New Budget 2026 incentive targets road safety, congestion, and aging vehicles nationwide
Malaysia is taking a decisive step to modernize its roads by encouraging the retirement of aging vehicles and making safer cars more accessible to the public.
A New Incentive Under Budget 2026
The Malaysian government has launched a new Matching Grant Programme aimed at helping owners replace vehicles that are over 20 years old with newer, safer models. Announced by Transport Minister Anthony Loke, the initiative is backed by a RM10 million allocation under Budget 2026 and is expected to benefit around 5,000 vehicle owners nationwide.
How the Matching Grant Works
Under the programme, eligible participants will receive a government matching grant of up to RM2,000. This amount will be matched by participating local manufacturers, effectively doubling the incentive and lowering the overall cost of purchasing a new vehicle. The scheme applies to selected models from national carmakers Proton and Perodua.
Eligible Models and Incentive Structure
Most Proton models qualify for a total incentive of up to RM4,000, combining RM2,000 from the government and RM2,000 from the manufacturer. However, the new Proton Saga and Proton e.MAS 5 are excluded from the full benefit and will receive a lower total incentive of RM2,000. These distinctions aim to balance affordability while supporting a wide range of buyers within the national car segment.
Addressing Safety and Congestion Concerns
According to Loke, the programme has two core objectives. The first is to reduce road congestion by ensuring that as new vehicles enter the system, old and inactive vehicles are permanently removed from circulation. The second is to improve road safety, as older cars typically lack modern safety features such as advanced braking systems and electronic stability control.
Targeting Long-Idle Vehicles
The initiative is primarily designed for owners of low-value or long-idle vehicles that have been left unused along roadsides. Loke noted that owners who believe their cars still hold value in the second-hand market are free to pursue private sales, as the programme focuses on vehicles that are no longer economically viable or safe to operate.
Transparent Scrapping and Environmental Compliance
To ensure transparency, surrendered vehicles must be deregistered through the Road Transport Department’s online e-DeREG system. All vehicles will then be scrapped at licensed Authorised Automotive Treatment Facilities, preventing illegal reuse and ensuring compliance with environmental standards.
A Growing Need for Vehicle Renewal
The programme responds to concerning data from the Road Transport Department, which shows that as of December 2025, Malaysia had nearly 19.7 million registered cars. More than four million of these vehicles have had inactive road tax for three years or longer, highlighting the scale of dormant and aging vehicles nationwide.
This Matching Grant Programme reflects Malaysia’s broader push toward safer roads, environmental responsibility, and smarter transport planning. By incentivizing the retirement of outdated vehicles, the initiative sets a precedent that could influence regional mobility policies and vehicle lifecycle management across Southeast Asia, including neighboring Singapore.
Sources: Malay Mail (2026) , Yahoo! News Malaysia (2026)
Keywords: Matching Grant Programme, Old Vehicles Malaysia, Proton Perodua Incentive, Road Safety Malaysia
