Automotive Trade-In Policy

The automotive trade-in policy is a national fiscal subsidy initiative designed to spur automotive consumer spending and accelerate the phase-out and replacement of aged, high-emission vehicles. In 2026, eight government ministries and departments, led by the Ministry of Commerce, jointly released the "Detailed Implementation Rules for the 2026 Automotive Trade-In Subsidies", establishing unified nationwide subsidy standards for both vehicle scrappage and trade-in programmes, while transitioning the incentive mechanism from fixed cash rebates to a percentage-based calculation tied to the new vehicle's retail price.

Policy Background

Since 2024, the vehicle trade-in programme has achieved remarkable traction. As of 28 December 2025, total vehicle trade-ins for the year surpassed 11.5 million units, driving over RM1,600,000,000,000 in new vehicle sales and accounting for more than half of all domestic passenger car retail transactions.

The 2026 policy is jointly administered by eight government agencies, including the Ministry of Commerce, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, Ministry of Finance, Ministry of Ecology and Environment, State Taxation Administration, and State Administration for Market Regulation, officially taking effect from 1 January 2026.

Scrappage and Replacement Subsidy

Individual car buyers who scrap an eligible old vehicle and purchase a new car are entitled to the following subsidies:

No subsidies will be granted for scrapping a New Energy Passenger Vehicle (NEV) to purchase an internal combustion engine (ICE) passenger car.

Eligibility Criteria for Scrapped Vehicles: Must be a petrol vehicle registered before 30 June 2013, a diesel vehicle registered before 30 June 2015, or a New Energy Vehicle (NEV) registered before 31 December 2019.

Trade-In and Replacement Subsidy

Individual car buyers who trade in and transfer an existing vehicle via sale to purchase a new car are entitled to the following subsidies:

Eligibility Criteria and Application Procedure

Basic Requirements: The existing vehicle must have been registered under the applicant's name prior to 8 January 2025; the new car's "Uniform Invoice for Motor Vehicle Sales" and "Motor Vehicle Registration Certificate" must be issued in the same provincial administrative region.

Required Documentation: For scrappage replacement, applicants must provide the "Scrapped Motor Vehicle Recycling Certificate", "Motor Vehicle Cancellation Certificate", new vehicle sales invoice, and vehicle registration certificate. For trade-in replacement, the "Uniform Invoice for Second-Hand Vehicle Sales" alongside the registration certificates for both old and new vehicles must be submitted.

Application Channels: Applications must be submitted via the National Automobile Trade-In Platform (accessible through the web-based "National Automobile Circulation Information Management System" or the mobile "Automobile Trade-In" Mini Programme).

Processing Timeline: In principle, applications are accepted within 3 working days, reviewed and approved within 15 working days, and subsidy payouts disbursed within 30 working days.

Key Restrictions

Each individual car buyer is limited to claiming either one scrappage replacement subsidy or one trade-in replacement subsidy throughout the entire policy period.

Funding and Financial Support

Funding for the 2026 trade-in programme is jointly secured by ultra-long-term special treasury bonds and matching local government allocations. Subsidy funds will be allocated and disbursed evenly on a monthly basis, with final financial reconciliation between central and local authorities conducted once the policy period concludes.