Govt urged to scrap old cars to boost new sales


The Proton Edar Dealers Association Malaysia (PEDA) is appealing to the government to revisit its stillborn policy that requires owners to scrap vehicles after they have reached a certain age.

The association wants the End of Life Vehicle (ELV) policy — that was scheduled to be introduced in 2014, but rescinded due to popular protest — to be revisited to boost sales of new vehicles.

PEDA advisor Datuk Armin Baniaz Pahamin said it is time for the government to consider the ELV policy as it will provide the impetus to the sector’s growth.

“Currently, there are about 28 million cars registered, but many of these vehicles are not roadworthy anymore,” he told The Malaysian Reserve.

Currently, there is no age limit for vehicles in Malaysia and, on paper, the country has among the highest ratio of car registrations against its population.

In a population of 32 million, the ratio is about nine vehicles for every 10 people.

The high number of older vehicles in use is restricting the appetite for new ones, according to the car industry.

Armin Baniaz said the ELV policy is practised in most developed countries and is the single factor for generating new car sales in mature markets.

“The government must be willing to address the issue in the next National Automotive Policy (NAP) review as the market is already matured,” he said.

The total industry volume (TIV), which measures the sale of vehicles, was 576,635 units last year compared to 580,123 units in 2016. Out of the TIV, 61,959 commercial vehicles were sold last year compared to 65,579 units two years ago.

In 2015, the TIV was 666,674 vehicles compared to 666,465 units in 2014.

Sales have been decreasing since 2015, prompting the industry to seek for more ways to reignite interest in new cars.

Besides new vehicles, the used car market transacts about 400,000 units annually, bringing the total car transactions to almost one million units.

The government had proposed the ELV policy, but had to backtrack following a strong public objection. The authority had pushed for the move in the first NAP.

The policy had proposed for mandatory annual inspections for road tax renewal for all vehicles aged over 15 years old. In 2006, there are 2.7 million passenger vehicles that are above 10 years old.

In Singapore, the ELV policy is adopted by the industry. Owners who want to extend another year (up to five years) of ELV age will be required to pay a higher road tax.

The owner also has to pay for the Certificate of Entitlement. Cars scrapped from the republic are shipped to other markets as used cars. The next NAP revision is expected to take place this June.