CKD vs CBU: Know The Difference

There’s a lot of things that need to be considered when buying a new car. One of the criteria is whether the car you want to purchase is a CBU (Complete Built-Up) or CKD (Complete Knocked-Down) unit.

On a surface level, CBU cars means that the vehicles were imported into the country as a fully assembled product while CKD cars arrive in the form of parts, which will then be sent to a local factory to be assembled. A small amount of local content such as tyres, windows and headlights are usually used by manufacturer to lower the production cost.

Obviously, the most significant difference between CBU and CKD vehicles is the pricing. CBU units are generally more expensive as they have a higher import duty of 30% (for non-ASEAN countries). CKD, on the other hand, offers a more reasonable option with a lower import duty at only 10 percent.

Take a look at the new Mazda 3 for example. The CBU version is priced at RM139,000 while the CKD version is offered from RM106,000 to RM121,000, with about the same level of equipment, if not more.

There are exceptions, of course. For example, CBU cars that are assembled in an ASEAN country are exempt from the 30% import duty thanks to the ASEAN Free Trade Area (AFTA) and the ASEAN Trade in Goods Agreement (ATIGA). This could mean that the ASEAN CBU vehicle would be priced cheaper than its CKD version, though that is not always the case.

Since the two usually come with minor changes in terms of specifications, materials and finishes, buyers are inclined to think that a CBU unit offers better build quality than the CKD version. We think the quality of a vehicle very much depends on the quality control of the plant, regardless of the location.

CKD units are also introduced much later than the CBU. Introducing a new model to the local assembly line is a complicated and lengthy process, which could take months or even a year to complete. For instance, the Pekan-assembled Mercedes-Benz C-Class was introduced in April 2015, approximately six months after the launch of the CBU version.

Complete Build-Up (CBU) Complete Knocked-Down (CKD)
 Imported as fully finished (assembled) unit Imported in parts and then assembled locally*Manufacturers may use local content for parts like tyres, windows and headlights.
Higher import duty at 30% (for non-ASEAN countries) Lower import duty at 10%
Purchase on release Longer waiting time (up to a year)