The Excise Department is studying incentives and measures to encourage motorists to bring their used cars in for demolition to tackle the pollution problem.
The automotive industry club under the Federation of Thai Industries (FTI) will meet with department officials next Monday to consult and propose a car demolition roadmap.
The process involves gauging the age of old vehicles suitable for demolition, possibly between 10 and 15 years old, said a source at the department who requested anonymity.
Demolition will be on a voluntarily basis, with volunteers receiving a cash incentive to buy a new vehicle at a lower price, the source said.
"This measure will have to be drafted as an act to be presented for parliamentary deliberation," the source said.
The expectation is that no more than 10% of old vehicles registered in Thailand will be voluntarily demolished, the source said. Some 39.3 million vehicles were officially registered as of November.
The source said the department has studied this method for a long time because it is one way to reduce the ultra-fine dust particles known as PM2.5.
The department is also considering establishing a fund for battery management of electric vehicles to seek financial sources to support the recycling of EV batteries.
"We are studying two plans at the same time," the source said. "The government will establish the fund for destroying used cars, financed by a levy collection when motorists buy new cars, but the fee should be affordable, such as 10,000 baht per car."
For owners of 10-year-old vehicles volunteering for the scheme, the fund will provide them with a certain amount of cash, plus a possible 7-8% interest rate.
For cars 15 years old and above, a single flat rate refund will be applied.
The refund rate will be the same across the board, regardless of brand, since the cars will be valued as scrap after demolition.
The levy collection when buying new cars is quite low compared with the price of refreshed cars or cars with minor changes, which normally increase by a further 30,000-50,000 baht per car, the source said.
The demolition scheme is in line with the Land Transport Department's plan to increase the annual fee for compulsory third-party insurance, with old vehicles paying higher renewal fees.
Khanchit Chaisupho, chairman of the FTI's auto industry club, said the private sector wants government support for the scheme, but the plan should come with short- and long-term actions.
"The club has talked with the Excise Department on many occasions and it has agreed to proceed with the car demolition scheme," he said. "Short-term action should allow auto wreckage that can be circulated in this process, while each old car owner will receive a cash coupon from the Excise Department to buy a new car."
This measure should be extended to 10-year-old used cars in the future in order to adopt the demolition plan for the whole automotive sector, Mr Khanchit said.
He said registered cars normally enjoy lower annual fees and taxes at the Land Transport Department after being used for more than seven years, meaning there is no incentive for their owners to buy new cars.
"It does not comply with international standards in developed countries, where old cars are subject to higher annual fees and taxes because they release more emissions than new ones," Mr Khanchit said. "Thailand does not integrate the used-car system and end-of-life-cycle registered vehicles on the roads, unlike in some European countries, Japan and the US, where old cars are subject to higher expenses and motorists are willing to buy new ones."
He said the plan is part of the circular economy strategy, bringing a higher value to the whole automotive sector -- new cars, used cars and recycling businesses.
Moreover, Thailand will suffer less from pollution caused by vehicle emissions, so the car-demolishing scheme with a cash rebate is a sustainable solution, Mr Khanchit said.