Two of the biggest factors that determine a used car's value are its age and its mileage. When sourcing or selling inventory, the odometer serves as the source of truth for mileage. Accurate mileage measurement helps you set an appropriate price for the vehicle and ensure both the dealership and the customer get a fair deal.  As a car dealer, here is some topline information you should know about odometers.

What Is a Car Odometer?

An odometer is a vital component of every car. It provides a numerical representation of the vehicle’s total distance traveled through its entire lifetime. Odometers play a pivotal role in determining the car's overall condition, as they offer insight into its usage and wear. Additionally, they serve as a valuable tool for vehicle maintenance, helping owners keep track of routine service intervals and identifying potential issues early on. 

What Are the Federal Odometer Laws?

The Federal Odometer Law of 1972 and the Truth in Mileage Act (TIMA) of 1986 are both federal laws that protect consumers from odometer fraud.

The Federal Odometer Law is intended to protect consumers buying used vehicles from odometer fraud, and is typically applied against sellers who intentionally tamper with an odometer to misrepresent the actual miles an automobile has been driven. It requires car sellers to provide a statement on the title if the odometer’s mileage is incorrect¹.  

Truth in Mileage Act requires the seller of a motor vehicle to provide an odometer disclosure to the buyer when ownership is transferred.²

How to Verify an Odometer

Verifying the accuracy of an odometer is crucial before accepting trade-ins or leased vehicle returns into your dealership especially for luxury vehicles. Here are some steps to verify an odometer⁵:

• Review a vehicle history report (VHR): This detailed report provides information about a used car's condition. A couple of examples are CarFax and AutoCheck. 
• Inspect the mechanical odometer: Look for, for signs of physical tampering. Misaligned numbers and altered dashboard screws and clusters are  reasons for concern.  
• Review available  maintenance and service records: These documents can provide insights into the vehicle's mileage history and may indicate any discrepancies or inconsistencies.
• Check for service stickers: These labels typically appear on the windshield or door frame and indicate the date and mileage of previous maintenance or repairs.
• Check for excessive wear: Looking at the car’s frequently touched parts which can help provide clues on actual mileage. The most important places to look are the pedals and other high touch areas, like inside of the door handles; the steering wheel; arm rests; and anything that is touched regularly.³ If these parts look extremely worn or look brand new on a car with moderate mileage, that should be a red flag. 

Reporting Requirements for Odometers

The following are some of the odometer reporting requirements:

• Odometer disclosure: The law requires dealerships to disclose the current mileage on the vehicle's odometer to potential buyers. The disclosure should be prominently captured on documentation such as vehicle registration documents and sales contracts. The mileage must be accurate and reflect the distance the vehicle traveled.⁴
• Odometer statement: Some states require a seller to provide an odometer statement certifying the accuracy of mileage captured on the odometer. This is a separate statement from the sales contract. 

Maintenance and Repair Exemptions 

As mentioned earlier, it is illegal to tamper with or alter odometer reading with the intent to deceive⁴. However, as you are aware, some maintenance or repair work on vehicles may require the replacement of an odometer. In such cases, the seller or repairer may be required to provide a written disclosure stating the mileage before the replacement and the date of the replacement.

Unlock the Power of ACV Auctions 

ACV has a team of full-time vehicle inspectors who go to dealerships around the country inspecting used car inventory. Our vehicle condition reports also provide the current odometer reading and a photo of the gauge cluster. Trust our platform for detailed condition reports and market comparables, enabling informed decisions and maximizing value. Register today to become a member.   

Sources

1. "Federal Odometer Act." Wikipedia, 17 Aug. 2019, en.wikipedia.org/wiki/Federal_Odometer_Act#:~:text=The%20Federal%20Odometer%20Act%2C%20passed,criminal%20penalties%20for%20odometer%20fraud. Accessed 17 Aug. 2023.
2. "Odometer Disclosure." North Dakota Department of Transportation,, www.dot.nd.gov/divisions/mv/docs/faq-odometer-disclosure.pdf. Accessed 17 Aug. 2023.
3.  "Odometer Rollbacks: A Hard-to-Spot Nuisance for Car Shoppers." New York Times, 20 May 2021, www.nytimes.com/2021/05/20/business/odometer-fraud.html. Accessed 17 Aug. 2023.
4. Odometers. (2022) Dealer 101®. https://dealer101.com/lessons/odometers/ 
5.  "Odometer Fraud." NHTSA, www.nhtsa.gov/equipment/odometer-fraud#:~:text=Odometer%20Fraud%20Laws,-Committing%20odometer%20fraud&text=If%20the%20odometer%20mileage%20is,the%20title%20to%20the%20buyer. Accessed 17 Aug. 2023.