Why Auto-Manufacturers Import CBU’s in Pakistan?

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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 (Semi Knocked Down) or CKD (Completely Knocked Down).
So, this article will be aimed to define these terms, followed by my own opinion on this situation.

CBU: (Completely Built Units)

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:

  • Land Cruiser
  • Toyota Prius
  • Toyota Camry
  • Honda Accord
  • Audi, Mercedes, BMW, Porsche etc

SKD: (Semi Knocked Down)

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:

  • Toyota Hilux
  • Toyota Fortuner

Opinion:

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.

We all make mistakes in life but I believe in learning from them and that is why I have opted to become an auto-journalist. I have a tech background but I prefer to write and express my views on cars because I am petrol head.

  • Petrolhead

    Noob! Hahahahahahaha its not slightly in the SKD! Hahahahahahahaha this article can win the prize for the most pointless article by far! What kinda research did you even put into your pet project to write up such ####

  • Guest is back

    An incompletely disassembled kit is known as SKD (semi-knocked-down)

    ROFL LMAO at slightly knocked down. and the best part is editorial staff is hibernating and such mistakes get published & represents PW

  • Abdul Hanan

    The error has been corrected, thank you for your feedback.

  • asd

    bro please research more carefully before publishing. Furthermore, you totally skipped CKDs and MKDs…

    we need to improve the quality of PW articles….Pak imports mostly used CBUs, import of new CBUs, especially in non-luxury segment, is very little.

  • Guest

    Q: Why makes its decision this way or that way?

    A: They do whatever makes business sense.
    It makes business sense to produce Corolla here. But the sales of Land Cruiser is not high enough to warrant recovery of fixed cost of tool and plant, therefore import.

    Welcome to Economics 101.

  • Guest

    Please introduce a bug bounty program.

    We shall be مالا مال soon.

  • Mohammad Saad

    Bhai jaan, khud toh ap lik nhn sakte.. mujhe toh sahi laga article, yeah there were some technical issues, but the writer did a very good job. and dont forget its an OPINION piece.. common, give the guy a break!

  • TickTock

    Give the guy a break, he made one (ONE) mistake in the whole article (Opinion Piece), which could have been easily made by anyone…

  • Farasat

    I think
    1: This is an opinion piece by the author, who is sharing his views on this situation. So I don’t understand the criticism on his opinion. Plus he does raises some valid points by mentioning the concept of localization and its effects on the economy of the target country.
    2: CKD and SKD are slightly different, which I think is obviously visible by their name but yes the writer should have explicitly defined the CKD term
    3: I agree with you on the quality too, but you have to admit the effort and fresh content, which is being produced daily. If I remember correctly, the content quality from past 1-2 months has definitely increased, which is good to see. The writers are putting in the effort, that’s for sure. But there is still a long way to go.

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