Identifying Standard SKD/CKD and Automotive Manufacturing Development Stage in Ethiopia

Abstract

Semi-Knock-Down (SKD) and Complete-Knock-Down (CKD) solutions have been widely accepted worldwide for export and import goods especially for automotive industry. The CKD kit ensures trade benefits and boosts technological capability for import substitutions. Duty at customs is high for products which are in the state of ready to use conditions where as the duty on SKD or CKD products imported from another country is lesser. Most domestic companies where the assembly cost is low and import cost is high prefer to buy product in SKD or CKD kits where as Complete-Built-Up (CBU) are not preferred technically and economically. This study focuses primarily on the basic concepts of assembly kit in Ethiopia, their benefits in tariff considerations, import substitution, technological transfer and other economic advantages. Secondly to analyzes basic problems on the understanding of these concepts to develop vehicle standard SKD and CKD in Ethiopia. In addition to this to highlight the automotive industry stage of development. The implementation of these concepts has great benefits in the size of job creation and import substitution rates which have impact on the economy. The investment for CKD in automotive industry requires greater finance when to compare machineries and equipment.