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Mileage is being wound back by dealers in Australia

We know this article is pretty long, but it deals with a very important subject and we would encourage prospective buyers to read the whole thing. Here are the salient points at a glance, with links to greater detail below:

  • How common is wound back mileage?

    This has now become a very common practice amongst Australian dealers unfortunately. An informal survey (outlined below) shows that more than 80% of the imported vehicles sampled with Australian dealers have had their mileage tampered with, and on average have done in excess of double what they are currently reading.

  • Are the Australian dealers responsible, or are they too victims?

    No, Australian dealers have in most cases the means to conclusively tell if the car had the mileage wound back before buying it, so it seems clear they are the ones responsible for doing it

  • How is it done?

    Modern digital speedos allow (with the right equipment) for relatively easy tampering

  • How much are dealers profiting from this practice?

    Significantly. See the details outlined here.

  • Shouldn't it be obvious?

    With a professional detail it is not always easy to tell if a car has done significantly higher mileage than it actually has.

  • How you can protect yourself

    There ARE ways in which you can tell if a dealer may have tampered with the mileage by seeing the Export Certificate. Details on this are outlined here.

  • Are dealers being caught winding back mileage?

    Yes, however the practice still seems unfortunately to be very wide spread.

  • Final comments...

    Not all Australian dealers are guilty of this so please don't judge all instantly, but by reading this article be aware of just how common it is, and how to avoide being caught out.

In detail....

The issue of wound back mileage on vehicles in Australia has become significant enough that at J-Spec we feel this should be addressed. Imports have a poor reputation as to the reliability of the mileage vehicles show and indeed this to a degree is deserved, however there is a very important distinction to be made between the reliability of mileage shown on cars which have already been imported to Australia (and in particular those by Australian dealers, which makes up their majority) and those which are purchased in Japan and imported with full transparency through an import consultant such as J-Spec.

How bad is it?

You might notice the majority of imports for sale by dealers locally all coincidentally have around 60,000 km to 90,000 km. While it's true Japanese cars DO have lower mileage typically than an equivalent age Australian delivered vehicle, this does seem a bit suspicious. Rather than rely on conjecture alone, the information below is based on specific vehicles advertised in Australia for which the real mileage in Japan could be determined.

First, to provide an indication of how wide spread the practice of tampering with odometers now is for cars being sold by Australian dealers, we decided to conduct a very quick experiment. Since we have previous Japanese auction data in our database going back 6 - 9 months, for cars recently imported by dealers we are often able to look up the same vehicle when it was being sold in Japan. If the mileage in Japan differs to the mileage it's now being sold for in Australia then you know something suspicious is going on. The cars below were found advertised for sale online in Australia, and are clearly the same vehicle as at auction (see notes below).

The results were surprising to say the least. The following are the first 30 cars which we checked where we were able to look up the car from auction in Japan, and to our surprise 25 out of that 30 had wound back mileage! That's a very big fail for the local dealer industry in our books, and suggests that the reputation as a whole that used car dealers suffer is not entirely unfair.

Vehicle
Accident history
Advertised mileage
Actual mileage
Difference
Silvia S15
Yes
59,000 km 132,000 km 73,000 km
RX-7
No
46,272 km 99,000 km 52,728 km
Skyline R34
Yes
69,000 km 144,022 km 75,022 km
Cube
No
85,000 km 169,000 km 84,000 km
Stagea M35
No
96,000 km 96,000 km 0 km
Lancer EVO 8
Yes
58,000 km 117,269 km 59,269 km
Galant
No
106,000 km 106,000 km 0 km
Lancer EVO 5
Yes
66,307 km 109,399 km 43,362 km
Lancer EVO 5
Yes
69,545 km 104,029 km 34,484 km
Delica Spacegear
No
67,312 km 122,509 km 55,197 km
Delica Spacegear
No
64,217 km 177,105 km 112,888 km
Chaser JZX100
Yes
69,000 km 172,000 km 103,000 km
Supra
No
48,000 km 94,230 km 46,230 km
Skyline V36
No
7,000 km 75,004 km 68,004 km
Elgrand E51
No
27,000 km 105,252 km 78,252 km
Elgrand E51
No
21,000 km 87,909 km 66,909 km
Elgrand E50
No
109,000 km 109,000 km 0 km
Skyline V35
Yes
39,000 km 99,000 km 60,000 km
Caldina ST246W
No
48,000 km 123,172 km 75,172 km
Delica Spacegear
Yes
102,000 km 102,000 km 0 km
Skyline R34
Yes
77,000 km 145,000 km 68,000 km
Elgrand E51
No
48,700 km 184,404 km 135,704 km
Delica Spacegear
No
78,000 km 157,755 km 79,755 km
Delica Spacegear
No
68,000 km 139,000 km 71,000 km
Silvia S15
No
68,202 km 132,450 km 64,208 km
GTO
No
51,000 km 118,000 km 67,000 km
GTO
No
52,000 km 94,000 km 42,000 km
Mark II JZX110
No
60,731 km 149,916 km 89,185 km
Legnum
No
91,000 km 91,000 km 0 km
RX-7
Yes
52,100 km 128,000 km 74,800 km

As you can see, from this (very informal) survey over 80% of cars have their mileage wound back, and of those which did they had on average more than double the mileage which the seller's were claiming! As an additional test out of curiosity for some of those cars which were listed as having accident history in Japan we called the dealers and asked as a potential buyer if their car in question had accident history, and of all those asked all said that the cars did not, even though it would appear according to their Japanese auction grades that they did.

