All systems go for ELV policy by choong en han

IF and when the end-of-life vehicle (ELV) policy for cars is implemented in the years ahead, the car inspection business will become a multi-million dollar business as there are almost 12 million vehicles plying Malaysian roads.

For now, all systems are a go for the Government to introduce the ELV policy in an announcement on Jan 15 as part of the National Automotive Policy (NAP).

However, that policy has elicited all sorts of emotions from car owners. Vehicle owners are nervous to the fact that their prized car might be scrapped with the ELV policy being enforced, but the Malaysia Automotive Institute (MAI) is ironing out the fine print when it comes to implementing such a policy.Under the purview of International Trade and Industry Ministry, MAI is tasked with charting the future of the local automotive sector under the revised NAP.

MAI chief executive officer Madani Sahari says the ELV policy is scrapping not for the sake of scrapping but for the sustainability of the automotive industry and general stakeholders at large.

Roadworthy industry

“When we talk about the ELV policy, we automatically think about scrapping our cars. But, this is not the case, as we are just ensuring the roadworthiness of cars that are plying the roads in Malaysia. We want to transform the local automotive industry to become a sustainable one,” he says.

To be introduced in several stages, the ELV policy would first start with the voluntary inspection programme where consumers are encouraged to check on the condition of their cars. Last year, there were 462,423 road accidents in Malaysia, resulting in almost 7,000 deaths. A Miros report published in 2012 projected that the number of road fatalities in the country will increase to 8,760 in 2015 and 10,716 in 2020.

To be roadworthy definitely should not be an issue, as it ensures the safety of the drivers, passengers and other road users. It’s the responsibility of car owners to ensure their vehicles are safe to be driven on the roads.

Currently Puspakom, a unit of DRB-Hicom Bhd, is the only company authorised to perform inspection checks on cars, which normally would be mandatory when a car changes ownership.

The fee for that check is RM60. Should the cost be fixed at RM50 to perform annual roadworthy inspections, the industry would be generating more than half a billion ringgit in revenue just based on these checkup.Channel checks reveal that the Puspakom inspection contains 12 checking points, and the Government is looking to increase it to 18 checking points in tandem with international standards.

Scrapping and recycling

There are also suggestions for the government to also open up the industry to other vendors interested in doing this business, which entails an investment in standard equipments, training and periodic calibration. According to Madani, when the policy is in place, consumers still have an option to deal with their cars, including repairing, selling it off at auction houses that would in turn export these cars to developing markets similar to the system in Japan, and the last resort being scrapping.

And even then there is a value to scrapping, he says.

This would be the dawn of another multi-billion dollar industry when scrapping comes into the picture as it would entails the recyling of a vast variety of parts and raw materials by factories.

“Recyling would be the future direction as raw materials like metals and plastics could go back into the supply chain, while salvageable parts could be re-manufactured as replacement parts,” he says.

According to him, a discarded car could be broken down to the last bolt to be re-purposed including the dashboard, seats, engine and chassis.

“The plastic components can be processed back into plastic resin in the form of pellets that would be a feedstock for the production of new plastic parts.

“While the chassis and metal parts could be melted down in furnaces into basic metal sheets that would then be manufactured into new cars. The potential is huge in the recycling business,” he says.

For instance, discarded tyres could undergo a pyrolysis process to produce fuel gas, oils, and carbon black, which can be used in other industries. Even the steel wires could be re-manufactured.

But the potential of those industries hinge upon the success of a ELV policy, which largely depend on the response from consumers.

“The infrastructure and system to do this would be ready in due time, and it would not be right for us to enforce a mandatory inspection on consumers immediately. Its about doing it right,” he says.

Essentially once the infrastructure is completed and inspection made mandatory, car owners would have to conduct the inspection of cars within a certain time frame to ensure their cars are road worthy.

Otherwise, they would not be able to renew their road tax, until the issues are rectified.

Consumers need not fear that their cars will be immediately scrapped should it fail the roadworthy test.

“However, this would not impact classic cars enthuasists who are worried about the status of their cars. If it’s a prized possession, an inspection would not be an issue as these cars would likely be in tip top condition,” he says.

“For the ELV policy to be in place, the price of cars must be competitive, and NAP would be the roadmap to 2020. We are looking to reduce car prices gradually in five years, by way of localisation, improving efficiency and other means,” he says.

Despite that, he stopped short in revealing details of the NAP, which is expected to promote the production of energy efficient vehicles, and make Malaysia a production hub for passenger cars in the Asean region.

“While the NAP roadmap is in place for the passenger car market, the motorcycle and commercial vehicle industries have been liberalised, and we would see some additional measures to further develop these industries in the future,” he says.