What Does CBU, CKD, SKD Stands For? Let’s Find Out!

Very often in our blogs, we have used the terms CBU, CKD, SKD and SBU to indicate the assembly of a certain car. But not everyone is sure about what these terms actually mean. Before we even start to interpret what does CBU, CKD, SKD stands for, it’s important to highlight that these terms are used to describe the import processes of the car or a bike to the nation before it is sold to the end consumer. While we are aware of the fact that countries like Pakistan and India regulate a high taxation system on import cars, manufacturers pick the best option between CKD, CBU and SKD units.

What does CBU stands for?

CBU stands for “Completely Built Up”. As the name suggests, it is a completely assembled vehicle which is ready to be used. It doesn’t need any kind of addition to its components to perform its working and has already been tested before making its way out of the factory. Many vehicles must be imported as CBUs in countries such as Pakistan, where there is minimal to no manufacturing.

Since, taxation system in Pakistan works according to the engine size of a vehicle, companies are more inclined towards importing cars with smaller engines to reduce the amount of custom tax incurred on the import of CBU vehicles. To tackle diminishing employment opportunities in the automobile manufacturing industry and depleting foreign exchange reserves, the federal government imposes large customs duty on CBU vehicles.

Audi Pakistan is the prime example here, and none of their cars has ever been assembled here in Pakistan. They also come with a down-sized engine so that the tax is lower too. The new Honda CR-V 2022 is also a CBU unit. All Benelli bikes sold in Pakistan and the upcoming Vespa Primavera scooter are also CBU units to name a few.

A CBU unit is not necessarily finished in the same country where its parts have been made. For example, the parts of Mercedes Benz S-Class are imported, assembled and then the final CBU unit is imported to Pakistan.

What does SKD stands for?

SKD stands for a “Semi Knocked Down” unit. Also, sometimes referred to as a Semi Built Unit (SBU), these vehicles are partially assembled in some other country before being exported to the final destination where they are sold, once fully assembled. SBU stands for the likes of Toyota Hiace and Hilux. International Manufacturing Companies import these vehicles partially built along with its parts and assembles them here in Pakistan. The heavy buses and trucks also fall into the same category.

Importing a SKD unit benefits the country in a couple of ways. Manufacturing the rest of the SKD unit promotes the creation of jobs in the auto manufacturing industry while also taking off the burden on foreign reserves. On the other hand, SKD vehicles are not fully assembled in the target country which is why the custom and freight charges still remain considerably high.

What does CKD stands for?

CKD stands for a “Completely Knocked Down” unit. A CKD unit is the one which has been locally assembled in the country. However, the parts, engine, electronics and other major components were imported from the origin country. This means that the manufacturing company has to put the parts together first before selling the vehicle to the end consumer. The benefit of doing this is low taxes on the cars. This way foreign manufacturers are encouraged to built plants and produce the cars locally.

The best example of CKD would be all the cheap Chinese knock-off sports bikes that are being imported in Pakistan. The bikes are imported as a kit from China and they are assembled here in Pakistan by local distributors. As far as CKD cars are concerned, the recently launched Hyundai Sonata, Kia Sorento, Toyota Yaris and MG ZS are all CKD units.

We hope this clears out your confusion regarding the terms CBU, CKD and SKD/SBU. If you know something more on these terms, or a specific vehicle that falls under these categories, please let us know in the comment section.