Mr Palmer told police he had been reversing slowly and keeping his eyes on the mirrors watching for his son, who usually came out to meet him when he arrived home, but had not seen him.
Police found that visibility in the vehicle was "very restricted", partly because of cardboard boxes in the back canopy, and Mr Palmer would have had only a "split second" in which he could have spotted his son before he ran behind the car and out of sight.
His mother had yelled out, but there was no way Aaron would have heard her or time for James to stop, the coroner found.
Mr Palmer also admitted to having "a couple of 'stubbies'" of beer before driving home, although police found he was under the legal drink drive limit.
Coroner Marshall found James, described as a "full-on little boy" by his parents, died from a head injury caused by a reversing motor vehicle.
"Tragedies such as this serve as a reminder that supervising adults and drivers need to be mindful of the inherent risks associated with children on or near areas used by vehicles," she said.
"Children are extremely unpredictable and can move quickly."
She said she would forward her findings to Safekids NZ and the Child and Youth Mortality Review Committee.
On average, five children a year are killed by cars on private driveways in New Zealand, the coroner said, with one child seriously injured every fortnight in the Auckland region alone.