About a year ago, we reported a lawsuit that accused Ferrari authorizing a Florida dealer of illegally rolling back odometers on its cars. Now, this week, Ferrari admitted to knowingly allowing its dealers do this for certain owners, which is highly illegal and could screw the entire used Ferrari market. Here’s what we’re looking at.
The Ferrari clientele isn’t the same as people who buy Nissans and Hondas. For many of them, the car is an investment, a commodity that they expect to turn a profit on when they inevitably sell it, which explains why so many of these Ferraris are so seldom driven.
Still, just like any car, a Ferrari’s resale value is determined by a few factors—originality of parts, wear and tear, condition, cosmetics—and most of that comes down as a function of its mileage. If the number on a Ferrari’s mileage counter turns out to be fabricated, this could greatly affect its value. By a lot!
I talked to Jonathan Klinger over at Hagerty, a classic and exotic car insurance agency, and asked how this would affect their client base. He admitted that it was far too early to see exactly where this would land the parties involved. Yet, he did speculate that, from an insurance standpoint, the odometer rollbacks could open up customers to a private action lawsuit that might find its way to Ferrari as misrepresenting the vehicle to them.
“This is definitely a game-changer,” he said.
I asked if Hagerty was planning on any readjustments for their customers if any of them suddenly found that the value of their Ferrari had been slashed.
Again, it was still too early for Klinger to definitively say, though he did confirm that this wouldn’t call their coverage into question. Readjustments would happen on a case-by-case basis, there would not be a blanket “yes” or “no.” Mainly, it’s still so unclear to what extent these rollbacks occurred, how many cars were affected and what specific mileage is being considered.
Additionally, the Daily Mail, which broke the memo story, stated that the DEIS tester tool could reset the odometer to zero, but was unclear on whether or not the tool could also turn the odometer back to some other arbitrary number.
This bit was interesting to Klinger, as a Ferrari with 60,000 miles of wear-and-tear would look very suspicious if it had zero miles on the clock. (Of course, you could always spin it back to zero and then drive it 20,000 miles and sell it as such). But if the device could be used to set any number on the odometer, it could potentially widen the pool of affected cars.
On high-end collectible Ferraris, this rollback probably might not devalue them that much. But on other more widely produced models, it could be a different story.
I also called Steve Lehto, an attorney who specializes in consumer protection law, and a friend of Jalopnik. Lehto explained that there are both state and federal laws regarding odometers.
Odometer law is actually one of the last places where there is consumer protection, he said, simply because it is so hard to prove that it doesn’t benefit the consumer somehow.
That Ferrari memo, which Lehto pointed out was printed on what appeared to be official Ferrari letterhead, suggested that Ferrari not only knew and was complicit in the rollbacks, but was also somehow actively involved.
“I only have two questions at this point,” Lehto said. “One: How many minutes until the lawsuit gets filed against the dealerships. And two: Are the Feds going to investigate?”
Of course, if it was just one guy rolling back the odometers of Daewoos in his garage and flipping the cars for cash, the Feds probably wouldn’t get involved. But if they hear about it in a large capacity and market, that’s when they might start asking some questions.
I asked Lehto what he thought the legal implications of this could mean for Ferrari. He speculated that Ferrari might argue and say that the company isn’t responsible for the actions of some dealers. “Manufacturers always say, ‘Dealers aren’t us,’” said Lehto, “but they always exert some control.”
It would also be impossible for Ferrari to claim ignorance of the issue because, as we have outlined previously, the DEIS tester requires approval from Ferrari SA first in order to make such changes to the cars.
At this point, Lehto thinks it’s hard to say if Ferrari is liable, but it’s possible that they might get hit by consumer lawsuits, state lawsuits and federal lawsuits.
Again, it’s still very early in this situation to draw any solid conclusions. So far, the rollbacks only seemed to have happened in Florida dealerships, according to court documents. Klinger is anticipating a very busy next few days, with customers calling in to voice their concerns over the value of their cars.
Likely what will happen is that the suits will be settled out of court. Can you imagine a jury that would be sympathetic to a wealthy Ferrari owner?
We’ll find out more as the situation unfolds. And if you know anything else, tell us at tips at jalopnik dot com.