Cash for clunkers scheme in the works, says MAI

By THE STAR | 12 January 2015

CYBERJAYA: A new car scrappage programme, designed to encourage people to turn in their old cars for cash, may help boost sales for automakers.

The Malaysian Automotive Institute (MAI) has projected that the “cash for clunkers” scheme could lift total industry volume (TIV) by as much as 50,000 new cars, if implemented this year.

“We are now in talks with other Government agencies such as the Finance Ministry, other related Government bodies and the original equipment manufacturers (OEMs). This is to ensure that if the cash for clunkers scheme is approved, vehicles will be recycled properly and not be simply dumped in the yard,” its chief executive officer M Madani Sahari said at a presentation today.


Such a similar policy had been introduced by Proton in 2009 under a voluntary scrapping policy, in which both the Government and manufacturer equally shared the cost of forking out rebates to the consumer.

“We are now studying the viability of such programmes on whether both the Government and the OEMs can afford to continue forking out such similar amounts,” Madani said.

He said cars that were going to be scrapped under the scheme would need to be recycled properly, cleaned, oiled and so on without adversely affecting the environment. The recycled components can be retrieved again and reintroduced into the eco-system as second-hand spare parts.

Madani estimates that the cash for clunkers programme could give the industry a one-time annual sales volume boost of 10%.

On this new consideration, the TIV of the automotive industry in Malaysia could outperform MAI’s initial TIV forecast of 700,000 units, which already is an increase of 5.1% from 2014’s TIV of 665,675 units.

“The TIV may increase to more than 750,000 units should such a scheme be approved and is viable. This not only needs Government approval, but the OEMs too need to see that it is viable for their operations,” Madani said. - DANIEL KHOO