Both cars were damaged but no one was injured.
The fleeing driver was later charged with failing to stop and reckless driving. They were sentenced to two months imprisonment and disqualified from driving for six months.
However, the Independent Police Conduct Authority found the officer breached the police's fleeing driver policy because his driving was not necessary to perform his duty.
The officer had said he was "urgent duty driving" because he was searching for the Subaru.
However, the Authority said police changed that policy in 2016 to direct that when a pursuit has been abandoned, officers should not drive around the nearby area looking for the fleeing vehicle.
For this reason the officer was not deemed to be engaged in urgent duty driving and should not have been driving the wrong way up Hobson St, the authority said.
"There was no reason at all for the officer to attempt to locate the vehicle after the pursuit had been abandoned," authority chair, Judge Colin Doherty said.
Auckland City District Commander Superintendent Karyn Malthus acknowledged that the officer breached policy.
"While the officer had really good intentions to help stop a driver who was putting other people at risk, he should not have briefly driven the wrong way down Hobson Street," she said.
"Police discussed this with the officer involved at the time and the findings from the IPCA have been relayed to him."