diff --git a/hack/update-manifests.sh b/hack/update-manifests.sh
index af57aad572d2d..746f08ce28358 100755
--- a/hack/update-manifests.sh
+++ b/hack/update-manifests.sh
@@ -1,22 +1,23 @@
 #!/bin/sh
 
-SRCROOT="$( cd "$(dirname "$0")/.." ; pwd -P )"
+set -e
+
+SRCROOT="$( CDPATH='' cd -- "$(dirname "$0")/.." && pwd -P )"
 AUTOGENMSG="# This is an auto-generated file. DO NOT EDIT"
 
 update_image () {
   if [ ! -z "${IMAGE_NAMESPACE}" ]; then
-    sed -i '' 's| image: \(.*\)/\(argocd.*\)| image: '"${IMAGE_NAMESPACE}"'/\2|g' ${1}
+    sed -i -- 's| image: \(.*\)/\(argocd.*\)| image: '"${IMAGE_NAMESPACE}"'/\2|g' "${1}"
   fi
   if [ ! -z "${IMAGE_TAG}" ]; then
-    sed -i '' 's|\( image: .*/argocd.*\)\:.*|\1:'"${IMAGE_TAG}"'|g' ${1}
+    sed -i -- 's|\( image: .*/argocd.*\)\:.*|\1:'"${IMAGE_TAG}"'|g' "${1}"
   fi
 }
 
-echo "${AUTOGENMSG}" > ${SRCROOT}/manifests/install.yaml
-kustomize build ${SRCROOT}/manifests/cluster-install >> ${SRCROOT}/manifests/install.yaml
-update_image ${SRCROOT}/manifests/install.yaml
-
-echo "${AUTOGENMSG}" > ${SRCROOT}/manifests/namespace-install.yaml
-kustomize build ${SRCROOT}/manifests/base >> ${SRCROOT}/manifests/namespace-install.yaml
-update_image ${SRCROOT}/manifests/namespace-install.yaml
+echo "${AUTOGENMSG}" > "${SRCROOT}/manifests/install.yaml"
+kustomize build "${SRCROOT}/manifests/cluster-install" >> "${SRCROOT}/manifests/install.yaml"
+update_image "${SRCROOT}/manifests/install.yaml"
 
+echo "${AUTOGENMSG}" > "${SRCROOT}/manifests/namespace-install.yaml"
+kustomize build "${SRCROOT}/manifests/namespace-install" >> "${SRCROOT}/manifests/namespace-install.yaml"
+update_image "${SRCROOT}/manifests/namespace-install.yaml"
diff --git a/manifests/base/kustomization.yaml b/manifests/base/kustomization.yaml
index 6d7f07ec51512..4adf9fb8e5947 100644
--- a/manifests/base/kustomization.yaml
+++ b/manifests/base/kustomization.yaml
@@ -1,6 +1,4 @@
 resources:
-- application-crd.yaml
-- appproject-crd.yaml
 - argocd-cm.yaml
 - argocd-secret.yaml
 - argocd-rbac-cm.yaml
diff --git a/manifests/cluster-install/kustomization.yaml b/manifests/cluster-install/kustomization.yaml
index b5252639e5572..fbf60a7d97750 100644
--- a/manifests/cluster-install/kustomization.yaml
+++ b/manifests/cluster-install/kustomization.yaml
@@ -1,5 +1,5 @@
 bases:
-- ../base
+- ../namespace-install
 
 resources:
 - application-controller-clusterrole.yaml
diff --git a/manifests/base/application-crd.yaml b/manifests/crds/application-crd.yaml
similarity index 100%
rename from manifests/base/application-crd.yaml
rename to manifests/crds/application-crd.yaml
diff --git a/manifests/base/appproject-crd.yaml b/manifests/crds/appproject-crd.yaml
similarity index 100%
rename from manifests/base/appproject-crd.yaml
rename to manifests/crds/appproject-crd.yaml
diff --git a/manifests/crds/kustomization.yaml b/manifests/crds/kustomization.yaml
new file mode 100644
index 0000000000000..c1b96f9dc45e0
--- /dev/null
+++ b/manifests/crds/kustomization.yaml
@@ -0,0 +1,3 @@
+resources:
+- application-crd.yaml
+- appproject-crd.yaml
diff --git a/manifests/namespace-install/kustomization.yaml b/manifests/namespace-install/kustomization.yaml
new file mode 100644
index 0000000000000..87447545e12f4
--- /dev/null
+++ b/manifests/namespace-install/kustomization.yaml
@@ -0,0 +1,3 @@
+bases:
+- ../crds
+- ../base
diff --git a/reposerver/repository/repository_test.go b/reposerver/repository/repository_test.go
index 361510b5ab16d..617dad19cbbda 100644
--- a/reposerver/repository/repository_test.go
+++ b/reposerver/repository/repository_test.go
@@ -10,7 +10,7 @@ import (
 
 func TestGenerateYamlManifestInDir(t *testing.T) {
 	// update this value if we add/remove manifests
-	const countOfManifests = 23
+	const countOfManifests = 21
 
 	q := ManifestRequest{
 		ApplicationSource: &argoappv1.ApplicationSource{},
diff --git a/test/e2e/fixture.go b/test/e2e/fixture.go
index 977c585a8a8a4..404e45ccb0649 100644
--- a/test/e2e/fixture.go
+++ b/test/e2e/fixture.go
@@ -93,7 +93,7 @@ func getFreePort() (int, error) {
 }
 
 func (f *Fixture) setup() error {
-	_, err := exec.Command("kubectl", "apply", "-f", "../../manifests/base/application-crd.yaml", "-f", "../../manifests/base/appproject-crd.yaml").Output()
+	_, err := exec.Command("kubectl", "apply", "-f", "../../manifests/crds/application-crd.yaml", "-f", "../../manifests/crds/appproject-crd.yaml").Output()
 	if err != nil {
 		return err
 	}