Govt mulls new voluntary ELV mechanism

Voluntary surrender of old vehicles will increase TIV, but deemed as burden to the public


MALAYSIA can still introduce a new voluntary end-of-life vehicle (ELV) mechanism as the industry aims to boost sales, drive the subsectors and create a sustainable automotive ecosystem.

Voluntary surrender of old vehicles will increase total industry volume (TIV). However, consumers have rejected such proposal as it is deemed to benefit manufacturers, but burden the public.

Malaysia Automotive, Robotic and IoT Institute (MARii) CEO Datuk Madani Sahari (picture) said the agency is still seeking a “win-win” voluntary ELV structure that would benefit consumers, manufacturers and the government.

Madani said the new mechanism may include subsidies which will encourage consumers to replace their old vehicles.

“If we put up a system that is still a voluntary ELV, but it benefits the people for letting go of their old cars with a subsidy and the original equipment manufacturers can contribute to a lower cost, then more cars will be sold and the government can collect more tax. It is a win-win situation for everybody.

“We are crafting the mechanism, but it is a policy call. The ELV should not be mandatory. Those who could afford may jump onto the scheme,” Madani said at a briefing on 2019 automotive performance update in Kuala Lumpur yesterday.

Industry observers view the ELV as one of the last pieces needed to complete the automotive ecosystem as the country’s TIV could not increase from the current 600,000 units annually.

The remanufacturing and component sectors would not invest as the life cycle of a vehicle is not complete.

There are also environmental concerns and safety issues behind the push for the ELV. Older vehicles are less environmentally friendly, use inefficient engines and do not meet today’s emission standards. There are also questions of the cars’ safety and road worthiness.

The recently launched National Automotive Policy (NAP) 2020 does not outline any mandatory ELV mechanism. Scrapping of old vehicles remains voluntary.

Last year, the automotive exports recorded RM15.5 billion, up 5% from RM14.7 billion achieved in 2018.

Overall, the automotive sector contributed about 4.3% to GDP, with parts and components exports accounted for RM13.7 billion last year, vehicle exports (RM1 billion) and remanufactured parts and components exports (RM722 million).

Energy-efficient vehicle (EEV) penetration rose to an all-time high of 87.6%, while a total of 65,388 jobs were created last year.

MARii expects this year’s TIV will grow to 610,330 units and the total production volume to 577,348 units.

EEV penetration is expected to hit 90% and automotive exports would increase to RM17.2 billion.

Madani said new investments worth RM1.4 billion, including RM1 billion in services aligned under the NAP2020, are expected this year.

The services are, among others, in the area of mobility-as-a-service, testing, inspection and certification.

Madani also said the government has established a stricter system in evaluating open approved permits to ensure the recipients undertake “real businesses” with the licences.