When the car went up in flames, the Fire Service was called amid suspicion the car may have been used to manufacture methamphetamine.
However, Megan Ruru of the Fire Service said once the fire had been extinguished it was clear the car had not been used as P-lab.
The corner where the car caught fire was "quite a bad little corner" and had been the scene of previous crashes, a local Opua man said.
"We had quite a bad crash here a couple of months ago. It's a bugger of a corner actually," Andrew from budget accommodation PineLodge said.
He added: "If you follow the signs it's not a problem at all, but you know how a lot of people don't like doing that."
He had seen a fire truck and one of his guests had reported hearing "a big crash", but no one had witnessed the incident, he said.
One witness who emailed the Herald reported seeing the car "hurtle" past him on the road to Opua.
"[I] get virtually to Opua, just ahead of trading estate, see black smoke around bend.
Then see the same Mercedes exploded," the man said, describing a "car on fire and an armed cop on side of road".
Yesterday's incident comes after a Finnish hitch-hiker was taken on a wild ride by a driver who evaded police in Northland in November last year. The backpacker thumbed a ride from Whangarei to Kawakawa with a driver who was travelling at speeds of about 150 km/h.
The driver eventually abandoned the car, and the hitch-hiker, in a driveway, following police pursuit and road spikes.
Paihia YHA owner Andy Larsen said he advised people who stayed at the hostel not to take "unnecessary risks".
"Hitch-hiking is a risk. It can have some marvellous rewards and you can meet wonderful people, but unfortunately, the odd element of society, it does pose a risk," he said.
"It's not something we can actively promote, but it does happen."
Even locals in Northland hitch-hiked to get around, Mr Larsen said, because there wasn't always a direct bus route to where you want to go.