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Interpretation ID: aiam3535

Lawrence W. Gebhardt, Gebhardt & Smith, Suite 1544, The World Trade Center, Baltimore, MD 21202; Lawrence W. Gebhardt
Gebhardt & Smith
Suite 1544
The World Trade Center
Baltimore
MD 21202;

Dear Mr. Gebhardt: This is in response to your letter of November 30, 1981, in which yo raised several questions concerning the application of the exemption for dealer-to-dealer transfers of new cars. We are sorry for the delay in responding. Specifically you wanted to know if a dealer transferring a new vehicle with fifty miles registered on the odometer to another dealer was required to issue an odometer disclosure statement. You also requested that the agency provide you with cases subsequent to *Lair v. Lewis Service Center*, 428 F. Supp. 778 (D.Neb. 1977) which address the enforceability of the exemptions to Title IV of the Motor Vehicle Information and Cost Savings Act ('Act') (15 U.S.C. 1981 *et seq.*); Purchasers of motor vehicles rely heavily on the odometer reading as a index of the condition and value of the vehicle. The purpose of the Federal odometer laws is to establish certain safeguards against odometer tampering and to provide purchasers of motor vehicles an accurate statement of the mileage traveled by a motor vehicle. Section 408 of the Act requires that each transferor of a motor vehicle furnish to the transferee a written statement certifying the accuracy of the mileage. 15 U.S.C. 1988. The Odometer Disclosure Requirements specifically detail the information that must be disclosed. 49 CFR 580.4. However, the agency has determined that the exemption of certain transactions and vehicles is consistent with the purposes and scope of the Act. 49 CFR 580.5.; 49 CFR 580.5(b) exempts all transfers of a new vehicle prior to th first transfer to a customer who actually plans to use the vehicle from the Odometer Disclosure Requirements. The exemption applies to the dealer-to-dealer transfer of new vehicles regardless of the odometer reading. However, the exemption does not preclude a dealer from requiring the transferring dealer to certify the accuracy of the mileage.; The exemption is consistent with the purpose and scope of the Federa odometer laws. It is customary for dealers to transfer new vehicles to other dealers who plan to immediately resell the vehicle to a customer. Generally, the frequency of odometer fraud in these transactions is minimal. Indeed, prior to the transfer of a vehicle to a consumer, the odometer reading should only reflect the mileage accumulated while the vehicle is being demonstrated to a potential buyer or driven a short distance, which might be occasioned by a typical dealer-to-dealer transfer. We are unable to establish by issuing an opinion letter what the limit of such mileage incidental to the sale of a new car should be. If a dealer doubts the accuracy of the odometer reading, he can readily inspect the car for evidence of odometer tampering. In the absence of such evidence, the first dealer to sell the vehicle to a non-resale purchaser should be free to certify the mileage as accurate. The agency therefore views the issuance of odometer disclosure statements in such dealer-to-dealer transactions as unnecessarily burdensome on dealers.; In addition to *Lair v. Lewis Service Center*, the agency has knowledg of one other case *Romeri Trucking, Inc. v. Boise Kenworth Sale*, No. 80-1252 (D. Iowa, February 11, 1981), that addresses the issue of the enforceability of 49 CFR 580.5(a)(1). To date the agency has not issued a formal opinion on either case.; Sincerely, Frank Berndt, Chief Counsel