Plan to replace old diesel fleets stalled

Slow response to scheme that encourages owners to swop smoky vehicles

An incentive scheme to encourage fleet owners to replace old, smoky diesel vehicles with cleaner models has been stuck in second gear since it was launched seven months ago.

Only 170 commercial vehicles had been replaced under the Early Turnover Scheme by Sept 30, according to the Land Transport Authority (LTA) on Tuesday.

That is less than 0.5 per cent of the 38,000 vehicles with pre-Euro or Euro 1 emission standards, which the Ministry for the Environment and Water Resources targeted when it proposed the initiative in March.

The scheme, which seeks to replace these vehicles with the latest Euro 5 standard, was implemented by the National Environment Agency and the LTA in April, and was to run for two years.

The ministry said the lack of suitable Euro 5 vehicles on the market may have hampered the take-up rate. Popular makes such as Toyota and Nissan will have a full range of Euro 5 models only from January, when the new emission standard for diesel vehicles kicks in.

But industry players said the scheme is not popular because it is too complex and not generous enough.

Motor Traders Association president Glenn Tan said: "The second-hand values of these old vehicles are higher than what the scheme is offering."

Mr Tan added that the calculation for the discounted prevailing quota premium - a three-month moving average of the certificate of entitlement (COE) premium - that an eligible vehicle owner must pay was too complex.

And although there is an online calculator available on an LTA portal, many vehicle owners are not computer literate.

The association has proposed a simplified version of the page-long formula.

"Have a straight-line sliding scale that the man on the street can understand," said Mr Tan, who noted that the current formula was complicated also because it was "too precise".

Vehicle owners can transfer the unused period of COE from their existing vehicle to the replacement one. They will get a bonus COE period for their replacement vehicle. This is derived from a proportion of what is left of their existing vehicle's 20-year lifespan when it is deregistered.

The proportion will be 10 per cent of the remainder of the 20-year lifespan if a vehicle's maximum weight is 3,500kg or less, and 30 per cent if its weight limit exceeds 3,500kg. The transferred COE and bonus COE periods will be capped at 10 years.

Contractor Andy Goh, 44, said the scheme is not popular because it is still costly for an owner to replace his old vehicle.

"For small businesses, it all boils down to cost," he said. "If my van needs an engine overhaul and the air-con has broken down, I can spend around $3,500 to fix it and I can still use it for the next five years."

That, he noted, was much less than the discounted prevailing quota premium of around $35,000 that such a vehicle would have qualified for.

The ministry said it was monitoring the take-up rate of the scheme, and will "take into account" feedback from motor traders.