Tony Weber, chief executive of Federal Chamber of Automotive Industries (FCAI), said on Monday there had been instances in New Zealand where used car imports were linked to the Japanese mafia, the Yakuza, and instances where radioactive cars from the Fukushima nuclear disaster found their way to Russia.

Australian Imported Motor Vehicle Industry Association chief executive David Vinsen also criticised the car lobby's claims.

Scare-mongering

"These claims are preposterous, outrageous even, and should be seen for what they are: blatant scare-mongering by the representatives of the foreign-owned vehicle manufacturers who want to maintain their monopoly control on the supply of vehicles into the Australian market," Mr Vinsen said.

He said close to 100 per cent of all vehicles imported to New Zealand are sourced from a domestic auction system and the New Zealand government had a stringent checking process, which prevented the import of vehicles that had been "rebirthed" by the Yakuza.

He also said that all New Zealand imports were checked for radioactivity before being exported from Japan.

Senator Muir said the government's decision to keep the $12,000 tariff and restrictions on second-hand car imports seemed to reflect the views of "a certain lobby group".

"It would seem that somebody's lobbied the government very hard ... unless there is an organised group on the other side it's hard to get your point across," he said.


Real world

The peak lobby group represents foreign-owned manufacturers and importers including BMW, Mercedes-Benz, Toyota and Ford.

The FCAI spent more than $133,000 on "public relations and media" in 2014.

Senator Muir said allowing parallel imports when the Australian car manufacturing industry closes in 2017 could benefit consumers and actually lower the age of cars on the road if consumers can buy quality used vehicles.

"I live in the real world. I would absolutely keep driving a 20-year old car if it means a choice between having to get a loan or keeping my family on the road," he said.

He also said the New Zealand experience – where the average age of fleet is 14 years old – suggested older cars could be reliable.

Mr Muir said he still has a 1998 Nissan with 350,000 kilometres on the clock in his driveway.

Last month, Paul Fletcher, the Minister for Territories, Local Government and Major Projects, ignored the recommendations from both the Productivity Commission and the Harper competition review and decided to keep the restrictions on parallel imports of second hand cars.

Australian drivers are paying up to twice as much as Kiwis for used cars. For example, a second-hand Audi that costs $23,000 in Auckland would cost $35,000 in Sydney, the Financial Review reported.