The government has launched a vehicle trade-in grant aimed at encouraging owners of older cars to switch to newer, safer models. Under the programme, eligible buyers will receive a RM2,000 government grant, which will be matched by national carmakers Proton or Perodua.

The initiative, first announced under Budget 2026, is now in force following its official launch yesterday.

Grant Offers Up To RM4,000 In Purchase Rebates

With an allocation of RM10 million, the programme is expected to benefit 5,000 vehicle owners. Each eligible participant can receive a combined rebate of up to RM4,000 when trading in a vehicle that is more than 20 years old and purchasing a new Proton or Perodua model.

For buyers, the rebate directly reduces the upfront cost of a new vehicle, potentially lowering monthly instalments and easing financing commitments.

Focus On Road Safety And Environmental Standards

The trade-in scheme is designed to reduce the number of ageing vehicles on Malaysian roads, which are more likely to pose safety risks due to wear and outdated safety features.

All traded-in vehicles will be disposed of through authorised treatment facilities. This ensures that scrapping is carried out in a controlled and professional manner, in line with environmental and regulatory standards.

Addressing Long-Abandoned Vehicles

Transport Minister Anthony Loke Siew Fook noted that around one in five registered vehicles in Malaysia has not had its road tax renewed for more than three years. This suggests that a significant number of vehicles may have been abandoned or left unused.

By encouraging owners to officially trade in older vehicles, the programme aims to clean up vehicle records while improving overall road safety.

Support For Local Automotive Industry

Beyond consumer benefits, the initiative is also intended to support the domestic automotive sector. Increased demand for locally produced vehicles can help sustain production levels, support jobs, and stimulate activity across the automotive supply chain.

For buyers, this focus on national carmakers helps keep prices relatively stable while supporting locally assembled models.

Tax Changes Deferred To Avoid Price Pressure

The trade-in programme comes alongside the government’s decision to defer planned revisions to excise taxes on locally assembled vehicles by a further six months. This move helps prevent immediate price increases on completely knocked-down vehicles.

Together, these measures may provide buyers with a short-term window of more predictable pricing when considering a new car purchase.

Similar Programmes Show Early Take-Up

National carmaker Proton previously introduced a similar trade-in programme in May last year, using a lower vehicle age threshold of 15 years. That initiative attracted more than 4,000 Proton customers, suggesting there is demand for structured vehicle replacement schemes.

The current government-backed programme expands on this approach with wider eligibility and direct financial support.

How The Trade-In Grant Affects Buying Decisions

For owners of older vehicles, the trade-in grant can make upgrading to a new car more financially viable. Lower upfront costs may translate into smaller loans and reduced long-term interest payments.

At the same time, buyers should weigh the rebate against ongoing ownership costs such as insurance, maintenance, and fuel efficiency to ensure the switch fits their overall budget and financial plans.

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