The Russian automobile manufacturer AvtoVAZ is returning to Cuba after an absence of 12 years. AvtoVAZ will export 300 Lada vehicles, the Vesta and Largus models to the Island. The first delivery of cars is set for November. Depending on the success of the venture, a contract to continue the import of AvtoVAZ cars may be signed in 2018.
At a press conference, the CEO at AvtoVAZ, Nicolas Maure, told reporters, “Last time we sold Cuba new cars was 12 years ago, and so the question now is how we can return to this market.”
In 1959, foreign cars were no longer permitted to be exported to Cuba. However, the exception was cars from the Soviet Union, because of the former relationship between the two countries. Many Russian cars continued to appear on the streets of Cuba during this time period. When the Soviets left the Island, the cars remained. It is for this reason, Cubans have a strong knowledge and familiarity with Russian car models. This familiarity with the Russian brand is an advantage to AvtoVAZ.
In 2011, laws changed and Cubans began to buy and sell cars. Foreign cars imports recommenced in 2014. A large percentage of the car import market is destined for the tourism industry for use as taxis, car rentals and travel company transportation. However, for the average Cuban with a monthly salary of 20 to 30 CUCs, purchasing a car is far beyond their reach.
Ivekta will be the supplier in Cuba and manage warranty services and spare parts supply.
The automobile industry will be watching closely the success or failure of this endeavor by AvtoVAZ. It could establish a business model for future automobile exports to Cuba.
Marco Hernandez is a father, husband, avid sports fan #beisbol, #fútbol, #Barcelona. He is also a consultant and market researcher for the Cuba Business Report.
