Original publication: November 2017
Authors: TRT Trasporti e Territorio – Enrico Pastori, Raffaele Vergnani
Short link to this post: http://bit.ly/2iExcx6

Odometer tampering is a malpractice that involves an unauthorised manipulation of mileage readings shown on odometers. Its aim is to create the impression that the motor of a vehicle has a lower mileage than it does in reality, which in turn leads to a higher re-sale price of the vehicle.

 

Estimations of the scale of the phenomenon differ considerably between Member States (ranging from 10% to more than 50% of the total number of cars traded in the secondhand markets) (Montag, 2017; Bellucci, 2015; Ereg 2014a). The malpractice is even more relevant in cross-border trade of used vehicles. This is mainly due to the lack of effective cooperation at supranational level and an insufficient exchange of information on mileage readings of odometers in vehicles traded between Member States. Cars with rolled-back odometers are estimated to account for between 30% and 40% of total number of vehicles traded across borders (CRM, 2010). These numbers prove that odometer tampering is a serious concern and a widespread phenomenon across Europe, affecting almost all second-hand car markets in the European Union (EU).

Obviously, consumers are financially affected by odometer manipulations. In the EU alone, their losses resulting from the rollback of vehicles’ mileage are estimated at several billion euros every year. Moreover, odometer tampering has profound negative effects on safety of road users and on the environment. In practice this means that cars, which have been heavily used and subject to a lot of wear and tear are sold at prices higher than their real value. To make matters worse, these cars encounter more frequent than expected technical problems and perform poorer in terms of pollutant and emission standards.

Surveys conducted in the past few years by the European Commission (European Commission, 2016a; European Commission, 2014) prove that, among the various markets taken into consideration for the purposes of the statistic, the whole second-hand car market sector was ranked the lowest in terms of trust by European consumers. The reasons are manifold, but the unavailability of information on accurate odometer readings is mentioned as one of the most critical by customers.

In recent years, odometer tampering gained more attention from consumers, public institutions and international associations, as they all have become increasingly aware of the harmful consequences of this malpractice. At the European level, the problem was addressed for the first time in the so-called “Roadworthiness Package” of 2014, where the Member States were obliged to adopt specific measures to collect and register mileage readings at every Periodic Technical Inspection (PTI). However, Member States are free to decide when the first mileage recording is conducted for the new vehicle as the Directive 2014/45 determines only that the first PTI should not occur later than four years. As a result, in most Member States the four-year grace period is considered to be an issue, particularly in the case of vehicles that are used intensively and with a high mileage, where the temptation to roll back the odometer is the strongest.

The “Roadworthiness Package” was followed by Regulation (EC) No 2017/1151, which entered into force in June 2017. It requires that the car manufacturers effectively deter reprogramming of the odometer readings. This is expected to be achieved primarily through the implementation of systematic anti-manipulation strategies by the vehicle producers. Moreover, methods giving an adequate level of tamper protection shall be approved by the relevant EC-type approval authority.

On top of the obligations resulting from the EU legislation mentioned above, some Member States have decided to introduce additional measures to minimise odometer manipulations. For the purpose of this study, best practices implemented in Belgium and the Netherlands have been analysed in more detail, as they have proven to be particularly effective. In Belgium, the implementation of the “Car-Pass” system contributed substantially to nearly eradicating the odometer tampering in the domestic market. According to Car-Pass vzw’s data, the percentage of unauthorised manipulations of odometer readings in Belgian-registered cars dropped from 8.6% in 2006 to 0.2% already after two years, and remained basically unchanged until 2016. Similarly, the Dutch Nationale AutoPas (NAP) system resulted in substantial reductions of odometer manipulations, which in 2016 accounted for only 1% of total second-hand vehicles traded in the domestic market. Inspired by the Belgian and Dutch experiences, a new legislation is expected to be adopted in Slovakia and should enter into force by March 2018. Additional information on the situation in Luxembourg and Germany is also reported in this study.

