Budget 2026: RM4,000 Incentive for Scrapping Cars Over 20 Years Old

A major shake-up for Malaysian motorists is on the way. Under Budget 2026, the government is introducing a vehicle scrapping incentive of up to RM4,000 for owners of cars over 20 years old who trade them in for a brand-new national vehicle — meaning they've a choice of either a Perodua or Proton.

Announced by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of the national budget, this move is part of a broader strategy to make Malaysian roads safer and more sustainable. The government hopes the initiative, developed in collaboration with national carmakers, will encourage the removal of old, inefficient, and potentially unsafe vehicles from the roads.

Anwar emphasised that the initiative is also a response to a worrying series of recent fatal road accidents, including the tragic Universiti Pendidikan Sultan Idris (UPSI) student crash and the Ayer Hitam tourist bus tragedy. “The government expresses its deepest sorrow over these incidents,” he said, adding that stricter measures are being finalised to prevent similar tragedies. Among them are new speed limit regulations for heavy vehicles, to be announced by the Transport Ministry soon.

Beyond the scrappage incentive, Budget 2026 also channels massive investments into improving road safety and infrastructure. A total of RM2.5 billion has been allocated for federal road maintenance — covering resurfacing works, pothole repairs, and new street lighting in accident-prone areas. Another RM5.6 billion under MARRIS grants will go to state road upkeep, while RM30 million is earmarked for district engineers to speed up minor repairs and public complaints through the MyJalan app.

In addition, the Malaysian Highway Authority will install 3,000 LED lights at high-risk highway locations, while heavy vehicle operators will enjoy an Accelerated Capital Allowance for installing speed limiters — a move designed to encourage faster compliance.

Meanwhile, the Social Security Organisation (Socso) will expand its health screening programme to include public and commercial drivers, ensuring road safety begins with driver wellbeing.

In essence, the RM4,000 scrappage grant is more than a financial perk — it’s a call for Malaysians to embrace safer, cleaner, and more efficient vehicles. For those still driving decades-old cars, 2026 might just be the perfect time to trade up for a brand-new Proton or Perodua — and help make Malaysia’s roads a safer place for all.