The Korea Herald


Automakers salivate over ‘oasis’ Cuba

By Korea Herald

Published : Jan. 14, 2015 - 19:47

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DETROIT (AFP) ― The world’s most prominent automakers are hungrily eyeing up Cuba after its rapprochement deal with the United States.

But trade restrictions that are still in place for Americans and a litany of concerns about Havana’s policies means they are unlikely to dive in any time soon.

Washington and communist Cuba in December began the painstaking process of restoring diplomatic relations and easing the five-decade-old trade embargo.

President Barack Obama declared that the United States was ready for a “new chapter” in relations.

It still needs Congress to fully lift the embargo ― and if that happens it could take some time ― but businessmen are already looking for ways to establish an early position in a country they expect could surge economically with a bit more liberalization.

Automakers at the Detroit auto show were not talking out loud about the mouthwatering possibilities, but the potential for the largest island in the Caribbean, with a population of 11 million, was on the minds of many.

“We’re very encouraged by the news that the countries intend to normalize relations. We will certainly evaluate any opportunities that may present themselves,” said Patrick Morrissey, a General Motors spokesman.

“We are studying the eventual opportunities for GM in Cuba.”

Christine Becker, a spokeswoman for Ford, said they also were keeping an interested eye on Cuba.

“We will review that initiative in order to determine its potential impact for the industry. We have to better understand it. We don’t rule anything out for now,” she said.

South Korea’s Kia, which produces some of the lowest-priced cars on the U.S. market, said it welcomed the change in policy toward Cuba, but told AFP it too had no tangible plans for the island’s market.

Experts identify a number of hurdles automakers are going to have to overcome in Cuba, which is famous for the decades-old classic American cars that ply its dusty and unforgiving roads.

The U.S. embargo and other economic isolation forced by the communist economy has denied car parts for those rich enough to have them, forcing skilled Cuban mechanics to keep them alive for decades.

Akshay Anand, an analyst at the industry specialist Kelley Blue Book, told AFP: “No doubt there’s a potential growth. Cubans love American cars, the demand is there.

“You can look at it and say Cuba is an oasis for the automakers.”

The buying power of Cubans remains low, but with investment slowly beginning to flow in to a range of businesses from agriculture to tourism, a surge in demand for modern vehicles is seen as inevitable.

But the current limited U.S. opening leaves most investment and sales by Americans tightly restricted.

It allows Americans to sell farm equipment to support Cuban farmers; it is not clear if that will extend, for instance, to pickup trucks.

In the attractive shape of the vintage cars on Cuba’s roads, Detroit has an indelible history in the island’s motoring sector, readily visible to visitors.

Sometimes flashy and often crudely patched and rickety Pontiacs, Plymouths, Dodges and Chevrolets make up the island’s 70,000 “almendrones,” cars affectionately called large almonds for their rounded shape.

There are also Peugeots, Skodas, Ladas and Chinese models that entered the country between the 1960s and 1990s.

They too depend on the skills of Cuban craftsmen-mechanics to keep them chugging along in the absence of replacement parts.