What Are CBU, SKD, And CKD Vehicles?
We often come across three terms when talking about cars. These are CBU, SKD, and CKD. It often confuses laymen and if it has left you wondering, you’re in the right place. This is where you will know what these stand for and what they mean. So, without further ado, let’s see what these terminologies mean.
Completely Built Unit (CBU)
As the name suggests, CBU vehicles are those that arrive in a country completely build and ready to use. This seems like a good option on the surface but there are two caveats. Importing a completely built unit doesn’t create manufacturing or assembling jobs locally and it also depletes the foreign currency reserves of a country.
In countries like Pakistan, where there is little to no manufacturing, a lot of the cars have to be imported as CBU. The federal government has imposed a huge custom tax on CBU vehicles to discourage the practice and avoid the two dilemmas mentioned above.
Moreover, in countries where there’s high unemployment, CBU vehicles do not help. Since they arrive fully assembled, the country importing them doesn’t benefit much in terms of manufacturing, employment, or foreign reserve. This is why most countries discourage importing CBU vehicles. Even for consumers, importing a CBU vehicle is usually very expensive.
On the other hand, small but high-income countries that are industry leaders in other industries can afford to rely on CBU vehicles. These include countries like the Netherlands, Norway, Singapore, Switzerland, and Saudi Arabia. They have no problem spending their reserves on importing cars. In fact, some of them avoid manufacturing locally because factories cause pollution, which they do not want to have.
There are so many CBU vehicles in Pakistan, it’s better to mention them, brand by brand. Starting from Toyota, their Camry, Crown, Rush, and Prius are CBU imports. Honda Accord and Honda CR-V 2018 are also CBU vehicles in Pakistan. Besides these, all Audi, BMW, Mercedes, and Porsche cars are CBU vehicles.
Heavy bikes such as Suzuki Hayabusa, BMW Ducati, Yamaha’s lineup, and Benelli are all CBU imports.
Semi-knocked down (SKD)
Semi-knocked down units are semi assembled vehicles whose remaining assembling is done in the targeted country. Moreso, SKD imports are also called semi-built units (SBU).
This helps the targeted country in several ways; one being the employment of labor and second, reducing the burden on its foreign reserves. A third way SKD imports can help the receiving country is by training its labor in advanced skills.
However, SKD vehicles are not fully assembled in the target country. They are assembled up to an extent. This is why their custom tax and freight charges are still high.
Therefore they are more expensive as compared to completely locally assembled vehicles, or otherwise known as SKD. Since the base structure and other parts are imported, foreign reserves are used. The labor also is not aware of the manufacturing of the basic components. It’s only skilled in assembling.
Examples of SKD include Suzuki Ciaz, Toyota Hilux, Toyota Hiace, and Toyota Fortuner.
Completely Knocked Down (CKD)
While semi-knocked down vehicles are partially assembled in the targeted country, Completely Knocked Down (CKD) units are assembled to a greater extent in the targeted country. This benefits the targeted company because the price of the end product reduces up to a varying extent.
Since CKD units are fully assembled in the importing country, more labor is required and more training is imparted to the labor. This is why governments also reduce custom taxes on such vehicles and the price further goes down. Thus the vehicle becomes affordable for the consumers and the car’s sales increase.
CKD cars in Pakistan are Hyundai Sonata and Hyundai Elantra, MG ZS, Kia Sportage, Kia Sorento, and all Suzuki cars except for Ciaz. Toyota has been offering CKD units in Pakistan for a long time. Most Toyota Corollas as far back as 1960 models were CKD and all the way up to the recent Toyota Yaris and Toyota Grande are CKD.
Honda City and Honda Civic are also CKD units in Pakistan. All CD 70 and CD 125 bikes in Pakistan are CKD units. There are some other CKD vehicles that we might have missed but we hope you get the point.
That’s it. We hope you are fully informed about these three terminologies and can recognize vehicles based on this category. If you’ve found this article informative, keep following our blog for more articles like these.