What Are The Differences Between CKD and CBU cars?

(Photo Credit: themalaysianreserve)

The differences between CKD and CBU cars are a deciding factor for most car buyers in Malaysia. How well do you know the differences between them?

If you assumed that fully imported cars (CBU) are better quality than locally assembled cars (CKD), then you are wrong; each represents a different set of local taxation rates for car buyers.

Let's dive into the details and explore the differences.

What are CBU Cars?

(Photo Credit: freemalaysiatoday)

Buying a CBU car is like going to IKEA to purchase your already built furniture. In short, CBU cars are already built up then imported into Malaysia. Such cars come with heavy excise duties, including import duties, local tax (based on the engine's capacity) and SST (sales and services tax), all of which can hike up the car's final price.

Here is a breakdown: there is 0% duty for cars imported from the ASEAN region, while cars imported from Most Favoured Nations (MFN) will have an additional 30% duty. Following that, the additional local taxes vary from 75% to 105%. Finally, each has an extra 10% SST tagged to it.

What are CKD Cars?

(Photo Credit: Unsplash)

The concept of buying a CKD car is similar to buying your furniture parts from IKEA then building them up at home. Brands will deliver the original car parts to their respective factories in Malaysia, where proper machinery and qualified workers will put them together.

Models that are locally assembled allows the manufacturers to qualify for the government's incentives. It also boosts the country's economy, as prices are attractive for customers after factoring in the 10% sales and services tax.

When were CKD Cars introduced to Malaysia?

In 1967, Volvo was the first brand to build a vehicle assembly plant in Shah Alam, booming Malaysia's economy. As technology advances, more foreign brands have collaborated with local manufacturers to build assembly plants. That's how Proton, our national car, was established in 1985.

Here is a list of CKD factories in Malaysia:

Benefits of CKD cars

(Photo Credit: Perodua Malaysia)

It isn't always true that CBU cars are better than CKD cars. Automotive manufacturers have to follow standard procedures to ensure strict quality checks are done to build a car. You see, when you purchase a locally assembled car, there are some benefits in terms of affordability, components used and lesser amount of time for you to collect your car.

For example, the Mercedes-AMG C43 sedan was first introduced as a fully imported unit for RM499,888. As demand increases, the model is now locally assembled at Mercedes-Benz Malaysia's plant in Pekan. The price has been decreased by RM98,000, retailing at RM401,888.

Assembly plants in Malaysia sourced most of their car parts from local vendors allowing manufacturers greater efficiency and effectiveness. These car parts are sustainable and reliable in our hot and humid weather. For example, locally assembled BMWs utilise a different cooling system and rubber components to suit Malaysia's driving conditions.

In summary, CKD and CBU cars are the same, and it all boils down to the dream car you have always wanted. The "made in" title shouldn't affect your decision making when you purchase a CKD car, after all, it will save you more money as compared to a CBU car.

Share with us your thoughts in the comments below on the choice of your new car purchase.

Read More: Touch ’n Go RFID Tag: Where to Buy and How to Install?