NK News, a U.S. media outlet specializing in North Korea, reported on Tuesday that Chinese dealers are illegally selling disputed secured vehicles to North Korea.
NK News analyzed a video posted last September on Douyin, a Chinese social media platform. In the video, a Chinese used car dealer promoted a mortgaged Toyota Camry, disclosed the vehicle identification number (VIN), and said the car would be sold only to buyers able to transport it to North Korea.
NK News pointed out that it’s highly unusual for a Chinese used car dealer to mention North Korean customers explicitly. This is particularly noteworthy given the tightened registration scrutiny for new vehicle exports and the stringent regulatory oversight from Beijing’s Ministry of Commerce.
The report further explained that mortgaged vehicles in China often carry overlapping financial claims, highlighting a long-standing gray area in the Chinese used car industry.
According to NK News, financially struggling vehicle owners in China may have their cars secured by multiple lenders. If borrowers default, financial companies can seize these vehicles, known as black cars, many of which end up in the used car market.
However, since black cars are considered the property of the primary lienholder, purchasing such vehicles carries the risk of uncertain ownership. NK News explained that once a vehicle is seized, lenders may conduct judicial auctions to recover unpaid loans, leaving buyers with little to no recourse.
The report suggested that some dealers view North Korea as an ideal destination for these vehicles because Chinese lenders lack jurisdiction there and cannot retrieve the cars.
This practice violates both Chinese domestic law and international law. In February 2024, China’s Ministry of Commerce and General Administration of Customs banned the export of vehicles with mortgages or liens, citing concerns over fraud and illegal transactions. Additionally, UN Security Council Resolution 2397, adopted in 2017, prohibits member states from exporting means of transport to North Korea.
Recent reports indicate a significant influx of new vehicles into North Korea. Japanese media outlet Asia Press reported earlier this year that numerous new-looking cars were being stored in North Korea’s border areas. They also noted the establishment of over 20 temporary crossings along the Yalu River, suggesting a large-scale smuggling operation by China to transport vehicles into North Korea. This trend has reportedly grown since North Korea legalized private vehicle ownership.