A method for testing a vehicular camera for a vehicular vision system includes providing a vehicular camera suitable for use on a vehicle, with the vehicular camera having a field of view. A collimator assembly is provided that includes an optic and a target fixedly disposed within the collimator assembly. The collimator assembly is positioned in the field of view of the vehicular camera such that the camera images light that reflects off the target and passes through the optic. The target has a stepped surface. Image data is captured with the vehicular camera, with the captured image data being representative of the stepped surface of the target. The captured image data is processed, via an image processor, and a defocus of the vehicular camera is estimated based on processing by the processor of the captured image data of the stepped surface of the target.