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Vehicle leasing regime in NZ ripe for digital ‘clocking’ abuses

on May 7 2015 | in Highlights, Industry news, Latest news | by | with Comments Off

Seven out of every 10 new vehicles in New Zealand are sold on fixed-term leases to business fleets – a statistic ripe for abuse under modern digital methods of ‘clocking,’ or winding back odometers.

Road organisations and service centres in NZ say for the first time in years clocking has become a problem again, thanks to modern digital gizmos that leave little trace of odometers being tampered with.

New Zealand auction website TradeMe and international site eBay are selling the latest ‘recalibration’ devices used to wind back the odometers of most modern cars, thereby adding value to a trade-in, or end-of-lease model.

The device on TradeMe was listed as a ‘Digipro 3 OBD Programmer’ and up for sale from $400. It plugs into the car’s computer. The list of cars it would work on included pretty much every nameplate. Bidding has closed and the device is no longer listed. eBay is selling recalibration devices, among them the ‘Sequoia Tundra speedo recalibration device’ for $US299.99

Vehicles bought new in NZ are especially vulnerable to the new form of clocking because they are exempt from Warrant of Fitness checks for three years. Therefore there is no paper trail – other than a reliance on what could be incomplete service records – to show the odometer may have been wound back.

The dominance in the NZ new vehicle market of lease deals can fuel dodgy practices, such as clocking. It has happened in the UK under the Personal Contract Plan (PCP), a private leasing system.

Land Rover Discovery3 ... vehicle like this was listed on TradeMe

Land Rover … vehicle like this was listed on TradeMe with 84,000km on the clock. It had actually done 194,000km

Most lease agreements in NZ are for three years with a limit of 45,000km. There are maintenance and non-maintenance contracts. Service records of a vehicle under a maintenance lease are obviously more transparent than those under a non-maintenance lease.

Drivers who exceed the contracted number of kilometres before the lease is up face excess penalties, including the risk of invalidating the vehicle warranty. But winding back the odometer can avoid the penalties, which can sometimes amount to thousands of dollars.

It has become a more identifiable problem in the UK, where NZ parallel importers regularly buy near-new and used vehicles.

UK industry specialist Glass’s – publisher of guides to everything motoring –says most of the vehicles involved have been supplied new and are less than three years old.

It says motorists are increasingly turning to operators with specialist equipment to reduce the number of kilometers showing on the odometer.

The warning comes as more people in the UK choose to finance a new car via a PCP. The deals enable them to get a brand new car with little money down. Essentially they are hiring the car, usually for three years, with the option to make a balloon payment and keep it at the end – or hand it back and get a new car.

The car will have an agreed value at the end date, which was set when the deal was taken out. Excess kilometres will push the value down but lower kilometres can push the car’s value up and drivers can use that extra value as a deposit towards a new car.

Rupert Pontin, head of UK valuations at Glass’s, said: “The issue tends to come to light when the car is prepared for sale either by the original dealer or another who has subsequently bought the car, probably at auction.

“It is often too late to take any action against the driver because the paperwork has already been processed and, anyway, they will usually just deny that they have clocked the car.”

  • A Land Rover Discovery3 imported from the UK and advertised on TradeMe in the past few weeks had a claimed 51,000 miles (84,000km) on the odometer. A potential buyer stumbled across a screwed-up receipt somewhere in the vehicle that showed a 2011 warranty recall at 66,000 miles (107,00km). Further checks revealed the Discovery3 had done 120,000 miles (194,00km). It was taken down off TradeMe and, when last heard of, was on a dealer’s yard in Wellington.

 

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