Government offers up to RM4,000 in incentives for owners to scrap vehicles over 20 years old, improving safety and reducing maintenance costs
PUTRAJAYA: The government has launched a new matching grant programme offering incentives of up to RM4,000 to encourage owners of vehicles aged more than 20 years to replace them with newer and safer cars.
Transport Minister Anthony Loke said the initiative is aimed at addressing road safety risks posed by ageing vehicles, while easing the financial burden on car owners.
Under the programme, eligible buyers will receive a government matching grant of up to RM2,000, which will be matched by participating local car manufacturers, bringing the total incentive to as much as RM4,000 per vehicle.
“This is a practical, targeted and high-impact programme that gives direct benefits to the people, especially owners of old vehicles who face high maintenance costs and safety risks,” Loke said at the launch of the Matching Grant Programme for the Replacement of Old Vehicles here today.
He said many Malaysians continue to use vehicles that are more than two decades old not by choice, but due to financial constraints and daily necessities.
Such vehicles, he said, are typically less safe, prone to frequent breakdowns, fuel-inefficient and no longer compliant with current safety standards.
The programme, announced under Budget 2026, has been allocated RM10 million, which is expected to benefit at least 5,000 vehicle owners nationwide.
To qualify for the incentive, vehicles aged over 20 years must be disposed of through an Authorised Automotive Treatment Facility (AATF) and deregistered via the Road Transport Department’s Online Vehicle Deregistration System (e-DeREG).
“This is not just an administrative exercise. Removing old vehicles from the road is a safety intervention that can prevent accidents, reduce injuries and save lives,” Loke said.
According to Road Transport Department data, Malaysia had 19.69 million registered vehicles as of last year, with 4.07 million vehicles — or about 20.7% — having inactive road tax for three years or more, placing them at risk of being classified as abandoned.
Loke said the use of e-DeREG would simplify the deregistration process, making it faster, more transparent and more citizen-friendly, while ensuring old vehicles are disposed of legally and do not re-enter the road illegally.
The programme is being implemented in collaboration with national carmakers Proton and Perodua.
Loke said vehicles of any brand are eligible to be scrapped under the programme, but the matching grant applies only to purchases of new Proton and Perodua vehicles.
For Proton, most models will qualify for the full RM4,000 rebate, except for the latest Saga and e.MAS 5, which are eligible for rebates of up to RM2,000.
Details for Perodua models will be announced separately.
