PETALING JAYA: The management of government vehicles under concession has been found to be unsatisfactory, with the government failing to recover RM54.51 million in penalties from the concessionaire for late vehicle deliveries, according to the Auditor-General’s Report 3/2025 (AG Report).
As of Dec 31, 2024, a total of 6,028 vehicles were delivered late – between one and 508 days beyond the agreed timeframe – under Concession Agreement 2 (CA2), signed in January 2022 between the government and concession company.
Under the contract, vehicles must be delivered within 60 working days, with penalties imposed for delays. However, the audit found that no claims were made against the concessionaire despite the extensive delays.
Based on audit estimates, the government could have imposed RM54.51 million in penalties – comprising RM45.14 million for replacement vehicles under the expired CA1 lease, RM8.98 million for new orders and about RM380,000 for vehicles classified as total losses.
The Finance Ministry, which oversees the contract, said it has set up a Penalty Committee and a Penalty Assessment Working Committee to review and determine appropriate claims. A coordination meeting with all ministries was held on Aug 18 to discuss the audit findings and next steps.
The audit also revealed that the government continued to pay RM123.43 million in leasing fees for 5,323 vehicles whose lease periods had expired between 2021 and 2024.
It estimated that if these vehicles had been replaced on schedule, the cost would have been RM94.64 million, resulting in a potential loss of RM28.79 million.
The ministry explained that expired vehicles were still being used to prevent service disruptions, adding that supply delays from manufacturers also contributed to the backlog.
Between 2021 and 2024, ministries spent a total of RM1.75 billion on vehicle leasing, repairs and maintenance – including RM1.52 billion under CA1 and RM235 million under CA2.
CA2, which took effect on July 31, 2022, is a 15-year contract running until July 30, 2037, replacing the earlier CA1 that expired in 2018 and was extended four times.
As of end-2024, there were 14,459 government vehicles under the concession – 11,322 departmental vehicles and 3,137 official cars.
The report concluded that the Finance Ministry’s management of the concession was inefficient, citing late deliveries, unclaimed penalties and financial losses from the continued use of expired leased vehicles.
