Cuban entrepreneur builds a business on classic American cars

Cuban entrepreneur builds a business on classic American cars
BY MIMI WHITEFIELD
mwhitefield@MiamiHerald.com

HAVANA
Julio Alvarez Torres started business with a single refurbished 1955
Chevy Bel Air that had been in his family for decades and put it into
service in 2010 driving tourists around the city.

They liked the feeling of going back in time, and Alvarez and other
cuentapropistas — self-employed entrepreneurs — liked the fact that the
pointy fins, heavy chrome and streamlined hood ornaments of 1950s cars
could be put to work to earn them a living.

After the 1959 revolution, Cuba became something of a car museum: the
trade embargo made it impossible to import the big American automobiles
Cubans loved and economic problems made it difficult to bring in much of
anything except Russian-made Ladas and small Fiats. Now other makes of
new imported cars are making their way to the island but they're
extremely expensive.

With Russian engines, homemade parts and sheer ingenuity, somehow they
kept old American cars chugging through city streets. Others carefully
guarded their American cars in garages and only took them out for weekly
or even more infrequent spins.

Cuba has allowed limited self-employment since the early 1990s but in
2010 when the government began emphasizing self-employment as a way to
reduce bloated state payrolls, the old cars became a hot commodity.

Now lines of big-finned beauties, 1950s convertibles and two-tone models
buffed to a gleaming shine wait outside the Hotel Nacional and other
Havana tourist hotels to take visitors for spins along the Malecon, pick
them up or drop them at the airport or ferry them to attractions and
business appointments.

Alvarez began by parking his car outside the Hotel Nacional and offering
his services as a taxi driver, but now he has taken the nostalgia craze
to a whole new level.

Cuba's Nostalgicar business ferries tourists around the island

Today, he and his wife Nidialys Acosta oversee a fleet of 22 classic
private cars and drivers that form a loose association called
NostalgiCar. Alvarez also has started an off-shoot called Garaje
NostalgiCar, a garage that refurbishes vintage cars and employs eight
workers. He calls the garage, which has refurbished his own cars and
those of others, his Plan B.

Pink-and-white Chevy

The couple owns two of the fleet cars, a 1955 blue Chevy Bel Air and a
1956 pink-and-white Bel Air called Lola that could possibly be the most
photographed classic car in Cuba. New York Gov. Andrew Cuomo sat behind
Lola's pink steering wheel during an April business mission to Cuba as
the cameras whirred.

When Alvarez lifted Lola's hood to show the governor the old engine had
died and been replaced by a four-cylinder Toyota diesel engine, Cuomo
said seeing a Chevy with a Toyota engine was a first for him.

Lola is a looker with whitewall tires and pink rims, pink and white
plastic-covered upholstery and even lipstick-pink car locks. But another
silver-gray 1956 Bel Air in the fleet has its original engine and a
big-cat purr that makes Lola seem like a kitten.

Alvarez says he's constantly in touch with the government about possibly
turning NostalgiCar into a cooperative. Many formerly state-run beauty
salons, barbershops and other service companies have been turned over to
their workers who run them independently on a profit-and-loss basis as
the government seeks to pare state payrolls.

But so far he hasn't had a positive response, so each driver/owner is an
individual cuentapropista. "Today we're not a company or a cooperative,"
Alvarez said. "There's not the legal framework to do what we want." But
he's content to leave the structure of the garage as it is because he
said he doesn't think the employees are prepared to become his partners
and so far all the investment has been his capital.

Most of the other NostalgiCar owners reinvest about 70 percent of what
they earn into their automobiles, and with the remaining 30 percent,
"they live better than any state worker," said Alvarez.

Alvarez, who studied mechanical engineering, first joined forces with
five friends who also had classic cars. NostalgiCar grew quickly from
five classic cars to 11 to 22.

But Alvarez said his dream is to have a company that provides services
with a fleet of cars that he has refurbished and owns and that has
drivers that he employs. "Right now I am preparing for the future," he said.

Even though Alvarez and his wife get no commissions from the other
drivers in the NostalgiCar group, he said working collectively helps
them get volume and name recognition.

The early name of the association was Renta Clasico Chevrolet, but when
they tried to register it, they, of course, found they couldn't because
the Chevrolet trademark was taken.

After that, they came up with the NostalgiCar name, which they are in
the process of trying to register in the United States as well.

A big break came in November 2013, when the Ministry of Tourism allowed
the owners of classic cars to sign contracts with state tourism agencies
for transportation services.

But in April, he said, the ministry revoked the resolution. Last week it
was resubmitted and Alvarez said car owners are once again allowed to
sign contracts with the state.

Market Barriers

Meanwhile, NostalgiCar keeps banging up against market barriers that
hamper growth and profits. "There are millions of difficulties and
obstacles," said Alvarez. "It's a country that's constantly changing,
looking to find its way without renouncing our values."

Although new U.S. regulations allow some products produced by private
Cuban entrepreneurs to be exported to the United States, refurbished
cars aren't included on the list of permissible products.

Then there's the problem of getting the parts needed to bring the cars
back to their glory days.

Parts are hard to get in Cuba, so Alvarez often turns to Danchuk
Manufacturing, a Santa Ana, California company that makes 1955-1957
Chevrolet replacement parts, MAC's Antique Auto Parts in Lockport, N.Y.
and even eBay.

Like so many things in Cuba, there is a Miami connection. Because he
hasn't been able to buy direct, Alvarez works with a Miami middleman who
purchases the parts that the garage needs with his credit card for a 20
percent surcharge and then arranges their delivery to Cuba through a
Miami shipping company. He said it often costs $8 to $10 per pound to
send the parts to Cuba. Then duties must be paid on the Cuba side.

That means a part with a factory value of $159 might end up costing him
as much as $250, Alvarez said.

Under the new U.S. regulations, Alvarez and other private Cuban
entrepreneurs like him may eventually be able to import the parts
directly, said Miami attorney Augusto Maxwell.

"Theoretically any American business should be allowed to export to a
private Cuban business person, but most U.S. companies aren't familiar
with how to do it," he said. "It's interesting to see the forces of
private enterprise begin to work in Cuba and it will be interesting to
see how they manage it."

NostalgiCar also pays a middleman in Canada to host the server for its
website, adding to its costs.

The big missing ingredient for Cuba's self-employed workforce, which now
numbers nearly 500,000, is the lack of a meaningful wholesale market on
the island. "If we can't figure out how to get access to a wholesale
market, I don't think we'll grow much larger," Alvarez said.

NostalgiCar has a preference for Chevys, but the fleet also includes
some Fords and other makes.

Old junkers, which cost $6,000 to $7,000, come into the garage and after
a year or so, they emerge as "very pretty" machines, Alvarez said.

As Alvarez walks through the garage pointing out works in progress — a
1959 Chevy Impala with a Mercedes engine that will be finished in a few
weeks and even a child-size blue classic car that he plans to refurbish
for his son — he admits renovating the vehicles takes every bit of
ingenuity he can muster.

And he grows very fond of them during the restoration process. "It's
like having to amputate a part of your body if you have to sell them,"
he said.

Although he's had people from around the globe come and offer to buy the
vintage cars, he said they should stay in Cuba.

Alvarez jokes that his first mistake was letting his wife join the
business, but then he quickly admits that in this marriage, Nidialys,
who has a background in marketing, is the "thinker" and he's the one
with an extra dose of passion for the cars. On the nostalgicar.com
website, it says to contact her.

Source: Cuban entrepreneur builds a business on classic American cars |
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