Australia to block thousands of hybrid car imports with one small rule change

Thousands of private import vehicles from Japan will run afoul of new Australian vehicle rules, leaving local buyers less options for affordable fuel-efficient models, Drive can exclusively reveal.

The legal change was made quietly by the Federal Government late last year as part of a move to Euro 6d tailpipe emissions standards for new vehicles sold officially in Australia.

The regulation in force from December 2025, known as Australian Design Rule (ADR) 79/05, requires vehicles imported to "meet or exceed national road vehicle standards for emissions".

Essentially, Australia has leapfrogged Japan by going from the more lax Euro 5 standard to the tighter 6d one used in Europe, cutting out the Euro 6 step Japan has adhered to since 2018 in between.

This means the Federal Government no longer considers fuel-efficient Japanese domestic vehicles as viable for local use.

The dealbreaker for the Government is that 6d includes the introduction of mandatory Real Driving Emissions (RDE) tests, ensuring cars meet emission limits on the road, not just in labs, and that they continue to meet them after 160,000km of driving – double Japan's 80,000km Euro 6 requirement.

Experts have warned the rule change could all but "kill" the Japanese 'grey import' industry, which has boomed over the past decade after changes were made encouraging the arrival of low-emissions cars to local roads.

“At a time of war in the Middle East when Australia’s fuel security is under threat and fuel prices at the bowser are skyrocketing, the Federal Government has eliminated a key source of affordable, environmentally-friendly vehicles,” Peter Greenwood from the Australian Imported Motor Vehicle Industry Association told Drive.

“It is a blow to the Australian consumer’s desire to purchase affordable environmental vehicles, and a blow to the Federal Government’s desire to reach net-zero emission targets.

“These vehicles are popular in the marketplace because they offer Australian car buyers the chance to trade out of their older, higher emission vehicles into good quality, low-kilometre hybrid vehicles with more modern safety features at a much lower price point than buying the equivalent new vehicle.”

Hybrid and pint-sized 'kei' vehicles sold in Japan that were approved for import into Australia before December 2025 – via the Specialist and Enthusiast Vehicle Scheme (SEVS) register – can continue to be brought in until their current permission expires.

However, their approvals, which only last a maximum of three years, cannot be renewed, and models not already on the register won't be approved once they've dropped off.

There is no impact on imported cars from Japan already on Australian roads, which can continue to be registered and traded on the used market.

The Federal Government argues the more stringent 160,000km 'durability test' adopted by Australia, as well as an additional on-road emissions test for petrol-powered vehicles, is better suited to local conditions.

In 2025, of the roughly 30,000 second-hand vehicles imported into Australia, 18,987 came in via the Specialist and Enthusiast Vehicle Register [SEVS], and of those, around half were imported under "fuel efficiency" criteria encouraging frugal vehicles.

Most of them were sourced from Japan, and were hybrids or plug-in hybrids.

Kristian Appelt, who runs Iron Chef Imports, said the decision is “an industry-killer” because half of his business comes from environmentally-friendly cars, and of those, 90 per cent are Japanese.

“When you're talking about cars that are doing four or five litres per hundred [kilometres], you're talking about cars that are so far under our maximum (allowance), even now that we've taken on Euro 6d… to me, this decision doesn't really pass the pub test,” he told Drive.

“Some of those will meet the performance criteria, so they won't be an issue. But any fuel-efficient ones will be gone.

“Kei trucks are extremely popular. We sell a lot of those, particularly for farm use as alternatives to four-wheelers. They'd be highly unlikely to suddenly [fail] at 80,000km. So this is the battle we've got.”

The rule change will affect cars like the current model Toyota Prius, the latest iteration of the one of the world’s first mass-produced hybrids, as well as vehicles such as the Toyota Alphard/Vellfire, Mitsubishi Delica Mini, Nissan Note, Daihatsu Hijet, and Toyota Crown hybrid sedan.

According to the Department of Infrastructure, there are differences between Japanese standards and Australian ones that it considers important enough to justify the rule change.

“While Australia and Japan both adopt UN Regulations with similar emission limits, they are not considered equivalent,” a spokesperson said.

“The version adopted by Japan only requires vehicles to meet the emission limits for 80,000km and does not require petrol vehicles to meet the emission limits in an on-road emissions test.

“The version adopted by Australia requires vehicles to meet emission limits for 160,000km and, critically, requires all combustion-powered vehicles to meet emission limits in an on-road emissions test ... [It] is most other advanced economies whose vehicles have long in-service lives, like Australia.”

They added that importers’ concerns were brought to the Department’s attention in late 2025, and since then, it has been working on a solution that could enable Japanese domestic market vehicles to demonstrate that they meet Australia's new requirements for noxious emissions.

However, Appelt says the “solution” proposed is “competely unworkable” for importers, which are small businesses rather than big corporations like global car giants.

“The problem is that all that [testing] evidence is held by the manufacturers… and the manufacturers aren't going to give it to us,” he said.

“We have to provide the evidence that these vehicles meet the standard.

“They [the Department of Infrastructure] actually want us to test a vehicle, like an example of whatever model it happens to be, with 3000 kilometres on it and an example with 160,000km. Now, that's completely impractical and very expensive.”

Appelt claims regulators have been “fed a misconception” by car manufacturers that "for every used import someone buys, they're not buying a new car off them, and, you know, new cars are better”.

“But what history has shown, any import dealer will tell you, people are not trading in new cars,” Appelt said.

"They're not cross-shopping against new cars. They're coming up from 20-year-old Commodores and jumping into these import cars because the leap's not quite so far as it is to get into a new car.”

Asked for the firm's position, Tony Weber, Chief Executive of the Federal Chamber of Automotive Industries, the top lobby group for new-car brands in Australia, said all vehicles should be held to the same requirements.

“Vehicles supplied to Australian consumers should meet all the same safety, environmental and regulatory standards. FCAI members typically supply vehicles via the type approval pathway, supported by their recall processes and aftersales support,” Weber said.

In 2024, hundreds of imported kei cars were deemed unfit for Australian roads by the Government after it was found they had been mistakenly approved for two years despite not meeting strict crash-safety regulations.

Customers waiting for kei cars were left in limbo after the documents needed to certify them for local roads were suspended.

And two years before that, hundreds of people who bought privately imported used cars were left in limbo after a nationwide crackdown was launched targeting workshops that had exceeded their vehicle compliance limits.

A born-and-bred newshound, Kathryn has worked her way up through the ranks reporting for, and later editing, two renowned UK regional newspapers and websites, before moving on to join the digital newsdesk of one of the world’s most popular newspapers – The Sun. More recently, she’s done a short stint in PR in the not-for-profit sector, and led the news team at Wheels Media.

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