Budget 2026: Up To RM4,000 Incentive To Scrap Cars Over 20 Years Old

The government will soon roll out a vehicle scrapping incentive worth up to RM4,000 under Budget 2026, aimed at encouraging Malaysians to trade in their old cars, especially those over 20 years old for new national models, Prime Minister Datuk Seri Anwar Ibrahim announced in Parliament on Friday.

The initiative, launched in collaboration with national carmakers, is meant to get old, unsafe, and polluting vehicles off the road while helping Malaysians afford newer, safer cars.

“This grant’s goal is to encourage these owners to scrap their old vehicles and purchase new national cars, as older, outdated vehicles can pose a higher risk of accidents,” Anwar said when tabling Budget 2026.

The scheme will work as a matching grant between the government and national automakers. 

“For example, if Proton or Perodua offers RM4,000 for your old car, the government will match it by giving you a total rebate of RM8,000 toward a new car

“If the carmaker offers RM3,000, the total becomes RM6,000. The government’s contribution, however, is capped at RM4,000,” The Prime Minister announced.

Beyond easing the financial burden for car owners, the move is also part of a broader push to improve road safety after a series of tragic accidents involving buses, lorries, and even university students.

"By encouraging Malaysians to retire aging vehicles, the government hopes to reduce road hazards, cut emissions, and give a small boost to local carmakers in Tanjung Malim and Rawang," Anwar added.