Transport

NZTA takes action on used-car testing

NZTA could be about to shake up its rules to stop car importers from testing their own vehicles, saying the current processes are a "potential risk to safety”.

The proposed changes come on the back of a Newsroom investigation which found two of New Zealand’s largest firms, VINZ and JEVIC, were testing vehicles effectively imported by the same Japanese holding company -  the Optimus Group - that they are part of.

Now the NZTA has sent out new rules for consultation. 

The rules would prohibit companies certifying vehicles they have an “ownership interest in” or carrying out entry inspections of vehicles “they or someone linked to them” had previously inspected at the border. 

Such conflicts of interest raise safety concerns due to fears that vehicle testers could potentially be incentivised, or feel obligated, to pass a vehicle they should have failed.

Complying with the rule change could be a challenge for firms like the Optimus Group, which promotes a vertically integrated chain that handles vehicles at every stage of the import process. 

A diagram from the Optimus Group's website showing their vertically integrated value chain. Structures like this could become a thing of the past under NZTA's proposed new rules. 

Too little, too late 

The proposed changes are a further admission from NZTA that its existing regulatory regime is not up to standard.

In a Q&A on the agency’s website, it said it had “identified the current process as a potential risk to safety”, and that it had launched the proposed changes to address concerns.

The agency also said that people who had safety concerns should have their vehicle checked by an approved vehicle certifier.

But figures in the motoring industry argue the main issue is to do with enforcement, rather than the rules themselves. 

Clive Matthew-Wilson, editor of the car review website dogandlemon.com supported the changes, but believed they could go further. 

"There are already NZTA rules governing conflicts of interest. The problem is: they weren't enforced,” he told Newsroom. 

NZTA reprimanded JEVIC and VINZ earlier this year in a formal letter, but it took no further action, saying it was happy the companies were adequately managing conflicts of interest.

Guidelines on the new policy say breaches "will be enforced", but do not elaborate on how.

The changes proposed by the agency could potentially make it difficult for companies like the Optimus group to operate in New Zealand. It may require the testing and importing wings of the company to be split off from each other.

Shareholders respond

Optimus shareholders don't appear to be waiting for NZTA’s changes to take effect. 

The company’s stock price fell 15 percent on the news the Companies Office could take action should Optimus be found to have breached the Companies Act for failing to declare the Optimus Group was the ultimate owner of JEVIC and VINZ. 

Optimus' stock is now sitting at near all-time lows.

VINZ CEO Gordon Shaw told Newsroom he had received a copy of the draft policy and was reviewing it with a view to making a submission.

Optimus Group stock has fell to all-time lows on the news regulators could sanction the company. Credit: Bloomberg markets.

Conflicts of interest remain 

NZTA last updated the policy in 2014. It said at the time the policy was drawn up "some integration of the used vehicle supply chain was anticipated and taken into account", but "not to the extent that has subsequently occurred". 

One area of concern is sole-operator garages that offer both warrants of fitness and vehicle repairs. The agency says businesses like this will have to show they have a robust conflict of interest plan in place. 

NZTA said the focus of the new policy was on used-vehicle entry certification in particular. 

"For other areas of certification, the policy changes focus on clarifying what is a conflict of interest, and how this needs to be managed," it said. 

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