Members of the public were warned to stay away from the scene of yesterday's blaze in Otepuni Ave because of fears of toxic smoke and fumes and the potential for exploding lpg cylinders.
About 30 firefighters, using five appliances, took more than an hour to bring the fire under control.
Scrap Metal Man owner Robert Butler, who exported car wrecks, said the fire was a bit of a ''kick in the guts''.
He had lost about 90% of the 700 cars and 1400 car bodies stored at the site.
The cars were uninsured and he estimated the fire would have cost him between $250,000 and $300,000.
''It's a bit of a blow, but never mind.
''It's just one of those things I suppose.
''As long as no-one is hurt, that's the main thing,'' he said.
He had been told the fire was probably caused by a fire lit in a 45 gallon drum by the person who leased a part of the yard from him.
''It's probably just bad luck, really,'' Mr Butler said. Southland Fire Service area commander Bruce Stubbs, speaking from the scene, said the fire started about 5.45pm in a large stack of wrecked cars.
A combination of strong winds, the potential for explosions and possibly unstable stacks of cars made fighting the fire difficult and a ''cautious approach'' was taken.
The fire caused some explosions and an onlooker said the flames were causing the windows of the cars to pop.
Mr Stubbs said some people downwind were evacuated and others were told to stay inside.
''With the tyres and everything else there was large plumes of black smoke spreading across the city because we had quite a strong westerly.''
There was a never a risk of it spreading to other buildings, he said.
A large crowd of onlookers watched the fire from the other side of Otepuni Stream.
Police said yesterday the fire was being treated as suspicious and a joint investigation by police and the fire service would begin today.
