Stringent requirements putting the brakes on car scrapping scheme

 

The auto scrapping scheme introduced in the recent mini-Budget could help boost vehicle sales. But is it working?

THE launch this week of Malaysia's first locally-made multi-purpose vehicle (MPV), the Proton Exora, marked a significant step up for the country's motor industry and for the national carmaker.

Like every Proton model that came before, there are substantial spillover effects and far-reaching benefits every time a new national car enters the market.

From Proton's own designers, engineers and workers, to vendors supplying high precision components, to the sales and service support ... everyone benefits.

More importantly, strong sales of the competitively-priced Exora will help raise domestic consumption and support economic growth.

For this reason, the auto scrapping scheme introduced in the recent mini-Budget - where owners of cars 10 years or older can trade them in to be scrapped for a RM5,000 discount on a Proton or Perodua purchase - could also help boost sales. But is it working?

It seems that stringent qualifying requirements have put a damper on the scheme.

In a statement welcoming the Exora launch, Proton Edar Dealers Association (PEDA) acting-president Armin Baniaz Pahamin said so far the policy has had negligible effect on new car sales although there were a lot of inquiries.

"This may be due to the stringent qualifying requirements that require all cars for scrapping to possess a valid road tax, in roadworthy condition and pass the Puspakom inspection," he said.

A valid road tax? Fine, I guess. But being in roadworthy condition and passing the Puspakom tests? Why is that necessary if the vehicles are headed for scrap?

Scrap yards pay by weight of the vehicle, not whether the brakes still work.

In the UK, for example, cars sent to the scrap yard must also take off the tyres, and completely drain out all fluid. The gas tank must also be taken out. Car crushers or compactors are then used to either flatten the car or compress it until it resembles a large cube.

In the US and Canada, auto recycling has developed into a business for the resale of usable parts and the wholesale of scrap material. Before the cars are wrecked, working parts are carefully removed by qualified technicians then inventoried using computer databases.

Is it possible that a similar new business activity could be developed out of the auto scrapping scheme? Do we have the necessary ingredients - large yard space, car crushers and compactors, and adequate transportation?

Maybe we should focus more of our attention on opportunities like these, rather than impose hurdles that unnecessarily stall good policies from getting off the ground in the first place.