of commercial sales and exports from the United States for certain goods and services, new cars and trucks were not specifically mentioned.
"The president announced the restoration of diplomatic ties. But trade legislation is still in Congress' hands," said Peter Nagle, a automotive sales analyst for IHS. "So for any U.S. company looking to invest in Cuba … they are still going to be subject to U.S. penalties."
Before September 2011, only cars in Cuba before the 1959 revolution could be freely bought and sold, hence the island's fleet of 1950s U.S. cars kept running and passed down through generations.
The Cuban government has a monopoly on the retail sale of cars in the country. There are 650,000 autos on the island, half of them owned by the government, according to Reuters. And the government's not in the discount business.
A 2013 Peugeot sedan was priced at more than $250,000 in January and a 2010 Volkswagen Passat was $70,000, according to a report earlier this year by National Public Radio.
Karl Brauer, senior analyst for Kelley Blue Book, noted that "the country is still ruled by a communist regime, and access doesn't mean economic capability."
"We're very encouraged by the comments today," General Motors said in a statement. "We will certainly evaluate any opportunities that may present themselves."
Nissan's U.S. office said the automaker "is aware of the diplomatic negotiations between the U.S. and Cuba and will continue to monitor the situation. Until there is an official change in the current environment, we cannot speculate about future plans."
Beyond routine new-car sales, Cuba eventually could provide a ready market for American used cars, easy to export from just 90 miles away.
And American collectors might be eager to get their hands on some of the best classics still in Cuba.
"There are a few gems left in Cuba, no doubt about it," says Dave Kinney, publisher of the pricing guide from an insurance agency specializing in collector cars, Hagerty. They include mostly foreign classics like the Mercedes-Benz gullwing sports cars.
For the most part, the shiny 1950s American cars there are clunkers underneath, patched together over the years just to keep them running. Many aren't worth restoring to original condition, but they could have high novelty value. Interest in them would be akin to cheap Soviet-era cars that came from Eastern Europe after the fall of the Berlin Wall, collectors believe.
"They don't have any real value above the romantic value, which is definitely there," Kinney says. "They are wonderful expressions of humanity's fight to win." He adds, "It would be very, very cool to show up at Cars and Coffee with a '57 (Chevrolet) Bel Air powered by a tractor engine."
Roger Falcione, CEO of ClassicCars.com, a trading site for collector cars, says the Cuban magic may be in discovering what rare cars still exit there. "Our industry loves 'barn finds,' " he says, noting there could be as many as 60,000 pre-1959 cars in Cuba. "This has the capability of being the largest 'barn find' of all time."
Falcione says, "There will be some that are pristine enough that they would still be worth quite a bit to collectors."
Snavely also reports for the Detroit Free Press
Source : http://www.usatoday.com/story/money/cars/2014/12/17/cuba-automakers-trade-cars-collectors/20547903/
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