Govt rolls out plan to replace 20-year-old vehicles with RM4,000 price-cut incentive

Transport minister Loke Siew Fook says eligible vehicle owners will receive up to RM2,000 from manufacturers, which will be matched by the government.

Transport minister Loke Siew Fook said the RM10 million allocation was expected to benefit about 5,000 vehicle owners. (Bernama pic)

PUTRAJAYA:

 A RM10 million matching grant initiative to encourage owners of vehicles aged more than 20 years to dispose of their old cars was launched today as part of the government’s efforts to improve road safety, reduce motorists’ cost burden, and phase out unsafe vehicles from Malaysian roads.

Transport minister Loke Siew Fook said the initiative, announced under Budget 2026, would see eligible vehicle owners receive up to RM2,000 from Malaysian manufacturers, which will be matched by the government for a total benefit of RM4,000 to buy new cars.

“The initiative starts immediately at Proton and Perodua showrooms,” he said during the launch here.

Loke said the RM10 million allocation was expected to benefit about 5,000 vehicle owners, adding that Proton and Perodua were being challenged to fully utilise the funds by mid-year so his ministry could seek additional allocations from the finance ministry.

He said many Malaysians continued to use vehicles that were more than two decades old not by choice, but due to financial constraints.

“Older vehicles are generally less safe, prone to frequent breakdowns, fuel-inefficient, and no longer meet current safety standards,” he said.

Loke said the initiative adopted a matching grant approach to ensure shared responsibility between the government, industry and the public, while optimising the use of public funds.

He said there were 19.69 million vehicles registered in Malaysia as of Dec 31, 2025. Of these, 4.075 million vehicles, or about 20.7%, had inactive motor vehicle licences for three years or more.

Such vehicles, he said, might be deemed abandoned and could pose safety hazards, cause environmental pollution and disruptions to local communities if left unmanaged.

To address this, the programme is supported by the road transport department’s (JPJ) online vehicle deregistration system (e-DeREG) which allows owners to cancel vehicle registrations digitally without visiting the counters.

“This digitalisation makes the process faster, more transparent, safer and more user-friendly, while reducing bureaucracy and waiting time,” he said.

Loke also said vehicles replaced under the programme would be disposed of through authorised automotive treatment facilities (AATF) to ensure legal, professional and environmentally compliant dismantling, and to prevent old vehicles from re-entering roads illegally.

Move to replace ageing taxis

During the launch, Loke said a separate initiative would be introduced to replace ageing taxis with new vehicles.

Under the scheme, old taxis will be matched with new vehicles through affordable payment arrangements. The programme is expected to be launched within the next one to two months, he said.

According to data released today by the Malaysian Automotive Association (MAA), total vehicle sales reached 820,752 units, a marginal increase of 0.5% from the 816,747 units sold in 2024.

In October last year, Prime Minister Anwar Ibrahim said the government would introduce a vehicle scrapping incentive of up to RM4,000 under Budget 2026 to encourage owners of vehicles which were over 20 years old to replace them with new national cars. - FMT