Most of the automobile publications frequently use the words like CBU and CKD which may sound quite confusing to many. These terms are more commonly used in terms of the Imported automobile cars and bikes.
CBU – Completely Built Unit
Completely built unit is the terminology when a car/bike/automobile is imported/exported to/from some other country as a complete car fully assembled. These automobiles do not require an assembly before they can be sold out to the buyers in the target country’s markets. Most of the imported cars and bikes in India come as a CBU.
CKD – Completely Knocked Down
Completely knocked down car / bike /automobile is one which is imported or exported in parts and not as one assembled unit. Such units are first sent to an assembly plant in the target country where all these parts are assembled and one complete car / bike / vehicle is made using the imported components. These kinds of units generate employment in the target country as more machinery and manpower investment is needed to assemble the components to make the vehicle.
CBU Vs CKD
CBU and CKD do not differ much in terms of technological sense except for the fact that CBU cars / bikes / vehicles are assembled in the same country where they originate and then exported to the target country. CKD cars / bikes / vehicles are assembled in the target country where all the parts of the vehicles are assembled and then sold to the end customers.
When talking from Indian perspective, CBU and CKD have a sharp difference in the import duties. At present, the import duties on a CBU vehicle coming to India from abroad is liable for an import duty of nearly 110% while the CKD attracts 60% duty. This sharp difference is strategically kept like this because CBU does not create as much of revenues and employment for the target country (India in this case). A CKD when assembled in the target country requires technology, infrastructure and manpower investment which generates business and employment opportunities in the target country, which is why it is motivated.