If you are still driving a car that has been around since flip phones were cool, the government might finally give you a reason to say goodbye.
The government has launched a RM10 million matching grant initiative to encourage owners of vehicles over 20 years old to scrap their cars and replace them with new ones.
Under this programme, eligible owners can receive up to RM2,000 from participating Malaysian car manufacturers. The government will then match the amount, giving a total incentive of up to RM4,000 towards the purchase of a new car.
The initiative was introduced under Budget 2026 and is now available immediately at Proton and Perodua showrooms nationwide.
Why the government wants old cars off the road
As reported by FMT, Transport Minister Anthony Loke explained that many Malaysians continue using cars older than two decades not because they want to, but because they cannot afford to upgrade.
Older vehicles are more prone to mechanical breakdowns, lack modern safety features, and do not meet current safety standards. This increases accident risks and poses safety concerns not only for drivers, but also for other road users.
By introducing a matching grant system, the programme spreads responsibility between the government, car manufacturers, and the public, while making sure public funds are used efficiently.
Millions of vehicles sitting idle
As of Dec 31, 2025, Malaysia has 19.69 million registered vehicles. Out of this, about 4.075 million vehicles have had inactive road licences for three years or more.
These vehicles are effectively considered abandoned. If left unmanaged, they can cause environmental pollution, safety hazards, and community disruptions, especially when they deteriorate in residential areas.
To tackle this, the initiative is supported by JPJ’s online deregistration system called e DeREG. This allows vehicle owners to cancel registrations digitally without visiting a counter, making the process faster, more transparent, and user friendly.
Scrapped cars will be dismantled legally
Vehicles replaced under this programme will be sent to authorised automotive treatment facilities. These centres ensure cars are dismantled professionally and according to environmental standards, preventing old vehicles from illegally returning to the roads.
The government expects the RM10 million fund to benefit around 5,000 vehicle owners. If Proton and Perodua fully utilise the allocation by mid year, the Transport Ministry plans to request additional funds from the Ministry of Finance.
Alongside the car scrappage incentive, a separate programme will be introduced to replace old taxis with new vehicles. Under this upcoming scheme, taxi owners will be matched with new cars through more affordable payment arrangements.
The taxi replacement initiative is expected to launch within the next one to two months.
Vehicle sales continue to rise
Data from the Malaysian Automotive Association shows that total vehicle sales reached 820,752 units in 2025. This is a slight increase of 0.5 percent compared to 816,747 units sold in 2024.
Last October, Prime Minister Anwar Ibrahim had already signalled this direction, announcing that vehicle scrappage incentives of up to RM4,000 would be introduced under Budget 2026 to encourage Malaysians to replace cars older than 20 years with new national vehicles.
For many drivers, that long overdue car upgrade might finally be within reach.
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