A bureaucratic loophole has allowed 50,000 damaged second-hand Japanese cars to be sold in New Zealand in the past seven years as if they were undamaged and without their histories being declared.
Experts say the loophole creates the false expectation among consumers that they are buying an undamaged car.
Consumer Affairs Minister Craig Foss has asked officials to investigate whether the consumer information notice, presented with all cars offered for sale, gives consumers the misleading impression the car they are buying has not been damaged.
Mr Foss said: "I have asked my officials to consider whether this notification hinders more than helps consumers ... whether it should be amended or removed."
He urged consumers to get independent inspections done before buying cars.
The issue is one of consumer information rather than safety because imported cars are not allowed on our roads without passing a strict compliance test.
It relates to a section of the consumer information notice on which dealers mark whether a vehicle has been "imported as a damaged vehicle".
Herald inquiries have confirmed the car is marked "damaged" only if the damage was discovered during a cursory inspection by Transport Agency contractors in Japan.
If the damage is instead found here, there is no obligation to mark it because the car was not knownto be damaged when it was impor-ted.
Statistics show that since 2006 there have been 560,000 cars imported from Japan. Of those, 48,500 needed repair certificates after detailed inspections in New Zealand revealed damage not picked up during earlier border inspections.
The damage associated with those cars is not recorded against the vehicles' history.
The Transport Agency's Bill Hyslop, senior engineer overseeing auditing of imported cars, confirmed that the only flag which could be placed on a vehicle was from the border inspections in Japan.
"There is no other flag. A vehicle that gets flagged [as damaged] after the border doesn't get picked up by that process."
He said he personally had bought three second-hand Japanese imports which could also have been damaged. "I've got no more information than anyone else who is a buyer in New Zealand."
Imported Motor Vehicle Industry Association chief executive David Vinsen said the field stating whether a vehicle was damaged should be removed. "It can lull you into a false sense of security."
Car-buying consumer advocate Clive Matthew-Wilson, editor of the Dog and Lemon Guide, said the notice was a scam. He said said it gave consumers false comfort and could lead to a car having its value inflated by 10 per cent to 30 per cent.