Truck makers keep an eye on the Cuban market

With a 50-year-old vehicle fleet and growing public opinion of the United States to end its trade embargo, Cuba could one day become a big market for truck makers.

Yet while there is pent-up demand for new U.S.-made trucks, experts say the country’s complex economy and financial woes can make importing U.S. vehicles difficult.

There are thousands of old cars and trucks on the roads of Cuba. Before Fidel Castro came to power in 1959, the island nation had a love affair with American vehicles.

Until the revolution, Cuba was the leading importer of vehicles built in the United States, including Ford and General Motors trucks, said Tom Cotter, co-author of Cuban Automobile Culture: Celebrating the Island’s Automobile Love Story.

After the revolution, Castro instituted a 200% tariff on all imported vehicles, and President Eisenhower banned trade with the island in 1960. Castro then banned the importation of all new American vehicles as well as spare parts. spare.

For more than five decades, Cuba has recycled and reused what it could, drawing on a mishmash of pieces handed down and rebuilt over the years. The whole country is a “parts dump” where even screws are salvaged and parts repaired, Cotter said.

Some classic American vehicles are equipped with parts of Danchuck, the world’s largest manufacturer of Chevrolet restoration parts from 1955 to 1957. But the only way to get them is to get around the U.S. embargo by shipping them first to Mexico and then to Cuba, Cotter said.

“If you take a piece of your car, you keep it forever because you can’t buy a replacement,” Cotter said.

A typical truck seen in Cuba. (Photo: Craig Guillot / Trucks.com)

Many trucks have even been fitted with engines from the tens of thousands of tractors Belarus has sent to the island over the past four decades, Cotter said.

Nonetheless, the United States maintained a presence on the roads of Cuba. There are dozens of US-made model cars and trucks from the 1950s, as well as a mix of newer vehicles from other countries such as Russia and China – two of Cuba’s former Communist trading partners.

Another half-century of repair and rigging has left the country longing for new trucks, and with Florida just 90 miles away, the United States could be a big source of imports.

Cuba has a growing need for transportation to transport agricultural products and to support the growing tourism industry, said Saul Berenthal, president of Cleber, a manufacturer of small tractors in Paint Rock, Ala.

But all auto imports are tightly controlled even today. It is only in the last two years that Cuban citizens have been allowed to import vehicles themselves.

Last year, Cuba-born Berenthal was told by the US Treasury Department that his company would be the first manufacturer allowed to make products in Cuba since the embargo. Berenthal is now awaiting further action from the Trump administration, which said in June it would cancel some of the new openings.

“There is definitely a market,” Berenthal said. “There is going to be a need for trucks for large-scale freight transport, but also smaller ones for private transport. “

Even the Cuban government has admitted its transport and infrastructure challenges, said Paolo Spadoni, Cuban expert and associate professor of political science at Augusta University.

Cuba was a big recipient of Russian aid and imported thousands of trucks from its manufacturers when it was part of the Soviet Union.

“Cuba has had transportation problems since the 1980s when the Soviet Union collapsed. This is the sector with the slowest recovery, ”said Spadoni.

Due to funding issues, Cuba doesn’t have a lot of options for getting vehicles, but China and Russia are the two main countries that will export to them, he said.

From 2008 – the same year Fidel Castro stepped down from the Cuban presidency and his brother Raul took power – Russian truck maker Kamaz started delivering trucks to the island. In the following years, Kamaz’s exports increased, reaching 900 in 2013.

In 2009, Cuba began importing sedans from Chinese automaker Geely for use as police cars, taxis and other commercial vehicles.

Last year, Kamaz signed a contract with the Cuban government to deliver 2,400 trucks as well as “automotive material, spare parts and equipment necessary for the installation in Cuba of a network of repair factories”.

American manufacturers interested in the market

American truck and equipment manufacturers have already shown interest in the Cuban market. Last year Ford, GM and Fiat Chrysler Automobiles said they were monitoring the market and waiting for changes in economic policy.

Although GM has not shared details, a company spokesperson told Trucks.com that it “will certainly assess any opportunity that may arise. [itself] as developments warrant.

In 2016, Doug Oberhelman, managing director of equipment maker Caterpillar Inc., took a high-level trip to the island to meet with Cuban ministers and said his company was ready to enter the market once the US embargo lifted. Oberhelman expects the new Cuban port of Mariel to become a successful distribution point for the Caribbean and Central and South America.

The first wave of demand could be for used trucks, said John Kavulich, president of the Cuban-American Economic and Business Council.

While Cubans prefer the quality of American vehicles, they also want low price and simplicity, Kavulich said.

“Cuba just doesn’t need a lot of the technology that usually comes with newer trucks. They are more inclined to go for what is simple to use, simple to repair and will have a long lifespan, ”he said.

Russian and Chinese vehicles are not the most technologically advanced, but “just like the AK-47,” they are simple machines, Kavulich said.

Truck in Cuba with an open hood

A truck in Cuba in need of repairs. (Photo: Craig Guillot / Trucks.com)

A demanding market despite everything

Even if the US government loosened the reins of the embargo, truck makers might still find Cuba a tough market.

Due to its state-controlled economy, buyers of trucks in Cuba would be government entities, not businesses, Kavulich said.

Two of the biggest potential customers would be the Ministry of Transportation and CIMEX, a military conglomerate for transportation products, he said. “You can’t import yourself. The government is in charge, and you have to depend on what it is willing to sell you.

An even bigger problem is that Cuba has a bad credit rating and has historically struggled to meet its financial obligations, Spadoni said.

The country defaulted on all of its foreign debt in the 1980s and recently restructured all of its debt with Mexico, Russia and its trade creditors in China and Japan.

“They have always had liquidity issues,” Spadoni said. “Even if you lift the embargo, it also depends on Cuba’s financial situation to give guarantees.”

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