In an effort to modernise the country’s vehicle fleet and improve road safety, the Malaysian government has introduced a vehicle scrappage incentive under Budget 2026 that could put money back into your pocket when you upgrade your old car.
What’s the New Incentive About?
Owners of vehicles over 20 years old are now eligible for a matching incentive of up to RM4,000 when they trade in and scrap their old car to buy a new national vehicle — such as those from local manufacturers like Proton and Perodua.
Here’s how it works:
- Participating carmakers may offer an incentive (e.g. RM2,000) when you trade in your old vehicle.
- The government will match that amount up to RM4,000 — effectively doubling your rebate toward a new car purchase.
- If a manufacturer’s rebate is higher, your total benefit could be even greater — as long as the government’s contribution caps at RM4,000.
This scrappage incentive is now available — including at showrooms nationwide — thanks to the collaboration between the government and national automakers.
Why Is Malaysia Doing This?
There are several reasons behind this policy:
- Improve Road Safety – Older cars may lack modern safety features and can be more prone to mechanical issues, increasing the risk of accidents.
- Reduce Pollution – Older vehicles tend to emit more pollutants, contributing to environmental and air quality challenges.
- Support Local Car Industry – Encouraging buyers to choose national car brands helps stimulate demand and support automotive jobs and production at home.
- Free Up Road Space – With millions of inactive or road‑licensed vehicles over 15+ years on Malaysian roads, this programme helps clear out vehicles that may no longer be economical to maintain.
How Much Could You Benefit?
Let’s say:
- A manufacturer offers RM2,000 for your old car.
- The government matches it with an additional RM2,000.
- Total incentive: RM4,000 toward your new national car purchase.
If the manufacturer’s incentive is higher (e.g. RM5,000), you could receive even more value overall (e.g. RM9,000 total discount) — depending on the terms of the vehicle trade‑in programme.
Practical Tips Before You Upgrade
If you’re considering scrapping your old car:
- Check eligibility: Your car must generally be over 20 years old and meet the trade‑in criteria from participating dealers.
- Compare offers: Ask dealers about manufacturer rebates and how the government match applies.
- Use online deregistration tools: JPJ’s eDeREG service allows you to deregister your vehicle digitally without visiting a counter.
- Plan your financing: If you need a loan to top up the balance for a new car, start exploring hire‑purchase or micro‑loan options early.
Why This Matters to Everyday Malaysians
This isn’t just a perk for car buyers — it’s a targeted effort to make Malaysian roads safer, greener, and more efficient while helping citizens more affordably transition to newer vehicles. The incentive also shows how policy can help bridge affordability gaps in big‑ticket purchases like cars.
Whether you’re using your old car daily or have been thinking about upgrading, this incentive could make the decision easier — and more cost‑effective — in 2026.
