Vehicle End Of Life Policies Don't Make Sense In Malaysia
InsightsEvery few years, some part of the government tries to introduce a scrap policy for old cars. It never makes sense - and even worse, they're completely tone deaf.
One of the more troubling pieces of automotive news to pop up recently is the fact that MIROS is surveying public opinion on vehicle scrapping after a certain age. Yes, we're talking about taking a car that happens to be 15 to 20 years old (or more), and crushing it - and maybe you'll get a pittance in return for destroying a perfectly functional car.
The Background
This is not the first time the government has tried to introduce a scrap policy. Over a decade ago it was first proposed, and come 2014 the Malaysian Automotive Association (MAA) actually tried to put forward such a scheme. They continued pushing this agenda, even with the change in government - where it was quickly shelved following public protest.
Obviously, the angle they're attempting now is to tie vehicle safety with age, and in many cases, crash testing shows that older cars just aren't as safe as their newer counterparts. Unfortunately, the data in isolation is usually pretty useless, because it doesn't take into account driving behaviour and actual car condition as being the key indicators of accident potential - beyond just safety in an accident.
The Reality
What do we mean by this? A reasonably well maintained Proton Saga from the 1980s will be much safer than a one-year-old Perodua Axia with bald tyres. In fact, this was proven when a delusional Axia owner crashed in Penang back in 2016, blaming the fault on Perodua when in fact he had four extremely bald tyres with absolutely no grip.
This scenario applies to many, many vehicles - especially when you see high-end luxury cars wearing cheap, second hand, or off-brand tyres that are obviously dangerous in wet weather conditions. Despite this glaring oversight, the government continues to put the blame on older cars in an attempt to get them off the road. No ABS system in the world is going to overcome sheer stupidity and bad tyres in wet weather.
The Agenda
But why this push to get older cars off the road? MAA and the Malaysian Automotive Institute (MAI) have openly declared that it's a bid to push Malaysian's Total Industry Volume (TIV) for car sales up. They have also openly said that in doing so, the government can collect more taxes from the Malaysian people. Let's think about that for a second.
In the majority of cases, if someone is driving an extremely old car - and it's their sole vehicle - chances are, they can't afford something new. Yes, there will be some who drive an older car for nostalgic or sentimental reasons, but the lion's share of "old car owners" so to speak will do so out of necessity rather than choice.
The Logical Fallacy
If this is the case, the government really isn't going to be collecting much more tax when you push TIV up, because most of those sales will be at the lowest end of the market where the cars are cheap, and the tax is practically nonexistent. This, of course, is assuming that people can even afford to buy a new car.
In 2016, MAA proposed that a Cash for Clunkers scrap scheme be introduced to "help" old car owners upgrade to something newer and encourage the purchase of new cars. The absolute insanity of this and the tone-deafness of the statement shows that these people have never truly studied the market - and you can tell when they suggest giving an RM5,000 rebate if you scrap a car "of 10 years old or more".
Does that sound right to you? As of 2021, even a 2011 Perodua Viva is worth just under RM9,000. A Perodua Myvi sits at the RM12,000 mark or so, a Toyota Vios at the RM24,000 mark or so, a Honda Civic at the RM35,000 mark or so, and a BMW 320i sits at RM40,000 or so. Apparently, the MAA believes that any of these cars should only be worth RM5,000 and aren't fit for road use.
The Bigger Problem
In their statement in 2016, it was even said that banks should make vehicle loans easier to obtain in order to promote new car sales. Have we not learned from loan-related crises in other countries? Does the fact that the majority of bankruptcy cases in Malaysia are people between 35 and 44 years old defaulting on car loans not suggest something?
Malaysia is home to something truly unique (and absolutely stupid): the nine-year car loan. Let's be completely frank here - if you have to take a NINE YEAR LOAN to pay off a car, you are usually in a situation born out of absolute necessity. Not only are you paying an absurd amount of interest, but you also increase your risk dramatically and you completely destroy any chance of settling a loan balance, even if you were to sell the car outright.
Forcing people to take insane loans all in the pursuit of "pumping up those numbers" is an incredibly irresponsible line of thinking. If a car is perfectly functional, there is no reason to take it off the road and subject people to extra financial stress.
The Halfway House Solution
One other proposal put forward is the idea of annual vehicle checks for vehicles beyond a certain age, which is something done in certain other countries. This isn't an altogether bad idea if it wasn't for the fact that we don't have the resources or the experienced personnel to execute this kind of assessment.
This also opens up another avenue for corruption, which we know is a common problem here. Pushing people to the edge makes them more desperate, especially if they know that failure to pass a vehicle check means losing their source of transportation, which may also be their source of income.
If the government was willing to give an RM5,000 rebate for people to buy new cars, they should be able to give that same money to people for the betterment of their vehicles. RM5,000 is more than enough to make sure an old vehicle gets up to standards for safe driving - a set of decent tyres, brake pads, fluids, replacement bushings and absorbers, and so on.
The Money
And as for the bottom line - the extra money that the government wants - so to speak? That should come from growing our vehicle export volume. Yes, the government doesn't get a one-shot tax payment on the sale of a vehicle, but with the growth of export volume comes more jobs in the automotive sector, more components imported (and taxed) or locally produced (and taxed).
That's real growth, both sustained and sustainable. That's foreign investment in our country, that's increasing our status and positioning as an exporter and supplier within the region. That's increasing faith in our automotive industry - just as Thailand has done, and how they have become the ideal choice for foreign automaker investment in our region. It's never too late for us to do the same.
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