Why Volvo Keeps Asking North Korea for Money Since the 1970s

After World War II ended, countries started building themselves back up again. Diplomatic and economic ties had to be reestablished, peace was a priority, and the good spirits brought up by the possibility of having a meaningful existence manifested into entrepreneurial greatness.

Europe had to work hardest on this matter. The war has left the continent with multiple scars and a lot of confusion. It needed a way out. Closing the door on hate and border changes, some industries began to shine. Automakers especially had a proper chance at escaping the old ways of doing business. Their machinery could be easily reconfigured to make other types of vehicles and parts for them.

Almost two decades after the end of the World War II and we find the same exuberance over in Sweden. The carmakers were looking to export as many cars as possible, since people in countries like the United Kingdom, France, Portugal, U.S.A, Canada, Russia, and Japan were finding out about the reliability of Volvo. “Made in Sweden” was becoming something of a phenomenon.

Business is booming

In the midst of all this international success, Volvo and the Swedish government decided North Korea was a good place to do business. They thought the market had promise. Even though the state was relying on foreign aid, they had been buying machinery from the northern European country. Swedes even set up an embassy – the first western country to do so!

The trade contracts signed with North Korea also stipulated the buying of exactly 1,000 Volvo 144s. The small Asian country wanted the rigid design, the European look, and the famed reliability. What the carmaker didn’t know was that North Korea never planned on actually paying for them. The Swedes, in good faith, made the cars and shipped them as the signed contract said. It took a whole year, but it was done. The cars were distributed to those close to the rulers, and became a sign of good friendship with the authoritarians.

The Volvo 144 was a great sedan in the ‘70s. It was part of the 140 Series, which was comprised of two- or four-door models and, before discontinuing it entirely, the car was also presented as a station wagon. The name ‘144’ was an indicative of what the car was: the first of its kind, 4-cylinder engine and 4 doors. The car was such a success that it ended up being made in Belgium, Canada, Australia, Malaysia and South Africa. The rectilinear appearance was one of great importance back then. And, apparently, it still is. North Korea still has the cars delivered by Volvo in 1972 and 1973. Granted, they’re a rarer sight today.

Disappointment ensued

Sweden and Volvo never expected North Korea to not deliver on its promise. That is why they waited for the money. They only started asking about the €110 million ($124 million) in 1976, and became serious about it later.

North Koreans didn’t budge. They never intended to pay, and it is possible they never will. But Swedes, as kind as they are, never forgot. They still ask Pyongyang once every two years to reimburse the effort they made in the ‘70s. According to the Sweden foreign ministry, the debt today is about €277 million ($314 million), and it will keep rising.

Volvo didn’t end up in trouble because of this mishap. The Swedish government paid the carmaker in full from public funds for the 1,000 cars. Now officials must keep trying to get the money back. The now Chinese-owned Volvo might help, but we'll see if it happens.

May this be a lesson for us all: never deliver in full when there’s no payment guarantee.