Analysis of China’s Automotive Industry KD Export Models: Differences Between CBU, SKD, CKD, and DKD with Case Studies

As China’s automotive exports have surged to become a global leader, the industry has transitioned from traditional Complete Built Unit (CBU) exports to diversified Knock-Down (KD) assembly models. These models—CBU, SKD, CKD, and DKD—differ significantly in tariff costs, localization levels, and industrial synergies. This article explores their distinctions through case studies of Chinese automakers’ overseas expansion strategies.

Analysis of China’s Automotive Industry KD Export Models: Differences Between CBU, SKD, CKD, and DKD with Case Studies

As China’s automotive exports have surged to become a global leader, the industry has transitioned from traditional Complete Built Unit (CBU) exports to diversified Knock-Down (KD) assembly models. These models—CBU, SKD, CKD, and DKD—differ significantly in tariff costs, localization levels, and industrial synergies. This article explores their distinctions through case studies of Chinese automakers’ overseas expansion strategies.

I. Definitions and Technical Characteristics of the Four Export Models
1.What does CBU mean?

CBU (Complete Built Unit)
• Definition: Vehicles are fully manufactured in Chinese factories and exported as finished products.
• Features: Low technical barriers and guaranteed quality, but high tariffs (30%-50%) and logistics costs. For example, King Long Bus exported new energy buses to Egypt via CBU, leveraging reliability to penetrate markets rapidly.

2. What does SKD mean?

SKD (Semi Knocked Down)
• Definition: Vehicles are disassembled into modular components (e.g., engine, chassis, body) for simplified overseas assembly without welding or painting.
• Features: Tariffs reduced by 30%-50% compared to CBU, optimized logistics, and suitability for markets with weak supply chains. King Long’s SKD factories in Vietnam and Kazakhstan achieved quick production ramp-up.

3.What does CKD mean?

CKD (Completely Knocked Down)
• Definition: Vehicles are broken down into individual parts (e.g., sheet metal, wiring harnesses), requiring full reconstruction of production processes (stamping, welding, painting, assembly) overseas.
• Features: Localization rates reach 40%-70%, maximizing tariff incentives but demanding heavy investment. SAIC’s CKD plant in Thailand localized MG electric vehicles, cutting costs by 25% and dominating Southeast Asian markets.

4.What does DKD mean?

DKD (Direct Knocked Down)
• Definition: Minimal disassembly (e.g., tires, bumpers), with core assemblies remaining intact for basic overseas assembly.
• Features: Lowest investment, ideal for markets with limited technical capacity. Weichai’s DKD projects in Africa reduced shipping costs while meeting symbolic “local production” requirements.

II. Comparative Analysis and Selection Logic

CKD vs CBU vs SKD vs CKD vs DKD

| **Criteria** | **CBU** | **SKD** | **CKD** | **DKD** |
|———————|—————|—————|—————|—————|
| **Disassembly Level** | None | Modular units | Full parts | Partial parts |
| **Tariff Rate** | 30%-50% | 5%-15% | 3%-10% | 10%-20% |
| **Localization** | None | Basic assembly| Full supply chain | Simple assembly |
| **Case Example** | King Long Egypt | King Long SE Asia | SAIC Thailand | Weichai Africa |

Selection Factors:
• **Policy-Driven**: Countries like Indonesia mandate 40% CKD localization for EVs by 2026 to access tax breaks.
• **Cost Efficiency**: SKD reduces shipping costs by 5-8x compared to CBU.
• **Strategic Goals**: CKD fosters long-term competitiveness through local supply chain integration, as seen with CATL’s battery plants in Germany.

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III. Case Studies of Chinese Automakers
1. Longchuang Design’s “Turnkey” Model
Integrating R&D and supply chain management, Longchuang enabled Southeast Asian countries to launch their first domestically produced EVs via SKD and CKD hybrid models.

2. SAIC’s CKD Expansion in Thailand
Localizing 60% of MG EV components, SAIC reduced production costs by 25%, capturing 15% of Thailand’s EV market within two years.

3. NIO’s European CKD Strategy
Combining CKD assembly with localized R&D, NIO tailored high-ground-clearance SUVs for European terrain, enhancing market adaptability.

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IV. Trends and Challenges
1. Trends: Transition from pure CBU to “CKD + localized R&D” hybrid models. For instance, BYD integrates battery production with assembly plants in Brazil.
2. Challenges: Rising localization thresholds (e.g., Brazil requiring 80% CKD localization) push automakers to deepen local partnerships.

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Conclusion
China’s KD export models have evolved from cost-driven strategies to technology and ecosystem collaborations. The flexible combination of CBU, SKD, CKD, and DKD not only mitigates trade barriers but also accelerates the globalization of Chinese automotive standards. As smart EVs advance, KD models will increasingly integrate localized data and service ecosystems, solidifying China’s leadership in the “New Era of Global Mobility”.

(Note: Case data and industry insights are synthesized from publicly available reports and corporate disclosures.)