Everitt Enterprises manager Peter Everitt said 14 cars in a heap of 30, sitting in a rented yard next to the company's Wilkie Rd depot, were destroyed in the fire just after 9am.
The cars were waiting to be emptied of fuel and gas and likely some would still have had some in them, Mr Everitt said.
A worker using a gas cutter on another job had accidently set the nearby pile on fire, he said.
The firm usually tried to scrap cars once they had three or four together because a smaller batch was easier to process, but had got "a bit behind" and the pile had grown to 30 vehicles.
"It was probably not the best."
The company would review the system in the light of what had happened, he said.
Three fire appliances attended the fire, which Dunedin Chief Fire Officer Dave Seque described as relatively small but "going quite well".
The Fire Service was more concerned about the smoke, which was likely to be "pretty toxic" given the amount of plastic and other toxic material in the vehicles.
"It wasn't really going into residential areas, so it was probably OK," he said.
Otago Regional Council resource management director Dr Selva Selvarajah said a staff member had visited the scene after observing the black smoke.
A report would be prepared and a decision would follow on whether any legal action would be taken against the company.
