Hundreds of motorists who re-registered vehicles as hearses to dodge car registration fees could face prosecution.

Land Transport New Zealand (LTNZ) has now written to more than 900 people, giving them until next week to re-register under the correct category or face prosecution.

After weeding out vehicles apparently registered to funeral homes, funeral directors and organisations providing a medical service using an ambulance, the LTNZ had detected 937 that appeared to have been wrongly licensed.

The scam came to light last month when a Christchurch woman claimed she and several friends had re-registered their cars under a category intended for non-commercial ambulances or hearses.

She went on air on NewstalkZB, saying she paid just $58 to register her car by telling an agency she used it as a hearse to carry dead animals. The usual fee for an average private car is $183.

The woman said her definition of carrying dead animals was carrying frozen chickens home from the supermarket.

She told the radio station several of her friends had done the same and other listeners called in to confirm that the ruse worked.

On July 28, the day the talkback show aired, 40 people re-registered their vehicles under the "hearse" category.

LTNZ spokesman Andy Knackstedt said people making a false declaration were committing an offence under the Transport Vehicle and Driver Registration Act and were liable to a fine of $1000.

They may also be voiding their insurance cover.

Mr Knackstedt said LTNZ staff had found just over 1600 vehicles registered under Category 6 of registration criteria as a "non-commercial ambulance, or hearse". Such vehicles were exempt from Accident Compensation Corporation (ACC) levies.

Mr Knackstedt acknowledged that in the context of the 3 million vehicles registered in New Zealand, number of fake hearses was "not huge".

However, people abusing the system were ripping off ACC and fellow motorists.

"All of those people are avoiding paying the ACC levy and they're required to do that by law," he said. "We all rely on ACC to cover our costs if we're injured in a crash."

Mr Knackstedt said it was interesting to note that several owners who switched to Category 6 since the radio broadcast had re-registered correctly "even before our letters went out", possibly after learning of the potential for prosecution.

"Carrying groceries or dead animals in your car does not make it a hearse, Mr Knackstedt said.

LTNZ plans to check the motor vehicle register again on August 16 and Mr Knackstedt said "follow-up action will result for those vehicles still improperly licensed".