A couple of days ago, while researching on a pet project of mine, I stumbled across the CBU’s (Completely Built Units) in Pakistan, which got me thinking on why automakers import CBU’s in Pakistan? Because they have more taxes imposed upon them by the Govt. and then there is the possible solution in the shape of SKD (Slightly Knocked Down) or CKD (Completely Knocked Down).
A CBU import refers to a vehicle, which has been assembled out of the country and has been imported as a complete unit. Some of the most popular CBU cars in Pakistan are:
An SKD is an incomplete disassembled kit, which is first imported in partially assembled kits or parts and then fully assembled in the target country.
Technically both SKD and CKD are subject to the trade, custom and technical abilities of the receiving country. Some of the most popular SKD units in Pakistan are:
I believe that the biggest difference between both type of units is the level of localization, for example ’11th Generation Toyota Corolla’ by IMC is 60% localized as mentioned in the IMC’s fiscal year report of 2015. CBU’s are often frowned upon in many (developing) countries by imposing taxes on their import to discourage this particular avenue. SKD on the other hand, helps introducing new employments and enhancing the technical abilities of the labor, which contributes more positively in the economy of said country.
But on the flip side, the quality off the CBU’s are definitely superior to the SKDs; which is why, people who can afford them, decide to just go ahead and buy CBU’s which come with a lot of pre-installed features. And since customers are in limited numbers and the cost of implementing an advanced assembly-line and training the labor to use it, it is very high, auto-manufacturers just import some selective units.