Do I need to own a car in Panama?

I would like to expand on what Judith and Lourdes have correctly said. Here is a list of general considerations about driving, cars and getting around – focusing mainly on Panama City and the Panama Province.

• Traffic is heavy, especially during rush hour. Think of it as a battle. Don't expect courtesy or turn signals, etc. Panamanians love their horns too. They beep in road rage. They beep when running red lights or approaching an intersection. They beep at pedestrians...

I would like to expand on what Judith and Lourdes have correctly said. Here is a list of general considerations about driving, cars and getting around – focusing mainly on Panama City and the Panama Province.

• Traffic is heavy, especially during rush hour. Think of it as a battle. Don't expect courtesy or turn signals, etc. Panamanians love their horns too. They beep in road rage. They beep when running red lights or approaching an intersection. They beep at pedestrians who have the right of way but don't get it.
• The streets tend to be narrow (but new infrastructure improvements are helping that). Basically streets are passable but watch out for 'tire killers' like deep pot holes and missing man-hole covers. Along the same line, make sure you know what streets to use as some can be confusing. There is one major street in the Banking District which is one way, except for one little block which is two way, for example.
• You can get a temporary 3-month license. A long term takes time, patience and red tape – if you qualify. Best to get a Panamanian to help guide you through.
• Make certain your car and insurance (now required) papers are in order. And that you don't speed. The underpaid traffic police can stop you for no reason and ask for a 'donation'. Start at $5 and if you can settle at $10 or $20, it is cheaper than going to traffic court. Be aware that if there are more than one police persons involved, your donation will probably be per head.
• If you want to import your car, you can duty free if you have proper permissions such as a Retiree Visa. You will have to pay shipping and handling though. And, customs are customs in any country and Panama is no exception. If your car is impounded for some reason, you will have to pay a per-day fee to get it out.
• New car prices are reasonable, second hand can be really cheap. The best bet is to buy Japanese or Korean as parts and repair are easy to find.
• Gas tends to fluctuate at around $4 to $5 a gallon, depending on type.
• There are alternatives to owning a car. Taxis are cheap. In Panama City, the Metro bus service and some parts of the Metro subway are open. There are also the 'Diablos Rojos' (Red Devils), which are used by the locals. These are converted American school buses. The fare is next to nothing but they are usually hot and crowded. If you want to go to outlying areas such as Arraijan or El Chorrera, there are air conditioned mini buses (Chivas) and pirate taxis (private car owners), which are inexpensive. If you want to go to the interior provinces, all the major car rental agencies are in Panama – Hertz, Avis, Dollar – and day rates are cheap.
• If you like motorcycles take extreme care. The average driver here is simply not accustomed to watching for bikers.

I hope this helps. FYI, I sold my Jeep Cherokee years ago. Less hassle.