5 On Your Side

Your New Car Might Count More Miles Than You Drive

Posted March 13, 2007 6:34 p.m. EDT

— Many people would not be surprised to hear that odometer fraud is a problem in the used-car market, but an investigation by CBS News has turned up suspicious mileage readings in new cars.

Odometers that show more mileage than was traveled have been the subject of two lawsuits—one against Honda that’s been settled and one against Nissan that’s pending.

In the used-car market, the federal government estimates that about 450,000 vehicles are sold every year with false mileage readings. That costs buyers more than $1 billion a year.

No one has an estimate, however, for the new-car market, where mileage that adds up faster than it should can shorten warranties, raise lease costs and reduce resale value.

"I feel cheated in that I'm being cheated out of miles that I haven't driven," said Sharon McQuiston, a Honda owner.

The odometer on McQuiston's Honda SUV says she's driven 25,000 miles, but she's really gone 500 miles less. Her car is one of millions of Hondas with faulty odometers.

"They were accelerated. They registered more miles than the car actually traveled," said attorney James Holmes, who tested the odometers in many Honda models. He said that on average, they run 2 percent fast.

"Over the lifetime of your car, or the lifetime of your lease or your warranty, you're talking about hundreds, even thousands of miles that are being stripped off of those cars that they've never been driven," Holmes said.

A class-action suit that Holmes filed against Honda claimed the company designed odometers to run too fast.

"It shortened the warrantees. It shortened the lease contracts. It increased the lease mileage penalties that customers pay, and as a result, Honda was able to generate and save millions of dollars," Holmes argued.

Honda said the error was an accident, an oversight, in 2002 through 2006 models and that new models are more accurate. In a settlement, the company agreed to extend warranties on 6 million cars and to reimburse owners for out-of-pocket repairs and lease fees.

What about other vehicle brands, though?

To find out, CBS teamed up with the Society of Automotive Engineers, the group that sets voluntary odometer standards. They used a global positioning system to track the real mileage cars traveled during 40-mile trips.

The Ford Taurus, Chevy Impala, and Toyota RAV4 all passed, but the Nissan Altima's odometer ran more than 2 percent fast.

“Two percent with new tires, I start to get suspicious," said Jim Smith, who carried out the tests.

James Holmes found the error in 10 Altimas and filed a class-action suit against Nissan. He said he’s on a crusade to expose faulty odometers so that consumers get every mile they pay for.

Nissan declined comment, but denied in court documents that it has inaccurate odometers, saying they meet all industry standards.