Read about car exports: Full analysis of KDSKDCKD, a must-see for car companies when going abroad

In the wave of globalization of automobile exports, KD, SKD, and CKD are no longer unfamiliar words, but the core models for China automobile companies to deploy overseas, reduce costs, and evade tariffs. Many people who are new to foreign trade, overseas factories, and automobile overseas business often cannot tell the difference between the three, and even step on tariffs, logistics, and localization policies.

Today, I will use an easy-to-understand dry article to explain KDSKDCKD thoroughly. After reading it, I can directly use it in business decisions.

1. Understand first: What is KD

KD = Knock Down

The literal translation means "tearing up and breaking up", and the core logic is

Instead of manufacturing complete vehicles domestically for export, we export parts and components and assemble them overseas and locally for sale.

Compared with direct export of complete vehicles (CBU), the KD model can significantly reduce tariffs and freight rates, while at the same time meeting the localization policy requirements of overseas countries, and is currently the mainstream choice for car companies to go abroad.

Depending on the degree of fragmentation, KD is divided into the two most common types: SKD and CKD.

2. SKD: Assembly of semi-scattered parts, rapid implementation of light assets

SKD=SemiKnockDown Semi-Loose Assembly

Export what

Most of the domestic processes have been completed

Body in white (welding + painting completed)

Engine, gearbox, axle and other large assemblies

Chassis, wiring harness, instruments and other major parts

Overseas factories only need to do the final assembly step: installing doors, tires, glass, interior decoration, filling oil, and testing offline.

characteristics

Overseas factories have small investment and only need assembly lines

Short factory building cycle, 6 - 12 months can be put into production

Quality is more controllable, and core processes are completed domestically

Tariffs are lower than the entire vehicle, but higher than CKD

Suitable for: market testing, small batches, weak local industrial base

3. CKD: fully assembled parts, deep localization

CKD=CompleteKnockDown fully assembled parts

Export what

Completely dismantle the vehicle to the smallest part level

Stamping parts (scattered steel plates such as doors, covers, fenders, etc.)

Screws, rubber sleeves, wire harnesses, glass, interior trim panels

Engine parts, gearbox parts

Almost all parts and components are shipped in bulk

Overseas factories need to have complete four major processes

Stamping → welding → painting → final assembly

characteristics

Large overseas investment and complex production lines

Long cycle, usually 18 - 36 months

Tariffs are lowest, with many countries close to zero tariffs

The highest degree of localization and can enjoy policy subsidies

Suitable for: long-term cultivation, large market, policy mandatory localization

VII. Summary

KD: The general term for all export assembly models of parts

SKD: Semi-scattered parts, simple assembly, fast, economical and stable

CKD: All scattered parts, full-process factories, the lowest cost and the deepest localization

For China car companies, the KD model is not just an "export method", but also a key step in a globalization strategy.

Source: Xiong Yu, digital automobile export

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