The NSW Waratahs' finals hopes are in tatters after their dreadful record in New Zealand continued with a painful 31-26 loss to the Highlanders in Dunedin.

The second-most penalised team in the competition, the Waratahs were again their own worst enemies on Saturday while slumping to a 13th consecutive defeat in clashes across the Tasman. 

A bewildered Dan McKellar looked a beaten man in the Waratahs' coaching box as his side continually handed over possession and territory with dumb penalties.

The upshot from a third-straight loss, and eighth of another wildly erratic 2026 campaign, is the Waratahs will almost certainly need to win their last three games of the regular season to squeeze into the finals.

That looks a tall order heading to Suva next round to face the Fijian Drua, before hosting the ACT Brumbies and finishing in Perth against the Western Force, who the Waratahs lost to last week in Sydney.

McKellar inherited a Wallabies-laden squad when he took over from Darren Coleman at the end of 2024.

But he will need to work wonders for the Waratahs to avoid missing finals action for a second straight year on his watch.

Even with game-breaking centre Joseph-Aukuso Suaalii back for his second game since a two-month stint out with a hamstring injury, the Waratahs misfired against NZ's weakest outfit who had lost seven of their previous eight matches against Australian rivals.   

The Highlanders also played half an hour of the match a man down after wrecking-ball skipper Timoci Tavatavanawai was yellow-carded for a cynical challenge at the ruck and then his centre partner Jona Nareki saw red for a second-half shoulder to Jack Barrett's head. 

But the writing was on the wall early for the Tahs after Jonah Lowe cashed in on some excellent footwork work from fellow Highlanders winger Caleb Tangitau to bag the first try after Suaalii rushed up out of the defensive line and missed his man in the sixth minute. 

Tangitau did it all himself for the Highlanders' second try, collecting the ball from the back of a ruck and beating four NSW defenders - Angus-Scott Young, Pete Samu, Jake Gordon and Angus Blyth - to score in a hell of an opening 10 minutes for the All Blacks hopeful.

When Jacob Ratumaitavuki-Kneepkens crossed, the Waratahs trailed 21-0 inside 20 minutes. 

The visitors received a lifeline into the contest when the Highlanders lost Tavatavanawai and they capitalised immediately with Suaalii and Max Jorgensen combining to put Andrew Kellaway over.

But the reprieve was short-lived as Lowe nabbed his second to give the Highlanders a 28-12 lead at the break.

The Waratahs kept the Highlanders scoreless until the final minute of the second half.

But their only two tries came all too late from Apolosi Ranawai and Sid Harvey - after Harvey had dropped the ball with the line beckoning and Suaalii had one disallowed.

Highlanders 31 (Tries: Lowe, Tanigtau, Ratumaitavuki-Kneepkens 2; Cons: Millar 4; Pens: Millar) def NSW Waratahs 26 (Tries: Kellaway, Ranawai, Halaholo, Harvey; Cons: Harvey 3)

Teams:

Highlanders: 15 Jacob Ratumaitavuki-Kneepkens, 14 Caleb Tangitau, 13 Jona Nareki, 12 Timoci Tavatavanawai (co-c), 11 Jonah Lowe, 10 Cameron Millar, 9 Adam Lennox, 8 Nikora Broughton, 7 Lucas Casey, 6 Te Kamaka Howden, 5 Mitch Dunshea, 4 Tomas Lavanini, 3 Angus Ta’avao, 2 Jack Taylor, 1 Ethan de Groot (co-c)
Replacements: 16 Soane Vikena, 17 Daniel Lienert-Brown, 18 Saula Ma’u, 19 Oliver Haig, 20 Sean Withy, 21 Nic Shearer, 22 Taine Robinson, 23 Xavier Tito-Harris

Waratahs: 15 Max Jorgensen, 14 Andrew Kellaway, 13 Joseph-Aukuso Suaalii, 12 Lawson Creighton, 11 Sid Harvey, 10 Jack Debreczeni, 9 Jake Gordon (c), 8 Pete Samu, 7 Charlie Gamble, 6 Angus Scott-Young, 5 Angus Blyth, 4 Miles Amatosero, 3 Dan Botha, 2 Ethan Dobbins, 1 Isaac Kailea
Replacements: 16 Folau Fainga’a, 17 Jack Barrett, 18 Apolosi Ranawai, 19 Clem Halaholo, 20 Leafi Talataina, 21 Teddy Wilson, 22 Jack Bowen, 23 Harry Potter

Referee: Damon Murphy
Assistant Referees: Jordan Way, George Myers
TMO: James Leckie