Germany’s €8 billion mileage fraud bill

November 23, 2016

Campaigners in Germany are calling for new measures to prevent mileage fraud, which they say is undermining confidence in the used car market.

About one-third of all used cars in Germany have their value falsely inflated by winding back the vehicle odometer, the industry claims.

Mileage is a critical factor in establishing a car’s value, along with its age and condition. Extensive fraud means that buyers will become increasingly suspicious of odometer readings. This makes them more likely to offer less than a vehicle’s market value because of the risk of fraud. This will eventually force down used car values overall, even for vehicles that have not been tampered with.

This view is supported by a new whitepaper on disruptive trends in remarketing produced by Autovista Intelligence. It warns that without good quality information on a vehicle’s history, it is impossible to distinguish between a good and bad purchase.

If buyers cannot distinguish between a top quality product and an inferior one then they will be reluctant to pay a premium for quality.

Wolfgang Köhler, a spokesman for the Automobilclub von Deutschland (AvD), said: ‘Buyers need to be sure when they are buying a used vehicle that the mileage is accurate. This is one of the key influences on the value of a used car.

‘About 30% of used cars have been tampered with and it is a really big problem because of the damage it is causing.’

The AvD wants vehicle mileage to be collected automatically and shared, both nationally and internationally, so that every vehicle has a full odometer history that prevents scams.

In Germany, this would require mileage to be collected during official vehicle safety checks every two years. Checks would also be made when cars were taken into the garage for servicing or repair.

Yesterday, lawmakers in Lower Saxony discussed a Car Pass programme to tackle fraud by formalising the collection of odometer data from cars. A Car Pass would be mandated whenever a used car is sold to prove its mileage is genuine. A similar system adopted in Belgium virtually eliminated the problem.

German officials also called for manufacturers to make it much more technically difficult to change a vehicle’s mileage, so that it becomes too costly and wipes out any profit gained from winding back the odometer.

Last week, the Car Remarketing Association of Europe (CARA) identified fraud as one of its key priorities for 2017.

Read our whitepaper on disruptive trends in remarketing…

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UPDATE: News & Insights have moved to the Autovista Group website

March 31, 2017

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