Knock-down kit

A knock-down kit is a kit containing the parts needed to assemble a product. The parts are typically manufactured in one country or region, then exported to another country or region for final assembly. Variant names include knockdown kit, knocked-down kit, or simply knockdown, and the abbreviated KD or CKD.

A common form of knock-down is a complete knock-down (CKD), which is a complete kit needed to assemble a product. It is also a method of supplying parts to a market, particularly in shipping to foreign nations, and serves as a way of counting or pricing. CKD is a common practice in the automotive, bus, heavy truck and rail vehicle industries, as well as electronics, furniture and other products. Businesses sell knocked-down kits to their foreign affiliates or licensees for various reasons, including the avoidance of import taxes, to receive tax preferences for providing local manufacturing jobs, or even to be considered as a bidder at all (for example, in public transport projects with "buy national" rules).

An incompletely disassembled kit is known as SKD for semi-knocked-down. Both types of KDs, complete and incomplete, are collectively referred to within the auto industry as KDX (for knocked-down export), and cars assembled in the country of origin and exported whole to the destination market are known as BUX (for built-up export).

Technically, the terms "knock-down" or "kits of parts" are both misnomers, because the knock-downs were never built up in the first place, and the shipments of parts are often not in the form of kits, but rather bulk-packed by type of part into shipping containers. The degree of "knock-down" depends on the desires and technical abilities of the receiving organization, or on government import regulations. Developing nations may pursue trade and economic policies that call for import substitution or local content regulations. Companies with CKD operations help the country substitute the finished products it imports with locally assembled substitutes.

Knock-down kit assembling plants are less expensive to establish and maintain, because they do not need modern robotic equipment, and the workforce is usually much less expensive in comparison to the home country. The plants may also be effective for low-volume production. The CKD concept allows firms in developing markets to gain expertise in a particular industry. At the same time, the CKD kit exporting company gains new markets that would otherwise be closed.

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Wikipedia