Federal law prohibits the disconnection, resetting, or alteration of the odometer of any motor vehicle with the intent to change the number of miles registered on the unit (15 U.S.C Section 1984[1972]). The law does permit the service, repair, or replacement of an odometer provided that the indicated mileage remains the same as before the service, repair, or replacement, the odometer must be set to zero, and a written notice must be attached to the left door frame indicating the mileage prior to the repair or replacement and the date of which it was repaired or replaced (15 U.S.C. Section 1987[1972]).
Federal law also requires that an odometer disclosure statement be provided to each ownership transferee of a motor vehicle (15 U.S.C. Section 1988[1972]), 49 CFR Section 580). Dealers taking vehicles in trade are entitled to disclosure statements from their customers.--Odometer Law Compliance
In 1972, the new Federal Odometer Law caused quite a stir in the fleet market. Some of my personal and business friends scoffed at the legislation and failed to heed the warning of the Federal Trade Commission. Vividly I recall one dealer, one Jerome Avenue wholesaler, and a person who worked for a major lessor, later paying dearly. They were but a few among many.
After the first successful enforcement action, the smarter ones changed their method of operation (still "clocking" but in a way more difficult to detect). Others went "straight" (letting someone else do it). And a few actually took pains to make certain that the intent of the law was indeed upheld (costing them important dollars).
Last year frequent headlines again began declaring that "Car Dealer (wholesaler) Is Barred from Pennsylvania's Auctions in Settlement," and other formal actions that resulted in a number of court cases. In a segment of 60 Minutes broadcast by CBS in November, Mike Wallace alerted the nation to the illegal practices of odometer tampering occurring. Early this year, Illinois zeroed in on 12 auto auctions by computer cross-checking car mileages, and charged that 15,000 of the 1.6 million cars changing hands each year in that state did so with tampered odometers.
There's more pressure coming now, both legislatively and from NHTSA Administrator Diane Steed, who maintains there are still six states and the District of Columbia "that are being used as Laundromats to wash titles soiled by high odometer readings." Coming almost in tandem is the proposed Senate Bill S. 1407 to protect purchasers of used cars from odometer tampering. Current estimates are quoted as costing the consumer $750 a car, or $2 billion each year through this fraudulent practice. Lawmakers want to make a violation of S. 1407 a felony punishable by three-year prison terms. Observers predict the situation will be in line by year-end. Be warned.
It's going to be a costly new world out there for most lessors and lessees still benefiting from talented wholesalers, though since the Cleveland, TN, crackdown, creativity is harder to find. The Day of Reckoning is nearly here. All those financially- and morally- professional fleet managers and lessors who have conveniently closed their eyes or turned their heads now face Armageddon and will be forced to rework depreciation schedules eliminating the unnatural values that ultimately cost the fleet company a monumental amount over current residuals. Two-year-old cars with 110,000 miles are off a full one-third in value versus a 50- to 60,000-mile unit of the same age. Daily rental firms need not be so concerned since they trade cars about every 16 months, on average, with some 15- to 20,000 miles; and there remains the strong need and desire for "marketable" fresh new cars. The day, 48,000 miles is ideal; 60,000 miles is murder, at least until the big change comes to influence truly realistic values. Just ask any auction company dependent on fleet business why there's a definite shortage of new low-mileage cars; their honest answer, as it has been to me, is that the wholesalers today are scared to death to get caught clocking. And the question is how interested that auction is going to be when faced with all high-milers.
It's just a matter of time when the state or the Feds move into areas like Cleveland, TN; the cities of Murray and Milton and county of Calloway, KY; Darlington, NC; Lebanon, MO; Albertsville and Boaz (Sand Mountain), AL; and others to cleanse the market. Fleet managers may be in for a jolt but nothing like the shock that their financial management is going to get (Gerber's yearly cycling story in the April AF may require re-reading) when every used fleet car is valued on appearance and true mileage. So Mr. or Ms. fleet manager, C.Y.A.
