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The auto industry has a substantial importance all over the world. In this sector, technological innovations are happening on a large scale. New automobiles with the latest features and hi-tech technology are launching rapidly in the market.
With the growth of this industry, people are also more aware and love to update about new cars, models, features, and specifications.
In Pakistan, the auto sector is also growing and trying to meet the challenges of new technology and fulfilling the demands of the customers.
Different companies in different manufacturing plants make cars, bikes, and vehicles. An entire team works in a single unit to make it perfect. The list is long, starting from design to welding, bolting, assembling, painting, etc. A simple wrench to hi-tech robots. Everything matters.
There is also a quality control department that instantly figures out the issue in assembling or finishing and resolves it; otherwise, it will affect the total production.
Due to some reasons, many countries can’t manufacture all the vehicles. So they import all those vehicles from different countries.
CBU vs CKD—have you ever listened to these terminologies? These terms are used to explain the import process of bikes, cars, and vehicles before selling them to the customers.
In a country like Pakistan, where the tax ratio is very high on the import of vehicles. So manufacturers try to choose the best option to import cars like CKD, CBU, and SKD.
Let’s have a look at CBU and CKD to understand them in detail. What actually do these terms stand for and where is it used?
CBU—Completely Built Unit:
CBU means ultimately building the unit. When a completely assembled unit is imported, it doesn’t require any further addition to its components to perform well. As CBU units come after testing the quality and performance from the factory. You just need to use it after importing.
Sometimes parts of CBU products are manufactured in another country, assembled in another one, and then imported to Pakistan. Like the auto parts of Mercedes, Benz S-class were imported, produced, and then imported to Pakistan.
In Pakistan, the tax system on vehicles applies as per the size of the engine. If the size of the engine is minor, then the value of the tax will be less. Audi never assembled locally and always came as CBU. It also comes in a low-sized engine, so the tax value is less on it.
You can check this too: Audi A7 Year 2015 to 2021
CBU Vehicles in Pakistan:
The list of CBU cars in Pakistan is as under:
- Toyota Camry
- Toyota Crown
- Toyota Rush
- Toyota Prius
- Honda Accord
- Honda CR-V
- All Audi models
- All BMW models
- All Porsche models
- All Mercedes models
The list of CBU bikes is as under:
- Benelli
- Suzuki Hayabusa
- BMW Ducati
- Yamaha’s lineup
- Vespa Primavera scooter
CKD—Completely Knocked Down:
CKD means completely knocked down. In which cars, bikes, vehicles, and electronics are imported or exported in the form of parts. Sold to the customers after assembled them locally.
This method of importing products has less value of taxes on it.
In Pakistan, a great example of CKD is all low-price Chinese knock-down sports bikes that are being imported. The bikes are imported from China as a kit, and local distributors have assembled them.
In Pakistan, many products are imported this way. Before importing complete kits of a specific vehicle, first foreign manufacturers built their plants here, assembled the auto parts, and completed the product locally.
These types of units produced employment, as to build units, needed machinery, and workforce in assembling the units, which generates revenue for the local country and is ultimately beneficial for them.
CKD Vehicles in Pakistan:
The list of CKD cars in Pakistan is as under:
- Suzuki Wagon R
- Toyota Corolla
- Toyota Grande
- Toyota Yaris
- Hyundai Sonata
- Hyundai Elantra
- Kia Sportage
- Kia Sorento
- MG ZS
- Honda City
- Honda Civic
You may like this: Generations and Existence of Toyota in Pakistan.
The list of CKD bikes is as under:
- CD 70
- CD 125
Check this out: 10 Reasons to Buy an Electric Sports Bike in 2022
CBU vs CKD:
Pros of CBU:
- In developing countries like Pakistan, where the automobile is not up to the level of the global auto sector. They are producing many vehicles locally, despite that, they need to import lots of the latest vehicles from other countries to meet the demand of users.
CBU is the category of imported vehicles. In which countries import ready-to-use products and sell locally with no changes in it.
- Small and developed countries with high incomes, leading in other industries, can easily afford CBU vehicles like Saudi Arabia, Norway, Netherland, Switzerland, and Singapore. They can easily spend money and import the latest automobiles. In fact, most of them prefer to import CBU vehicles as factories generate pollution, which they want to avoid.
Cons of CBU:
In Pakistan, the government is discouraging the import of CBU vehicles because an immense tax value has been paid while importing these cars, which is the biggest drawback of this category.
These vehicles are also expensive for end-users as they also have to pay a large amount in tax and import duties.
In our country, where the level of unemployment is very high. The CBU category doesn’t benefit from getting revenue from foreign countries, employment, and manufacturing because all products come fully assembled and ready to be used. That is also the reason that our Govt. Is discouraging the import of CBU products.
Check this out: Top 20 Hybrid Cars in Pakistan [Latest 2022]
Pros of CKD:
- To fully assemble an SKD unit in the importing country requires a complete setup, and to run that setup, you need to be trained staff and labor. This means more people have a chance to get employed.
- Govt. has also reduced taxes on SKD units to encourage local manufacturers, which means prices have been reduced, and the affordability of these vehicles has been increased for the customers.
- In assembling SKD units, enormous capital investment is required in the setup of assembling facilities to transform CKD into CBU. Welding area, ED coating, paint area, assembling area, other infrastructure, and also require a large number of workforce to run it. Which gives a chance to work for a large number of people. That’s why SKD is far better than CBU.
- In SKD operations, there is always the pressure of maintaining the project, making it workable, competing with the competitors, and getting the confidence of customers. Which are always beneficial aspects in making progress.
- In SKD, auto parts can easily be available and can be replaced, and for this job, trained mechanics are also available, so you need not worry if you need such type of service for your vehicle.
- In a few cases, some local parts used in SKD are much better than the CBU units. The locally assembled BMWs have a better rubber part and cooling system than the imported ones. Because local manufacturers used some parts as per the local climate.
Cons of CKD:
- When we import complete kits of vehicles in CKD. Sometimes, it took time to build a proper manufacturing plant locally to assemble the parts and give the product a complete finish look. Which delays the process of delivering the end product.
Read More: BMW X5 Year 2018 to 2021
Conclusion:
Whatever method you choose to import a vehicle, CBU or CKD. One thing you should know is if you are interested in importing a new model from a foreign country. The auto company will release it in CBU first.
The CKD unit is usually released after one year of CBU when importer countries build the assembling units to assemble them locally.
One thing you also keep in mind is that local taxes and import duties are implemented according to the engine capacity. Local taxes comprise sales tax and excise duties. If the engine capacity is higher. Taxes would be higher too.
FAQs:
Q1: CBU or CKD, which is better?
CKD units are less in cost as compared to CBU units because of less value of the tax on them. But mostly hi-tech cars and bikes come as CBU units.
Q2: What does CBU mean in Pakistan?
When auto manufacturers import an entirely built unit and don’t manufacture or assemble units locally. In countries like Pakistan, where the manufacturing of cars is not much and can’t fill the demand of customers, most of the cars need to be imported, as in CBU.
Q3: What does CKD mean in Pakistan?
When auto manufacturers import a complete knock-down unit. A complete kit of unassembled parts of a product. Which can easily assemble locally.
In the CKD category, many products come like buses, heavy trucks, automotive, railway vehicles, electronics, furniture, and many more.
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