Since November 2016, the authorities responsible for the management of the Belgian and the Dutch systems (i.e. Car-Pass vzw in Belgium and Road Transport Agency -RDW- in the Netherlands) have been exchanging odometer mileage readings of the second-hand vehicles traded between the two countries. Within the first few months of implementation, the two organisations were able to detect many manipulations that were not possible to be identified before the cooperation had started. Consequently, the number of odometer manipulation cases has been decreasing even further. A similar cooperation is in place between the Netherlands and Slovakia, where a system comparable to the “Car-Pass” is expected to be implemented from 2018.

Outside Europe, odometer tampering has been addressed by mostly private-led initiatives implemented in the US, Japan and New Zealand. These initiatives aim at providing customers – who request it – with a detailed Vehicle History Report (VHR) of the vehicle they wish to buy. The VHR includes odometers reading data among other information concerning a particular vehicle.

Information Technology (IT) can contribute to the eradication of odometer tampering, thanks to hardware and software- based solutions that can further safeguard odometers from unauthorised manipulations. These technological solutions are available at reasonable prices, and vehicle manufacturers, as well as suppliers of vehicle components, are free to choose the technology used to address the problem of odometer tampering as long as they comply with the relevant regulations.

Based on the study’s findings, the following recommendations are proposed. They include both regulatory aspects, as well as solutions based on the technology available.

Recommendations

1. Shortening of the maximum four-year period after which the first recording of the odometer readings is made

The maximum four-year time lapse between the registration of a new car and the first PTI – as laid down in the “Roadworthiness Package” – is considered to be too long, as it leaves fraudsters a lot of time to tamper with odometers, especially on the newest cars with high mileage exploited in the first years. The first mandatory PTI after 3 years already adopted in some countries could be embraced at EU level. Nevertheless, such a measure, if taken in isolation, would have only a limited effect, as it would simply reduce the time interval in which the odometer manipulation could take place.

2. Inclusion of additional measures within the EU legislation

The mandatory (or at least recommended) requirement of mileage registration not only at PTIs, but also at each maintenance and service, should be considered as an additional measure to be included in the EU legislation. This is a key success factor in the initiative undertaken in Belgium. Considering that this data is often already recorded for maintenance planning purposes, the additional burden on operators might not be too heavy.

3. Promotion of implementation of systems based on the national best practices

Member States should be encouraged to take stock of the successful experiences of other countries both from within (“Car Pass” and RDW activity) and outside of the EU. Regulatory systems that have been implemented in Belgium and the Netherlands have proved to be very effective in tackling odometer tampering, since they contribute to the creation of a more transparent framework at national level, defining clear rules and responsibilities for all the stakeholders involved in the second-hand car market. These systems could be adapted to the specific markets and legislative frameworks in various Member States.

4. Encouragement of data exchange on odometer readings between Member States

The lack of cooperation between the Members States is the main reason why the share of the tampered odometers is the highest in the second-hand vehicles that are traded across countries’ borders. In this context, once again the experiences of Belgium and the Netherlands have proven to be effective. The existing EU-wide platforms (such as EUCARIS) could be used to facilitate the exchange of information between Member States on odometer readings avoiding duplications of databases and at the same time ensuring cost-effectiveness. Since data protection rules are different among EU countries, this may entail the adaptation of some Member States’ legislation in order to allow for the data exchange on a common platform.

5. Monitoring the effectiveness of the provisions laid down in Regulation (EC) No 2017/1151

The EU legislation has recently seen the entry into force of the Type-approval Regulation (EC) No 2017/1151, which put stricter requirements on technology security for odometer recording equipment. The technology solutions adopted by car manufacturers and car component suppliers should guarantee that the objectives of the EU legislation are met and the right of EU consumers when buying a second-hand car (irrespective of the origin of the car) is safeguarded. The effectiveness of the technical solutions adopted should be evaluated in the years to come by setting up a dialogue with the industry and by monitoring the reduction of the odometer tampering malpractice.

Link to the full study: http://bit.ly/602-012

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