I am Dutch and I would like to understand if a German native speaker would understand if I pronounce the 'km' abbreviation of the word 'Kilometer' as 'kaa em'.
- "km" is usually pronounced as Kilometer, ka em [kaː ʔɛm] is at least where I am very unusual in everyday spoken German.
- ka em may be encountered more frequently in ka em ha [kaː ʔɛm haː] (km/h, the slash/division not being pronounced) as an alternative to saying "Stundenkilometer" colloquially, sometimes also Kilometer in der Stunde (sounds somewhat old-fashioned to me) or Kilometer pro Stunde.
Other units that are fequently pronounced abbreviated are kW [kaː veː] and sometimes also kWh [kaː veː haː], maybe also MW and MWh (but W, Wh, GW or GWh are usually pronounced in their "long form") and as some other answers already point out also storage capacity units may be pronounced in the abbreviated form.
μm are sometimes pronounced mü [myː].
While these "abbreviations" are common in everyday spoken language, noone would think it odd to pronounce the long form for any of these.
It would absolutely never be pronounced kaa em if talking about kilometers. As cbeleites unhappy with SX noted, km/h is actually often pronounced kaa em haa, but that is the exception. Usually, units are pronounced completely. Wh are Wattstunden, J in physics is always pronounced Joule, etc., and everything else would sound incredibly weird and out of place, like a physicist pronouncing kg as kay gee in English.
The only other exception I can think of is PS, which everyone just pronounces pe es, mostly because "Pferdestärken" is very archaic.
It is spoken as abbreviation rarely, but there are exceptions.
If you have to read a long list of such abbreviations, you probably would use the shorter "ka emm", or in a professional context, where it is used often, it might get a habit, as in the IT field, where MB is often used in abbreviated form.
Another situation might be a citation of a written text, where you like to be absolute accurate, especially if from the context it is clear, that you are talking about kilometers.