Car Scrapping in Malaysia is a very sensitive subject right now.
There has been a lot of NEW chatter online about a car scrapping policy in Malaysia and even though the Transport Ministry quashed all rumors and chatter on it when YB Anthony Loke was in charge, the end-of life car scrapping program has re-emerged recently.
Now, car scrapping works in many countries, like the United Kingdom……where new car prices are NOT high and the government has a scheme to buy back the scrapped cars to allow the owners to afford new cars, but we Malaysian do not enjoy low new car prices and we are not a high income nation like Singapore.
Also, our lower and middle class workers do not earn enough (monthly salaries are still not on par) when compared to nations employing car scrapping.
- Imagine a retired 60 something school teacher owning a fully paid up 1996 Honda Civic 1.6L. The car works fine and gives no problems. Yes, it is 25-year-old car but with no issue why should this retiree scrap his one owner Civic for a new local made compact car that will incur monthly installments. This new car might not even be better than his 25-year old Civic.
- What if a 23-year-old fresh graduate working in Klang Valley drives a ‘hand me down’ from the mother, a 2008 Nissan Latio 1.6L. The car works perfectly, has low maintenance, is still good for outstation travel for the monthly visits to the hometown in Muar and has airbags for decent safety. The car has no installments and fuel consumption is pretty decent…almost the same as a new car costing RM80k. With the high cost of Kang Valley living, this fresh grad is better of driving the no installment Nissan Latio until their salary gets better and maybe a down-payment for a small condo is made. Scrapping the Latio for a new basic car with monthly installments does not make any sense at all unless the retired parents in Muar are helping out with monthly payments.
- Take a para-legal living in Klang Valley. With a decent enough salary driving a 19-year-old 2002 Toyota Camry. It is an easy car to live with. Large enough for the family and can travel out-station without a hitch. Why would the school teacher want to sell it and start a fresh car loan?
- Then you have the divorced fifty something living in Gombak with an ex-wife and tow children to support. His 28-year old Mercedes is working fine despite a number of dings around the car and the drivers seat is slightly torn. But the air-conditioner is cold, the 2.0L engine is smooth and its got a pointed star on the edge of the bonnet. Why sell this and get a simple basic local brand car and start monthly installments.
- You have the family of seven. All five kids still in school, parents work and with a household income of just below RM8k. A maid to look after the 5 kids and a trusty Proton Exora that is fully paid up. Salary is not going up and expenses are rising every year. A new car installment is definitely not going to help this family and the trade in value of the Exora is just enough for the minimal down payment for a small Malaysian rebadge sedan which will not be enough for all 7 in the family to fit in.
Now in an economy where new car prices are subjected to minimal tax, an End Of Life Vehicle (ELV) scheme will work as buying a new Nissan, Toyota or Honda will probably be 30-35 percent lower compared to what we are paying for it today.
So, until car prices in Malaysia come down to levels similar to North America and Europe, we will keep maintaining our old cars and try and save on monthly installments.
