Bollywood star Salman Khan (front, 2nd R) drives with Katrina Kaif in a convertible car on Havana's seafront boulevard El Malecon February 15, 2012. The actors are working on scenes for their latest film, "Ek Tha Tiger". The movie, directed by Kabir Khan, is expected to be released in June 2012. REUTERS/Desmond Boylan (CUBA - Tags: ENTERTAINMENT TRANSPORT SOCIETY)

Cuba will ease restrictions on vehicle imports for the first time in half a century, marking the end of an era that made icons of the island's vintage cars.

The official newspaper Granma said the decision to allow cars to be imported for sale at market prices on the island was taken on Wednesday by Cuba's council of ministers.

It said the decision would gradually free up retail sales of all types of vehicles - cars, vans, trucks and motorcycles - and end the practice of granting some Cubans special permission to bring in vehicles as a privilege.

Granma acknowledged the so-called “letters of authorisation” issued by the transport ministry had generated “resentment, dissatisfaction and, in not a few cases, had become a source of speculation and enrichment”.

Holders of the letters, however, will still be first in line to buy cars while the new system is phased in.

Opening Cuba's domestic car market to imports is likely to have fateful consequences for the lovingly maintained 1950s Chevys, Fords and Pontiacs that have survived a 50-year-old US embargo.

No official figures are available on Cuba's vehicle but experts believe there are about 60 000 American cars still circulating on the island, alongside Soviet-made Ladas and Moskvich cars made in the 1970s and '80s and more modern, usually Asian, vehicles imported by the government.

Mint condition Cadillacs, Chryslers and Oldsmobile convertibles can still be seen carrying tourists around Havana, but most of the rolling relics from pre-revolutionary Cuba are now used for collective public transportation.

The changes are a long-awaited element of president Raul Castro's attempts to gradually liberalise Cuba's Soviet-style economy.

The government in September 2011 allowed Cubans and foreigners living on the island to sell their used cars to one another.

“We've been waiting for this for 20 years.”

Freddy Mugercia, a 41-year-old taxi driver, welcomed the news.

“Now anyone who has money will be able to buy a car,” he said. “There were a lot of people who had received money from their families outside Cuba and weren't able to.”

Granma provided few specifics on how the broader car market would work, saying the new rules would be made public in the coming days.

But it said pricing of new vehicles should be similar to that for used vehicles sold privately.

That suggests the government will impose hefty taxes on sales of imported vehicles.

Because of the restricted supply, car prices in Cuba are already astronomical.

A basic Lada in good condition, for example, sells for around $12 000 (R125 000), about as much as a '57 Ford that has had decades of use as a taxi.

A Cadillac convertible, such as those that cruise the Havana waterfront with tourists aboard, can cost as much as $80 000 (R833 000).

For most Cubans, with salaries that average just $20 (R208) a month, owning a car is still just a dream.

In the meantime, Granma said, proceeds from car sales would be used to finance upgrades to Cuba's public transportation system. - AFP