Efforts to strengthen vehicle recycling and replacement frameworks are continuing to gain attention in Malaysia, following the rapid utilisation of the MYR 10 million (US$ 2.51 million) matching grant programme for replacing old vehicles introduced under the 2026 Budget, which was fully utilised within three months, according to a brokerage firm.

The firm stated that this indicates demand for structured vehicle replacement initiatives. This follows the firms' site visit for institutional investors to gain insights into end-of-life vehicle (ELV) recycling operations in Malaysia, including a visit to Car Medic, one of five licensed authorised automotive treatment facility operators in the country.

The firm stated that, while Malaysia has historically been cautious about implementing a nationwide ELV policy due to affordability concerns and public sensitivity, gradual policy changes could still be introduced over time.

These could include stricter inspection standards, targeted scrappage incentives, or formal deregistration requirements, implemented incrementally rather than through a single comprehensive policy announcement, it added.

"Car Medic sees long-term growth potential in the vehicle recycling industry and is currently expanding its monthly vehicle throughput capacity to 3,000 units from 1,500 units. The group is also evaluating recycling technologies such as vehicle shredders," it said.

The brokerage firm stated that these technologies could help improve material recovery rates, enhance scrap quality, and enable the group to expand its position within the recycling value chain. The firm further added that the broader opportunity is supported by Malaysia's ageing vehicle population and a fragmented industry structure, where informal operators continue to account for a substantial share of the market.

"Overall, our visit to Car Medic reinforced our view that ELV recycling is evolving beyond a traditional waste-management function into a broader sustainability and circular economy segment within Malaysia's automotive sector. While the timing of nationwide policy implementation remains uncertain, we believe the long-term direction points towards a more regulated, traceable, and environmentally compliant automotive recycling ecosystem," it said.