Even to long time North Korea (DPRK) watchers this was something new – a billboard advertising a product in Pyongyang. And not just any product. Ads occasionally appear in the slim party-controlled newspapers – usually for something mundane like blankets or heating oil. This ad was for a car, the Hwiparam (‘whistle’ in Korean) – basically an updated version of Fiat‘s Siena, writes Paul French.

There are only six commercial ads in the DPRK’s capital Pyongyang (population 2.8 million) but the move is groundbreaking to say the least featuring the first car the country has ever produced alongside DPRK judo gold medallist Gae Sun-Hee and star movie actress Chung Hae-young with the slogan “Ahead into a new world, rallying the people’s efforts” that is reminiscent of the propaganda billboards that appear frequently in the capital. Just as the shock of the ads is wearing off they have been followed by a seven-minute commercial on the subway in Pyongyang (there are no ads on state controlled TV). The last time commercial ads were seen in North Korea was when Kim Jong-il toured the Rajin-Sonbong economic zone in 1998. Then the ‘Dear Leader’ was reportedly appalled to see adverts that were larger than the banners containing his father (and the North’s ‘Great Leader’ and founder) Kim Il-sung’s likeness. All the offending billboards were removed. The Zone’s Director was also removed, disappearing and rumoured to have been shot.

North Korea is a country known for many things – reclusive and strange leaders, rigid Stalinism, strange and belligerent diplomacy and perhaps nuclear weapons – but not for traffic jams or car production. However, Pyonghwa (Peace) Motors is changing that. Pyonghwa, the North’s first auto factory, is the brainchild of the Reverend Sun Myung Moon who is better known for his religious activities and is almost as reclusive as his new partner Kim Jong-il. The Reverend Moon is, of course, the head of the Unification Church (the ‘Moonies’). Now as well as being the man who claims to have had an encounter with Jesus on a Korean mountainside and has long dabbled in South Korean politics he is the owner of Pyonghwa Motors and partners with DPRK’s leader who was reportedly born under a double rainbow as a nearby iceberg cracked open. In 2000 Moon teamed up with Fiat and the state-owned Ryonbong Corporation (which owns 30% of the venture) to start construction of a new assembly plant that eventually opened in April 2002 in the run down North Korean port city of Nampo. According to Pyonghwa the company has plans to produce approximately 10,000 Hwiparam models annually and also eventually a few thousand Alfa Romeo 166s.

Pyonghwa originally started out as a Moonie owned South Korean car importer. Now Pyonghwa has the exclusive rights to car production as well as the exclusive deal to buy and sell used cars in North Korea. Ryonbong Corp is the state body that exports metals, minerals and machines from North Korea – i.e. it doesn’t do very much.

The obvious question is who is going to buy and drive these cars? The current car market in North Korea doesn’t offer much hope. Pyongyang is remarkably traffic free. Some people do drive but traffic congestion is hardly a major problem. Most passenger cars belong to state organisations and all vehicles entering Pyongyang must be clean with fines for dirty cars. Even now the odd oxcart can still be seen trundling around Pyongyang’s suburbs. Traffic laws for those that do drive are not that onerous though drunk driving is punished with hard labour while on hills ascending vehicles have the right of way, and trucks cannot pass passenger cars under any circumstances. For some years North Korea became unique for having four colour traffic lights, though most traffic control is now performed by female traffic directors (who are reportedly hand picked by Kim Jong-il for their beauty) as the lights are switched off to save electricity.

Passenger cars in the North are estimated to number only around 260,000 (compared to over 12 million cars in South Korea). Most are under the control of the communist party (the Korean Workers Party), the State Security Agency, the Ministry of Public Security or the Ministry of People’s Armed Forces. Traffic fines rarely apply to cars owned by these organisations, invariably older model Mercedes, Volvos or Soviet era Volgas and ZILs. Most other drivers keep a bottle of alcohol and some cigarettes for emergencies to ensure that fines are forgotten about. Smoking while driving is banned on the grounds that a driver puffing away cannot smell a problem with the car – a sign that reliability is questionable in North Korean vehicles. Petrol and diesel rationing is in force and many petrol stations remains closed due to the fuel shortages. Fuel is bought with coupons to ration supply though much of what is available is low in octane. Taxis are rare. The luxury high end market is represented by the 200 S-500 Mercedes cars Kim Jong-il had shipped in for the elite’s use in 1998 (when famine was still apparent in the North) at a cost US$20 million.

Still Pyonghwa thinks it can develop a market and also has plans to export cars to China, Vietnam and South Korea. So far two models have rolled off the production line – the Hwiparam and the rather clunky mini van Ppeokkugi (Cuckoo), which is based on the Fiat Doblo. Both models use parts imported from Fiat in Italy, both have engine displacements of 1,600 cc (1.6-litre) and cost between US$12,500 to US$14,000 per car. They are extremely expensive for the North Korean market to say the least – the average income in North Korea is around US$700-800 per annum for the lucky few (by contrast the South’s average income is US$10,013 – 13 times higher). Pyonghwa has a monopoly on domestic car production for the next ten years while Pyongyang levels no taxes on either car sales or the import of car parts. Though the people at Pyonghwa are cagey about releasing figures it is reckoned that the firm has invested around US$60 million into the venture with another US$240 million in investment planned over the next decade. This may be wishful thinking – Pyonghwa sold a grand total of 314 cars in 2003 and even by its own (somewhat dubious) statistics needs to sell over 1,000 cars a year to see a profit. The target for this year is 514 cars sold. To date the company has one client – the Korean Workers Party – the ruling party of Kim Jong-il in the North.

With the current economic collapse and isolation of the North realistically selling cars to the local market is a non-starter. However, there is a possible revenue stream for Pyonghwa. Many South Koreans have shown an interest in purchasing a car for their isolated and impoverished Northern relatives while ethnic-Koreans living in Japan who have relatives in the North are also keen to buy. To date the North Korean authorities don’t allow this but it could potentially be possible if the ban on private cars is eventually lifted (though it is rumoured that some famous actors and gold medal winners from the Olympics have been given private cars). However, it would not be wise for Pyonghwa executives to hold their breath waiting for this to happen in the ‘Hermit Kingdom’. In the meantime the ads for the Hwiparam have become a major attraction for Pyongyang residents, most of whom have yet to actually see a Hwiparam drive down the road.

Paul French is the Publishing Director of Access Asia and based in Shanghai. He is also the author of the forthcoming book North Korea – Paranoid Peninsula (Zed Books, 2004, London) and regularly writes about developments in the DPRK for the international media.