CKD grows fast, but China's auto engine tech lags far behind

China has increased its use of imported auto engines and CKD kits (completely-knocked-down, assembled locally), but China’s engine R&D technology lags far behind the world's advanced level.

In 2006 China used approximately 1.1 million units of imported engines, of which 598,000 units are assembled outside China and the rest are assembled in China with the imported kits.

Typically Chinese automakers have three options to acquire car engines: first, Chinese automakers acquire car engines from its subsidiary engine makers; secondly, Chinese automakers acquire engines from an unrelated engine-maker and lastly Chinese automakers imported engines or engine kits in CKD form.

In recent years China’s CKD engine assembly business prospers as a result of heavy demand of highly efficient petrol and diesel engines in China. Local governments or even automakers are reluctant to invest in engine projects because they believe whole-car business is more lucrative while investment in engine R&D is too costly and the investment cycle is too long.

On the other hand, international automakers, like VW, Toyota are reluctant to share engine-making technologies with their Chinese partners.

Despite Chinese government’s efforts to push Chinese automakers to develop their own engine technology, imported engines still easily found their way into China’s auto markets.