Some notes:

  • Note neither the exact cars nor the dealers selling them will be named or identified here.
  • All cars were advertised with Licensed Motor Car Trader (LMCT) license holders
  • The 30 cars here are not the first 30 cars we came across, but the first 30 for which we were able to also find in the Japanese auction database to confirm their legitimate mileage. Cars which have been in Australia for a long period of time or bought in Japan through other means could not be checked.
  • Cars were uniquely identifiable with the Japanese auction result compared with the Australian for sale listing either by things such as unique modifications or stickers, and in most cases unmistakably by comparing the chassis numbers. It is conclusive (with proof) that these are the same cars.

Are the Australian dealers not innocent victims themselves?

This is unlikely. The main reason is that in fact the Japanese registration system has quite good measures in place to prevent the winding back of mileage without prospective buyers knowing it, and this is why importing a car from Japan yourself through an import consultant such as J-Spec is actually quite safe. When a car is purchased the buyer receives the Deregistration Certificate (also sometimes referred to as the Export Certificate). Included on this is the date and mileage of the car recorded at its last two mandatory roadworthiness inspections in Japan (required every 2 years). If a car currently reads for example 80,000km now, but read 130,000km at the last inspection then it's obvious the mileage has been tampered with. More on this in greater detail is discussed later. Not only will the Australian dealer winding back the mileage receive the Export Certificate as part of their purchase of the car in Japan, but in the case of dealers who are also compliance workshops (a fair proportion of them) they are required under the SEVS import rules as outlined by DOTARS to keep the original copy of this document on file! Therefore in many cases for a dealer to claim ignorance, that they either never received the Export Certificate or don't still have it is untrue as the car could not be complied and registered without it. Again, more on this later.

How is it being done?

Most cars now imported have a digital odometer which allows for (with the right equipment) easy tampering of the mileage. There are a variety of black market devices which hack into the electronics system and "correct" the mileage on a car, shown below is an example of such a device.

We have heard of some cases where dealers have such devices themselves, and in some cases they pay someone to do this for them. Cars which have older style tumbler odometers can be tampered with by someone with some skill and basic tools, and often without there being any obvious evidence of it.

How much are Australian dealers profiting from this practice?

The way we at J-Spec became suspicious of this practice is two-fold. The first is that some suppliers in Japan would straight up ask us if we would like the mileage of the cars we were importing for customers wound back, so while we don't do it, clearly others are.

The second is the improbable pricing and mileage of so many cars being sold by dealers in Australia. We regularly have customers contact us and ask how much a particular car with a particular mileage might cost in Japan. We would look up the past several months' sales data and can often say that a typical sale price is "x", and there wasn't a single car with that mileage that sold for less than "y". In some cases customers will respond with "I thought importing myself was cheaper, but there are cars for less than that with a certain mileage here in Australia being advertised now" and then they'd often provide the link. Given that with an import consultant such as J-Spec you are importing a car essentially at cost plus our service fee there are no 'tricks' to get a car into the country any cheaper, and so if a car is far cheaper than with a dealer the cheapest one in decent shape with similar k's ever sells for in Japan, then either it must have been one with some sort of issue to have made it so cheap, or it was far cheaper because it really had higher mileage. In many cases where we interact with customers as outlined above we can look up the car at auction that they've linked to and the answer as to how it's so much cheaper than we could import one with genuine mileage becomes very obvious.

As an example of how much dealers are able to mark up the price of a car, in one case of those cars listed above (based on the sale price in Japan, typical importing costs and the asking price in Australia) the dealer is making a profit of approximately $20,000. We have no issue with dealers making any particular amount of profit they can (let the market decide if it's too much or not), but in the case of this car they are able to do this only by deceiving whoever ends up buying it, which in our books means they are being ripped of $20,000. Had the car had the mileage they are claiming then their profit would have been closer to around $3,000, based on typical sale prices in Japan. This is why dealers are doing it, and how much people are being ripped off as a result of buying cars with wound back mileage from such dealers.

Shouldn't it be obvious?

A good, professional detail done by most Australian dealers upon arrival can do a very good job of hiding the condition of a car, and therefore possible inferences about the mileage one could make. While obvious things such as body panels being repainted can help make a car look younger, also steering wheels can be retrimmed, repainted or replaced, seats can have tears repaired, cracks to the leather hidden/repainted, shift knobs can be replaced and other areas which might be a tell-tale sign of a high mileage vehicle can be addressed.

