CKD

CKD is a three-letter acronym that stands for Complete, Knocked Down. An incomplete car kit is known as KD ('Knocked Down) kit. It's a common practice among car manufacturers to sell KD kits to their foreign affiliates in order to avoid high import taxes and/or receive tax preferences for providing local employment.

CKD assembling plants are cheaper to maintain because there is hardly any modern robotic equipment and the working force is usually much less expensive in comparison to the home country, so they are perfect for low-volume production.

In most basic form, a car in KD kit misses only the engine, battery and transmission, which are supplied as parts for assembly; wheels and all of the interiors are already installed on the head factory. To gain some extra tax preferences, the manufacturer needs to further localize the car, i.e. increase the share of parts produced by local manufacturers, such as tyres, wheels, seats, headlights, windscreens and glass, batteries, interior plastics, etc. down to the engine and transmission. At some point, even the steel body could be pressed, welded and painted locally; this effectively makes KD assembly only a couple of steps behind the full-scale production.

Examples

Cars built in New Zealand up until the late 1990's were imported as CKD kits and assembled locally. This made them amongst the most expensive vehicles in the world, but provided local employment and reduced the trade deficit.

In Ukraine, which has almost prohibitive import taxes, AutoZAZ assembles CKD kits of some Lada, Opel, Mercedes-Benz and Daewoo cars. It went as far as adopting a version of Daewoo Lanos for full-scale production and equipping it with a domestic engine. In a similiar approach, an (undisclosed?) Swedish company buys used busses, disassembles them and then exports to Ukraine as spare parts; then they are reassembled into full busses at the local plant.

In Russia, the most known KD assembling facilities are owned by Avtotor company; it produces Hummer H2, BMW 3-series and BMW 5-series in Kaliningrad, and Renault Logan is built in Moscow on the facilities that once belonged to AZLK.