Changes taking effect next year will mean that drivers of older, less safe cars will actually pay less for their registrations, while people who own newer, safer cars will pay more.
ACC Minister Iain Lees-Galloway announced on Monday that the Government will scrap the Vehicle Risk Rating scheme, which was introduced by the National Government in 2015.
"The VRR programme, which applies different levy rates to different makes and models of cars based on their safety ratings, is challenging for MBIE to administer and lacks evidence that it is contributing to a safer vehicle fleet in New Zealand," Mr Lees-Galloway said.
"There is no evidence that variable levies based on VRR contribute to injury prevention or encourage the purchase of cars with higher safety ratings.
"It also loads more of the burden onto low-income people and families, as they are generally less able to buy cars with the best safety ratings."
The change will take place from July next year, and is likely to have a significant effect on the cost of registrations (regos) for many Kiwi motorists.
Mark Stockdale of the AA, speaking this morning to TVNZ1's Breakfast, said the change means 65 per cent of car owners will have their rego cost increase next year.
He called the move "a backwards" step, and said the VRR had encouraged motorists to consider buying a safer vehicle every time they paid registration.
HOW MUCH WILL MY CAR'S REGO COST CHANGE BY?
Petrol vehicles are divided into one of four bands depending on their safety.
The ACC levy amount per year varies from $18 for the newest, safest vehicles, to $80.64 for older, less safe vehicles.
Once the VRR is phased out, petrol vehicles owners will all pay the same levy - $46.04 per year.
Motorists can enter their registration plate number into ACC's service here to find out which band their vehicle is charged under.
Those in Band 1 currently pay a $80.64 ACC levy per year of registration and will save $34.60.
Those in Band 2 currently pay a $53.53 ACC levy per year of registration and will save $7.49.
Those in Band 3 currently pay a $37.22 ACC levy per year of registration and will pay $8.82 more.
Those in Band 4 currently pay a $18 ACC levy per year of registration and will pay $28.02 more.
Diesel vehicle owners currently pay between $149.14 and $86.50 for the ACC levy portion of their registration per year.
The release from MBIE did not include exact figures for the new fees for non-petrol vehicles - including diesels - but the average levy fee paid across all four bands in that class is $115.84.