North Korea’s $430 Million Volvo Heist: The Untold Story

In 1974, North Korean authorities ordered 1,000 Volvo 144s from the Swedish auto company. This formed part of a bigger trade deal with several major Swedish firms. Volvo duly shipped 1,000 brand-new 144s to North Korea. And then the North Koreans… failed to pay for the cars. More than 50 years later, that bill remains unpaid.

This is the curious story of the biggest car heist in the world, involving a country where private citizens are, in effect, not allowed to own a car.

And how North Korea got away with it.

Volvo’s For Me, For You, For… Well, For Some People!

To fully understand how all of this came about, a short trip down history lane is required. And how the biggest car robbery, in a very roundabout way, strengthened the relationship between Sweden and North Korea.

Firstly, the North Korean propaganda machine is not shy about exaggerating certain facts. Like in 1994, when state news outlets reported that new supreme leader Kim Jong-il had recorded no less than 11 holes-in-one at his very first attempt at a round of golf. Or that North Korea’s own Sungri Motor Company had created a 1,000-hp tipper truck that could reach more than 100 mph.

North Korea has been ruled by one family since 1948. Shrouded in secrecy, and mostly isolated from the rest of the world, North Korea is ruled with a strong hand, its citizens kept on a very short leash. For instance, ownership of a private car in North Korea is almost unheard of, a privilege only reserved for the richest, best-connected officials.

In the early 70s, Swedish government officials came to the conclusion that North Korea was a burgeoning market, and one that the Scandinavian country had to tap into. Thanks to its unique and long-standing relationship with North Korea, dating back to the Korean War when Sweden provided medical assistance to the Korean people through the Swedish Red Cross, the two countries officially established diplomatic relations in 1973, with an eye on trade deals.

In 1974, various Swedish firms and the North Korean government struck a trade deal that saw millions of dollars worth of equipment shipped to North Korea. That included 1,000 cars. And that’s when the fun really started.

All Hail… The Taxi?

In a state where private citizens were effectively not allowed to actually own a car, what was the plan, you’re no doubt wondering. Well the North Korean officialdom had a plan: a number of lucky officials were handed the keys to a brand-new Volvo 144, considered to be quite the luxury and prestigious car (especially compared to the shoddy civilian cars on the road in North Korea at the time).

The Volvo 144s remained the property of the government, of course, and if an official with a Volvo key in his pocket happened to step out of line, well, the 144 went to a more deserving comrade. The cars that remained were deployed for taxi duty, mainly in the capital city of Pyongyang. So far, so good, right?

Next, the Swedish officials presented their North Korean trade partners with an invoice for an estimated $75 million (at current rates), as per the trade deal. But the payment never came. Despite Volvo’s best diplomatic efforts, the officialdom in Pyongyang simply ignored the Swedish request for a settlement for the 1,000 cars.

There was a light at the end of the tunnel for Volvo, and it wasn’t a speeding train heading towards it. The company had insured the deal through the Swedish Export Credit Agency, referred to as EKN. The governmental agency paid Volvo for the 1,000 cars, so at least Volvo did not suffer a significant financial loss.

Interestingly, it is said that the Swedish government, to this day, sends North Korean officials a statement with the outstanding amount, twice per year. And North Korea simply does what it has been doing since 1974… it ignores the statement. But it serves as a handy reminder of what happened in 1974.

Only the North Korean authorities know how many of these cars are still running today, but it appears that there are quite a few still on the road. Clearly, Volvo built them tough. To that point, a period Volvo commercial:

The Secret Sauce Of The 144

North Korea may have bagged 1,000 Volvo 144s and not paid a cent for them, but between 1966 and 1974 Volvo sold more than a million 144s around the world. So what was Volvo’s secret 144 sauce? At the unveiling of the new sedan in 1966, Volvo’s CEO at the time, Gunnar Engellau, confirmed that the 144 represented the biggest investment in a new car in the company’s history, including brand-new production facilities.

Engellau added that the emphasis in designing the new 144 was on safety, quality and economy. For one, the Volvo 144 was the first car to be fitted with a dual-circuit brake system, with disc brakes at all four corners. In 1966, that was quite a thing. The Volvo featured a conventional layout, with the 85-hp B18 engine under the hood, driving the rear wheels. The car featured a number of safety innovations, including a safety cage around the passengers with crumple zones, front and back. The steering column was designed to collapse in a crash, another first.

The Volvo 144 made its debut as a sedan, but a two-door coupe and a station wagon were added to the range. In the two-door GT coupe, the two-liter version makes up to 140 hp. There was even a van with a raised roof called the 145 Express.

The year that Volvo sent 1,000 cars to North Korea was also its final year of production. It became Volvo’s first million-seller model, and it is estimated that a total of 1.25-million cars were eventually sold.

The Volvo 144s still running around in Pyongyang in North Korea tell the story of a high-quality, durable sedan that stood the test of time. Considering that Volvo clearly did not provide any after-sales backup for those 1,000 cars, and that the comrades at the North Korean government’s official service centers could not simply order some spare parts from the factory in Sweden, the longevity of these cars is truly commendable. North Korea probably did manage to source parts through third parties, but the fact that a number of 144s are still running, 51 years down the line, is an impressive feat.

Nothing To Pay Here…

In 1974, Volvo’s invoice for 1,000 cars amounted to around $75 million (in today’s monetary terms). With interest accrued over 51 years, that amount has ballooned to an estimated $430 million. Will North Korea ever pay that back? Not a chance. When Volvo shipped the 144s to North Korea, several other Swedish companies also sent product and equipment in the hope of opening a new trade relationship with North Korea. They were apparently also never paid.

Doing business with North Korea is clearly a tricky affair, fraught with pitfalls, red tape and the whims of officialdom. Yet Sweden remains the only Western country with an embassy in Pyongyang. So why would Sweden even bother, with all the funds still owing to them by the North Korean state?

Since the Korean War, Sweden has played an integral part in the humanitarian efforts in South Korea. Additionally, the fact that Sweden has a diplomatic relationship with North Korea is considered to be vital by many other governments around the globe, as the Swedish connection provides them with a half-foot-in-a-door that would normally remain completely shut to them. As a result, Sweden has played a pivotal role in acting as mediator between North Korea and countries like the USA.

So, in a plot that may be worthy of a film, North Korea managed to pull off the biggest car heist ever, bagging 1,000 Volvo 144s, with no retribution. But at the same time, the Swedish government, who ultimately paid the bill for those cars, is now the only country to maintain a meaningful and cordial diplomatic relationship with North Korea.

It seems that, for Sweden, the 1,000 Volvo 144s served as a type of “statement of intent to negotiate”, a goodwill gesture, if you like. After all, it served to demonstrate Sweden’s best intentions in forging a new relationship with North Korea, going forward. As a result, Sweden has continued to play a vital role as mediator between North Korea and other nations.

After all is said and done, the Volvo 144 played a small but significant role in establishing the relationship between Sweden and North Korea. And it is a relationship that has had a crucial impact on the region, and the world.

Sources: Volvo, NPR, National Committee Of North Korea, Embassy of Sweden.