More than 5500 motorists are being warned their vehicles are potentially dangerous.
The New Zealand Transport Agency (NZTA) has urged some drivers to urgently get their Warrant of Fitness (WoF) rechecked after a second mechanic had his licence suspended.
NZTA says Westland Automotive and Tyre in Henderson, Auckland failed to properly check crucial safety features including brakes, seatbelts and exhaust systems.
Now its boss Akram Zakeri has been suspended as a Warrant of Fitness inspector.
Craig Pomare from the Motor Trade Association says it's a big concern.
"When you are carrying out safety checks on a vehicle every day, you are making life and death decisions."
Mr Zakeri declined to be interviewed, but told Newshub he hadn't done anything wrong.
However another nearby mechanic with 15 years' experience said he had complained to NZTA more than three years ago about Mr Zakeri because he was worried about the way he was issuing warrants.
Mr Zakeri's suspension comes just days after Northland mechanic Rodney Wilson from Dargaville Diesel Specialists was stripped of his licence to issue WoFs.
- Mechanic who approved crash car denies improper vehicle inspection
- WoFs are 'stupid', claims mechanic who had WoF licence revoked
Mr Wilson signed off a vehicle despite a frayed seatbelt, and a passenger in the car died in January when that seatbelt failed.
NZTA admitted it knew about issues at Dargaville Diesel Specialists as far back as 2011, but can't confirm when it was first alerted to problems at Westland Automotive.
"Given the lack of resources, unfortunately they've not been able to get in and see as many of the inspectors as we would like them to be seeing," says Mr Pomare.
NZTA says it's changed its approach and is urgently reviewing all 850 of its open cases, as well as contacting thousands of owners with WoFs from the two banned mechanics.