Govt Moves to Cut Import Fees and Keep Vehicle Prices Down for Kiwis

The Clean Vehicle Standard, introduced in early 2023, was designed to reduce national transport emissions by incentivising importers to balance high-emission vehicles with cleaner alternatives.

The Government has announced major changes aimed at making both new and used vehicles more affordable for New Zealanders, with Transport Minister Chris Bishop confirming a suite of measures targeting rising costs within the Clean Vehicle Standard (CVS). The reforms are intended to protect consumers from steep price hikes that vehicle importers say would otherwise be unavoidable.

Mr Bishop emphasised that cars are essential to everyday life for most New Zealanders—whether for work, family needs, or business operations—and that rising vehicle costs pose significant pressures at a time when many households are still struggling with the high cost of living. Without urgent intervention, he warned, Kiwi car buyers could face increases of several hundred to several thousand dollars due to escalating compliance charges under the current emissions regime.

Clean Vehicle Standard Under Strain

The Clean Vehicle Standard, introduced in early 2023, was designed to reduce national transport emissions by incentivising importers to balance high-emission vehicles with cleaner alternatives. The framework sets annual CO₂ targets for importers, who must earn enough credits from efficient vehicles to offset higher-emission models. Falling short results in charges; exceeding targets generates credits.

While the policy has contributed to better fuel efficiency across the fleet, market conditions have shifted considerably. The supply of low-emission used vehicles—especially hybrid and electric models—has tightened globally. At the same time, domestic demand for new electric vehicles has dropped sharply, making it harder for importers to meet their emissions obligations.

According to Bishop, the system has now drifted so far from market reality that 86 per cent of New Zealand’s vehicle importers are facing net charges rather than accumulating credits. Some hybrid models—once considered a low-emission alternative—are now incurring fees rather than contributing credits. The result is a mounting financial burden that importers are increasingly unable to absorb.

Risk of Price Hikes for Consumers

Mr Bishop warned that without immediate corrections, importers would be forced to pass on these costs to consumers, leading to reduced vehicle choice and higher prices across the market. Families, tradespeople, small businesses, and first-time buyers would all be affected.

“The last thing hardworking Kiwis need is prices jumping by hundreds or thousands of dollars because the scheme has become unworkable,” he said. “These changes will ensure that car buyers are not unfairly penalised by a system that no longer reflects the current market.”

Government Intervention: Key Changes

To stabilise the market and prevent a surge in vehicle prices, the Government will implement three major adjustments:

1. Temporary Reduction of Charges (2026–2027) Charges will be cut by nearly 80 per cent, easing financial pressure on importers:

• New vehicles: maximum charges reduced from $67.50 to $15 per gram of CO₂.

• Used vehicles: maximum charges reduced from $33.75 to $7.50 per gram of CO₂.

This move is expected to significantly lower compliance costs for the most common imported models and could prevent thousands in additional expenses from being added to retail prices.

2. Protection of Earned Credits All credits under the scheme will remain valid until at least 31 December 2028, preventing importers from losing accumulated balances while the system is reviewed.

3. Comprehensive Review of the Clean Vehicle Standard A full review has been initiated, with findings and recommendations due to Cabinet by June 2026. The review will revisit emission targets, credit structures, the pace of change, and the feasibility of compliance in current global and domestic conditions.

Expected Economic Impact

The Government estimates that the temporary measures will prevent roughly $264 million in net charges that would otherwise fall on importers—and ultimately on consumers through higher vehicle prices. The changes are expected to bring immediate relief while ensuring the policy’s long-term objectives can be reassessed for practicality and fairness.

Legislative Pathway

The adjustments will be introduced through an amendment to the Land Transport (Clean Vehicle Standard) Amendment Bill (No. 2), which has recently been reported back from Select Committee. The Government expects the amendment to pass this week, coming into effect on 1 January 2026.

Looking Ahead

Mr Bishop said the reforms strike the right balance: maintaining momentum toward a lower-emissions transport fleet while avoiding unnecessary financial strain on New Zealand households and businesses.

“These practical changes ensure we continue striving for a cleaner, more efficient fleet, but not at the expense of affordability,” he said. “The review will help us build a smarter, more workable Standard for the future—one that supports emissions reduction while keeping choice and affordability front and centre for Kiwi vehicle buyers.”