New Zealand will retain the Clean Vehicle Standard, ending months of uncertainty over the policy. As part of this move, the Government will develop separate emissions targets for used vehicle imports to apply from 2028.
Transport Minister Chris Bishop said the first stage of the Government’s review found the Standard remained the most cost-effective way to increase the availability of lower-emission vehicles in New Zealand.
Officials will now work with the vehicle industry on revised settings, with the Government expected to report back early next year before the new rules take effect on 1 January 2028.
Government retains emissions standard
The Clean Vehicle Standard sets annual CO₂ emissions targets for imported vehicles. Vehicles that exceed their targets incur charges, while lower-emission vehicles can generate credits to offset higher-emitting vehicles.
Mr Bishop said removing the Standard at this stage would create disruption for the vehicle industry.
“In feedback on the review, industry noted that the Standard is now well established in New Zealand, with importers accumulating credits and charges over time. Removing it at this stage would be highly disruptive for the vehicle industry,” Mr Bishop said.
The Government’s decision follows a review of the Standard’s settings after concerns that the existing targets were increasingly out of step with market conditions.
“In 2025, it became clear that the Standard’s settings were not well matched to market conditions. Most importers were struggling to meet the passenger vehicle targets, with the charges likely to be passed through to consumers through higher car prices and reduced choice,” Mr Bishop said.
Used imports to receive separate targets
A significant change will see separate targets introduced for used vehicle imports, recognising that they typically involve older technology and different supply conditions from new vehicles.
Used imports currently follow the same target trajectory as new vehicles, although their charge rates are half the rates applied to new vehicles.
The change has been welcomed by the Imported Motor Vehicle Industry Association (VIA), which has argued that new and used vehicles operate in fundamentally different supply markets.
VIA chief executive Greig Epps said the decision recognised an issue the association had consistently raised, although it had preferred used imports to be excluded from the Standard altogether.
“New Zealand does not have one vehicle supply market. New vehicle distributors source current production from global manufacturers, while used importers are sourcing vehicles that were manufactured years earlier, predominantly for the Japanese domestic market,” Mr Epps said.
“Applying essentially the same emissions trajectory to those two very different supply channels was never going to produce a sustainable outcome.”
Mr Epps said the detail of the new targets would be critical, particularly given the vehicles available from overseas markets and the prices New Zealand households can afford.
“The principle is important, but the detail will determine whether this works,” he said.
Industry turns focus to 2028 settings
The Motor Industry Association (MIA), VIA, and Motor Trade Association (MTA) have all backed the Government’s decision to retain the Standard, although they differ on the treatment of used imports.
MIA chief executive Aimee Wiley said retaining a regulated standard was important, but future settings needed to reflect the realities of the New Zealand market.
“MIA has consistently supported retaining a regulated Clean Vehicle Standard, while arguing strongly that its settings need to reflect the realities of the vehicles New Zealand motorists can afford, want and need,” Ms Wiley said.
She said the next phase of the review would be critical.
“Stage 1 sets the direction. Stage 2 is where the detailed work begins,” Ms Wiley said.
The MIA also highlighted the different circumstances faced by new vehicle distributors and used importers, with the latter sourcing vehicles manufactured several years earlier for overseas markets.
“This is not about stepping away from lower emissions. It is about getting the settings right so the Standard can deliver sustained emissions reduction in the real world,” Ms Wiley said.
MTA supports retention but questions used-import split
The MTA also supports retaining the Standard for both new and used vehicles, but had argued against creating separate targets for used imports.
MTA head of advocacy James McDowall said retaining the Standard preserved an important mechanism for influencing vehicle emissions.
“We have long argued that it would be remiss not to have a standard. It remains the last policy lever we have to influence vehicle CO₂ emissions, and it stops New Zealand becoming a destination for less fuel-efficient, higher-emission vehicles that cost our customers more to run,” Mr McDowall said.
He said the next phase should focus on ensuring any separate used-import targets remain achievable and do not undermine affordability or choice.
“We will be engaging with officials to ensure any separate targets are grounded in market realities, do not disadvantage the used-import channel, and continue to protect affordability and choice for New Zealand motorists,” Mr McDowall said.
Charges remain reduced through 2027
The Government previously reduced Clean Vehicle Standard charges for 2026 and 2027 after concerns that the settings were placing pressure on importers.
The maximum charge for new vehicles was reduced from $67.50 to $15 per gram of CO₂, while the maximum rate for used vehicles fell from $33.75 to $7.50.
Those reduced rates apply through 2027. The Government has yet to confirm the charge rates that will apply from 2028, with those settings now part of the next stage of industry consultation.
Mr Epps said the revised system would also need to provide used importers with a viable pathway to generate or access credits.
“A sustainable system needs to provide a genuine pathway for used importers to generate or access credits. Simply reducing the size of the penalty does not resolve the structural problem if the sector remains permanently in deficit,” he said.
The Government will now engage with industry before reporting back on the revised settings early next year.
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