MAA doubts ‘scrap car policy’ will be part of NAP

According to its president, the issue is still being weighed cautiously by the govt


The scrap car mechanism, or end-of-life vehicle (ELV) policy, could be among the best ways to spur the automotive industry’s growth, but the likelihood for the government to introduce it in the country is rather slim.

Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said while the policy is among the initiatives desired by industry players to be included in the National Automotive Policy (NAP), the issue is still being weighed cautiously by the government.

“However, I doubt it (will be done). I have raised the issue to the transport minister, but he said this is a very sensitive question and the government has to be really careful and look at it holistically,” she told the press at the automotive sales performance briefing for 2018 in Subang, Selangor, yesterday.

Aishah was referring to her earlier discussion of the issue with Transport Minister Anthony Loke at the Kuala Lumpur International Motor Show 2018.

“Now, if you ask the industry players,” she said, answering queries by the media if it is the right time to introduce such a policy.

“However, the indication is, it would not happen so soon,” Aishah added.

Earlier this month, The Malaysian Reserve (TMR) reported that the ELV could be part of the next NAP which is slated to be launched by the first quarter of this year.

It could also be a revised policy by the previous Barisan Nasional (BN) government that was launched in April 2018.

TMR’s report stated that the current government is studying the most viable ELV mechanism that could suit the country’s auto market.

The ELV was first announced during the NAP 2006 road-map. Three years later, the BN government introduced mandatory annual inspections for all vehicles exceeding 15 years old.

The programme was postponed, only to resurface in 2015 — which saw both the government and carmakers agreeing to share an equal commitment of RM5,000 for every vehicle scrapped. The programme was discontinued due to public outcry.

Loke, who was appointed in June last year, shelved the plan for the same reason.

Aishah said the main ELV concern comes from rural vehicle owners who view the scrap policy as “taboo”.

She said it would be troublesome for the underprivileged in remote areas, who would have to forgo their old cars at penny prices and commit to new long-term loans.

“It may also be not convenient for those who live in rural areas to appear for mandatory inspections,” she said, adding that the government’s financial constraints may cause a delay on the ELV’s reintroduction.

At the briefing, Aishah said the total industry volume in 2018 closed 3.8% higher at 598,714 compared to 576,625 vehicles registered in 2017, supported by the three-month tax holiday period.

Passenger vehicle (PV) sales grew by 3.6% to 533,202 from 514,675 in 2017, while commercial vehicles slightly increased by 1.7% to 65,512 in 2018 compared to 61,950 units sold in the previous year.

Perusahaan Otomobil Kedua Sdn Bhd continues to dominate the PV market share of 202,854 (38%) unit sales recorded, followed by Honda Malaysia Sdn Bhd with 102,282 units (19.2%) and Proton Holdings Bhd’s 64,744 units (12.1%).

The total vehicle production volume also increased by 13.1% from 499,639 in 2017, to 564,971 last year.

MAA forecast a 0.21% flat growth for 2019, with an estimation of 600,000 unit sales.

Moving forward, MAA expects the industry to regain its momentum with a 2% estimated growth in 2020, followed by 2.1% (2021), 2.2% (2022) and 2.3% in 2023.

“This year, potential customers were brought forward due to the tax holiday period.

“Some of our members also extended their promotions by absorbing the Sales and Services Tax until the end of last year. Hence, we could see the flat growth recovered by 2020,” Aishah said.

She added that some MAA members had lost out due to the weakening of the ringgit, which plummeted 5.3% in 2018 from a year ago.

“The backlog of pricing approval from the authorities has also caused a delay in the launch of new models. We have models that were launched seven months ago and still with no price tag,” she said.

On the next automotive industry roadmap, Aishah hopes that the government will still continue with what was implemented in the NAP 2014 to incentivise the energy-efficient vehicle (EEV) segment.

EEV penetration has been increasing since 2014. About 19 of 27 car manufacturers are offering environmentally friendly vehicles to the market with approximately 52% penetration in 2017, 9.2% higher from the previous year.

During the year, 308,807 EEVs were produced, a 24.6% jump compared to 247,912 units in 2016.