As evidence of this of those cars above there are several with over 70,000km wiped off (and some with over 100,000km) yet clearly the dealers think they can get away with it or they wouldn't try. Note one of those cars above has been advertised with 7,000km (which should look like an as-new vehicle) which had in reality done over 10 times as much, so presumably a professional detail was able to hide the fact that it had had 90% of the k's wiped off.

Some people could argue if a car looks like it's done low mileage then what's the difference? The biggest issues would come to mechanical reliability which could end up costing a lot of money in the long run, and potential catastrophic failures could happen now that scheduled maintenance is now out of step. In the event of for example a car having done 95,000km (and being due for a timing belt change) but has been wound back to say 30,000km, the owner may change the belt 65,000km too late, by which point it may have failed and destroyed the engine along with it. Detailing can also often be a stop gap measure and in a few years repainted body panels and other repairs will become obvious as new paint fades at a different rate to old, or other issues as a result of a car being dolled up to look better than it really on a dealer's lot becomes apparent.

How you can protect yourself

The best way to ensure a vehicle is showing the correct mileage is to view the Export Certificate (sometimes referred to as "dereg"). Here is an example of a copy of an export certificate below:

Of most importance is the chassis number in blue in the top right corner as this uniquely identifies the vehicle, and the last two roadworthiness inspections in red in the bottom right corner (sometimes also in the bottom left). What this shows is that the Japanese department of transport recorded the date and mileage of the last two mandatory roadworthiness inspections that this car went through, and included it as part of the official paperwork. Using this car as an example you can see that it had done 64,000km in 2008 and 81,000km in 2010, and therefore the mileage on the car at time of purchase (around 90,000km in 2011) is legitimate. If this car now had 50,000km on the odometer then it would have been tampered with.

With this document in mind, if you want to ensure you are not purchasing a vehicle with wound back mileage there are a few things you can do:

  • The first is import a car yourself through an import consultant such as J-Spec, and all cars with us are subject to the J-Spec Mileage Promise. You will always receive the original copy of the Export Certificate so you can see what is on there yourself. If the mileage on the car doesn't match the Export Certificate prior to sale (e.g. the car has had the speedo changed, or it has been wound back in Japan already, unlikely though that is) then either the auction house or Japanese dealer selling the car will inform you of this in advance by Japanese law, so you are doubly protected.
  • If you are looking to purchase a car with an Australian dealer, demand to see the original Export Certificate (avoid a copy where possible as this is easily forged). If a dealer says they don't have it or can't show you be suspicious, and if they are also a compliance workshop be VERY suspicious as they are required as part of the SEVS import laws to keep the a copy (and usually the original) on file. Note if a dealer who has the car is not the first owner in Australia then it is unlikely they will have the Export Certificate. To see if the car has only recently been imported check the date of compliance on the purple compliance sticker either in the engine bay or in the door jam.
  • There are now some services being offered on eBay for a fee to check the mileage of a vehicle, and these are a welcome addition to the industry. They will check with the Japanese department of transport for a publicly available document which shows some of the information about a car that they have on record. Looking very similar to the Export Certificate shown above, this document shows the dates and mileage of the last two roadworthiness inspections. We have heard of several people using this service to date and finding a car that they were planning to buy from an Australian dealer did not have genuine kilometers.

About cars that have already been in Australia for a while

If a car has been in Australia already and is not a fresh import (either one being now privately sold or sold by a dealer) it is far more difficult to determine if the mileage is genuine. Even if it is being privately sold the car might have originally at some point been imported by a dealer (most imports in Australia come in this way) and so may have had the speedo tampered with. Unfortunately it is more difficult to find the information about cars in this case, other than using one of the services which looks up Japanese records, as mentioned above.

Are dealers being caught winding back mileage?

There is some justice in that we have heard of cases where dealers have been caught, however given the prevalence of cars with tampered mileage as outlined above it is still a very widespread practice. In some cases we've heard of dealers paying 'hush money' to customers to satisfy their grievance, and in some cases we have heard of buyers going to the ACCC, which has very clear documentation as to a Licensed Motor Car Trader responsibilities in this matter as well as punishments. We do not know how these cases turned out, but given the simplicity by which the genuine mileage can be found for an imported vehicle the results can be guessed at. Some buyers have also published the results of having mileage checks done on their cars on online forums, and the dealer's reputations naturally suffered substantially. Unfortunately though there are still many doing it.

Final comments

It is important to note that although wide spread, not all dealers are guilty of engaging in these immoral practices. There are good dealers out there who are honest and it is unfair to paint them with the same brush as the dishonest ones, so using the points above determine if the mileage is genuine on a car before passing judgment. This article is not designed to scare-monger, however given the results of our impromptu little "survey" it is important that people are made aware of the seedier side of the import industry and just how common it is.