If you are a regular reader of Above the Law, chances are good that you own an expensive, limited-edition Porsche like the 911 GT3RS, 911 GT2, 959, Carrera GT, or a 918 Spyder (to name just a few). You’d love to drive it hard, the way it was meant to be driven. But since low-mileage examples of these cars tend to go up in value, you must temper your urges while driving to work in your lowly Panamera.
But what if mileage can be reset to zero by the factory? Can this be done legally? And if the car is being sold, does the seller have to disclose the odometer reset if it runs good as new?
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Porsche offers a special program called the Sonderwunsch (“special request”). Under its factory recommission program, customers can bring in their existing car to Porsche where it will undergo a comprehensive overhaul. The experts then check the customer’s ideas for feasibility and work out the details together with them until they are technically approved. Once the process is complete, the car leaves the factory, as new. Porsche describes it as giving the car a “second birthday.”
Classic car restoration is nothing new. High-end car brands like Ferrari, Mercedes-Benz, and Aston Martin have restoration programs for their classic cars. Restoration programs for other cars exist, but they are done by independent boutique shops and, in most cases, are model specific. Examples include Garage Yoshida for Nissan Skylines, which have recently become popular grey market imports in the United States.
But what sets Porsche’s program apart is that they revert the odometer back to zero once their restoration work is complete. During this overhaul in the factory, the vehicle is practically put into a “zero kilometer condition,” which is also documented accordingly.
There are no published requirements on which cars qualify for the Sonderwunsch treatment. There are reports that the car should be at least 10 years old unless it is a special model. Porsche also does not advertise a price for this service, but it is safe to assume it will be very expensive.
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So can an existing Porsche that has undergone the Sonderwunsch treatment legally change its odometer back to zero? The Federal Odometer Act (specifically 49 U.S. Code § 32703) prohibits a person (which includes manufacturers) from disconnecting, resetting, or altering an odometer with the intent to change the registered mileage. Section 32704 provides an exception for repairing or replacing a faulty odometer. If the exact mileage cannot be preserved, the odometer must be set to zero and a written notice must be attached to the left door frame disclosing the prior mileage and date of work.
Odometer readings serve as a rough but important proxy for a vehicle’s wear and tear, maintenance history, and market value. Thus, to prevent fraud and protect buyers, odometer tampering is prohibited by law.
But Porsche’s Sonderwunsch program does not fix a broken odometer. Instead it restores a car to as good as new. Unfortunately, there is no statutory exception for fully restored cars even with certification from the factory no matter how well the restoration is done.
When selling the car, the seller must disclose the prior mileage and the fact that the vehicle underwent the Sonderwunsch program. Simply advertising the car as “zero-mile” without context could constitute a material omission.
But let’s suppose the owner of an originally high-mileage Porsche that underwent the Sonderwunsch treatment with a factory approved and installed zero odometer sold it intentionally without disclosing that it was restored. If the buyer found out (which is very likely since the restoration information would be in the car’s records), he would have a strong fraud claim against the seller. Failing to disclose that the car has been fully restored is an omission of a material fact. It does not matter if Porsche did the restoration and the car drives as good as new.
The next question is whether the buyer suffered damages due to the fraud. Damages could be the difference in fair market value between a genuine low-mileage example and a high-mileage factory-recommissioned one. Obtaining the value of the latter could be difficult and so the better remedy for the buyer is to rescind the contract and get a full refund if possible.
Porsche’s Sonderwunsch restoration program seems to give owners the freedom to drive their special cars whenever they want without worrying about depreciation. But under current federal law, odometer changes are legal but they must be disclosed, even if it is done by the factory and runs as good as new. Otherwise, the owner could be in legal trouble if they later sell the car. Ultimately, the collector car market will decide whether the certified zero-mile factory recommissioned Porsche holds the same value as an untouched, low-mileage original.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.