Second, KD piece explanation

KD parts include CKD and SKD.

CKD(CompletelyKnockDown) All Bulk Parts CKD imports all bulk parts from abroad and then assembles them in China. Or a part of imported bulk parts and a part of locally produced parts are assembled into assemblies or parts on the assembly line. At present, the main reason why domestic automobile manufacturers adopt this model is to avoid the high tariffs on vehicle imports.

SKD (semi knock down) Semi knock down SKD car-making In the international automobile trade, automobile companies disassemble the assembled cars, but export them in the form of semi-finished products or parts, and then the imported manufacturers assemble the finished cars themselves in the host country and sell them.

At present, the usual practice is to disassemble the whole vehicle into large component assemblies, such as engine assembly and chassis assembly. In this way, exporters can save freight and enjoy some import tariffs lower than that of vehicle imports, and importers can also promote the development of their own industries, increase employment opportunities and occupy their own markets.

This method was initially adopted by imported cars and other automobile manufacturers in China. For example, in the early stage of production, the tires and cassette players of Shanghai Santana were all made in China. Most of the assemblies and parts are imported from SKD and assembled into complete vehicles in Shanghai Volkswagen. In the past two years, major domestic automobile companies have introduced more than 30 new models from abroad, among which CKD is the main way in the early stage. Since 2002, in order to seize the domestic market, some automobile manufacturers have directly imported SKD assemblies from abroad and assembled them in China.