SKD becomes economic at roughly twenty units per order, and only in markets where the tariff on an incomplete knocked-down kit is materially below the tariff on a complete built-up vehicle. Below that volume the fixed cost of an assembly line, tooling and trained labour outweighs the duty saving. Above it, the saving compounds with every order.
What is actually in an SKD kit?
Semi-knocked-down means the vehicle arrives substantially complete but with defined assemblies separated so that it is not a finished vehicle at the point of import. In practice that usually means the body, chassis, battery pack and driveline arrive together with bumpers, wheels, seats, glass, lighting and interior trim packed separately for local fitment.
- Painted body and chassis, joined or separate depending on the duty definition.
- Traction battery, motors and high-voltage harness — shipped under IMDG provisions.
- Wheels, tyres, bumpers, glass, seats, lighting and trim, packed for local assembly.
- Assembly documentation, torque schedules and the fixture list.
- Initial consumables and fasteners for the first production batch.
Why tariff definitions decide everything
Customs classification of knocked-down kits is defined nationally and the thresholds are specific — how many assemblies must be separated, whether the body may arrive painted, whether the powertrain may be pre-installed. A kit that is one step too complete is classified as a complete vehicle and attracts the full CBU tariff, which destroys the business case.
This is not a question to answer from a supplier's brochure. Get a binding tariff ruling from the destination customs authority against the specific kit definition before committing capital to an assembly line. We supply the technical kit description for that application.
Which markets currently reward local completion?
Indonesia, Vietnam and the Philippines have all operated tariff structures favouring knocked-down imports, with additional incentives attached to local electric vehicle assembly. Several African markets — Nigeria, Ghana, Ethiopia and Kenya among them — have run automotive industrial policies tying duty relief to local assembly content. These regimes change with budget cycles, so verify the current position rather than relying on a policy announcement from a previous year.
The arithmetic, simplified
| Line | CBU | SKD |
|---|---|---|
| FOB per unit | Base unit price | ≈5% below the CBU unit price |
| Assumed import duty rate | 35% | 10% |
| Duty per unit, on CIF | 35% of CIF value | 10% of CIF value |
| Local assembly cost per unit | — | Added to the kit cost |
| Landed cost per unit | Baseline | Roughly 20–25% lower |
| Saving across 20 units | — | Enough to fund the assembly line |
The duty rates above are illustrative, not a quotation. Substitute your market's actual CBU and CKD/SKD rates against the unit price on your proforma invoice, and the conclusion holds or collapses on that one input. Where the spread between the two rates is under ten percentage points, SKD rarely pays at any volume an independent importer can reach.
What SKD does not solve
- Warranty. Assembly faults introduced locally are not covered by the factory warranty, so assembly quality control is now your liability.
- Lead time. Kits ship on the same production cycle as complete vehicles; local assembly adds time rather than saving it.
- Parts supply. An assembly line does not create a parts network — that still has to be built.
- Certification. The locally assembled vehicle usually needs its own national approval, distinct from the imported CBU's.
