The Ministry of Transport is incentivizing the removal of older vehicles from our roads with up to RM4,000 in public and private funds.
A few years ago, there were fears that the government would start to implement ways to discourage the ownership of older vehicles. It was thought that some mechanism would be used to penalize the use of older vehicles that were seen as unfit or unsafe on roads. Instead, the Ministry of Transport has gone the other route, INCENTIVIZING owners to get rid of their older vehicles by way of a grant.
Under this “Matching Grant Programme for the Replacement of Old Vehicles”, the Ministry of Transport has been allocated RM10 million under Budget 2026 and they’ve been given a target to assist 5,000 owners of vehicles aged 20 and up with upgrading the a newer car. The matching grant will see the government offering up to RM2,000 and participating manufacturers (so far, just Proton or Perodua) will offer up to an additional RM2,000 for a total of RM4,000 to de-register and dispose of their vehicles in exchange for a new vehicle. The only exemptions are the new Proton Saga and the new Proton e.MAS 5. Upgrading to either of these vehicles will see the total combined financial incentive be capped at RM2,000.
Vehicles that are traded in and scrapped will be put through the Online Vehicle Deregistration System (e-DeREG) and disposed through Authorised Automotive Treatment Facilities (AATF) to ensure no illegal re-entry or export and to also make sure the vehicle is properly scrapped in compliance with environmental standards.
What Are Our Thoughts?
Mostly, this is a good thing. It’s purely voluntarily, there’s no need to worry about some arbitrary limit such as emissions or age that would force you to give up your car. It’s also good that they’ve set an age of 20 or older for these cars which is the sweet spot as many cars from the mid 2000s onwards still come across as relatively modern and perfectly usable as long as well maintained. Think anything launched after the first Myvi and you’ll get an idea of what we mean.
Making sure these cars go through proper deregistration and disposal is also a good thing. The used car market has just about collapsed and many lots are overflowing with unsold inventory. Used car dealers are becoming more selective and reluctant to take in tough sells and this scheme makes car scrapping financially viable. It may even normalize the act of car scrapping in Malaysia, which has long been seen as wasteful as many older cars just get handed down over and over until the wheel fall off.
It’ll also help incentivize the removal of abandoned cars parked by the roadside. Owners may finally have a good reason to get these eyesores out of the way, as RM4,000 should just about cover the downpayment for something efficient and easy to drive and maintain like a Perodua Axia. Sure, enthusiasts will be up in arms, but the reality is that many young people aren’t interested in driving and maintaining old clunkers. This initiative at eases the financial burden of acquiring one’s first vehicle.
Is there room for improvement? Sure. Just thinking about cars that have been abandoned by the roadside – we wonder if the grant’s potency will be chipped away by towing services and other fees. I can easily see a situation where someone thinks he’ll get RM4,000 clean to get rid of an unroadworthy car only to have that chipped away by the cost of getting that car safely towed to an AATF. It’s a minor concern but I wonder if it’s addressed or paid for by the AATFs.
