Used Car Dealers May Be Profiting From A Common Odometer Blind Spot

The Number on the Odometer Is Messing With Your Brain, Researchers Say

Used car shoppers think they’re doing their homework. They scan the mileage, compare prices, and try to sniff out a deal. But a new study of millions of real transactions suggests that car dealerships may know something buyers don’t. The human brain has a predictable blind spot when reading numbers, and dealerships may be benefiting from it.

Researchers from the University of Chicago and the University of Texas at Austin analyzed more than 4.8 million used vehicle transactions in Texas over seven years, covering both private sales and dealership transactions. At the center of their findings is a pricing quirk called “left-digit bias,” a tendency for people to anchor too heavily on the leftmost digit of a number. It’s the same mental shortcut that makes $3.99 feel noticeably cheaper than $4.00, even though the difference is a single penny.

In the used car market, that penny logic can add up to real money. A car with 49,999 miles on it feels, to the inattentive brain, much closer to 40,000 miles than to 50,000. Dealerships, the researchers argue, appear to price and stock cars in ways that let them benefit from this bias.

Dealership Buyers Show About Twice the Odometer Inattention of Private-Sale Buyers

To measure how much shoppers tune out the trailing digits of an odometer reading, the research team used actual transaction prices as a proxy. When buyers put too much weight on the leftmost digits and too little on the rest, sale prices can reveal that distorted perception. Across millions of deals, dealership customers were estimated to be roughly twice as inattentive to precise odometer readings as people who bought through private, owner-to-owner sales.

A car with 69,000 miles on it was perceived by dealership buyers as having around 64,896 miles, a gap of more than 4,000 miles from the actual reading. Private-sale buyers pegged the same car at roughly 67,155 miles, much closer to reality. Dealership buyers were off by nearly twice as much, and the researchers link that gap to higher dealership margins. Across vehicles in the 99,000-to-99,999-mile range alone, dealership operating profits ran roughly $13 million higher, about 36%, compared to vehicles in the 100,000-to-100,999-mile range just above the threshold. Price effects appeared consistently at every 10,000-mile cutoff in the data.

Left-Digit Bias Lets Dealerships Charge More and Sell More Simultaneously

Normally, raising a price means selling fewer units. But sub-threshold vehicles moved at higher prices and higher volumes at the same time, a combination the researchers say is hard to explain unless a sizable share of buyers are underweighting the exact mileage. Dealerships also sold those vehicles faster. A car sitting just below the 90,000-mile mark cleared the lot about 1.74 days faster than one sitting just above it. At a median lot time of 29 days, that’s a 6% difference, which matters when carrying costs add up daily.

Dealerships also paid sellers slightly more for trade-ins on vehicles below these round-number thresholds, pulling more of that inventory into their pipeline. Private sellers appear to have far less ability to use that lever at scale. Selling a car through Craigslist or Facebook Marketplace offers no comparable pricing infrastructure, no scale, and far less ability to benefit from those blind spots.

How Dealerships Sort Customers Without Shoppers Realizing It

To explain the mechanics, the researchers built an economic model tested against the transaction data. When buyers visit a dealership first, which surveys suggest most do, inattentive shoppers overestimate what they’d pay for the same car in a private sale. That inflated mental benchmark makes the dealership’s asking price seem like a reasonable deal, even when it isn’t. Buyers who catch the discrepancy are more likely to walk and find a private seller instead.

More competition did not seem to protect buyers. In dealership transactions, estimated inattention was about 40% higher in the most competitive markets than in the least competitive ones. A crowded lot doesn’t sharpen consumer attention.

Left-Digit Bias in the Used Car Market Hits Buyers in the Wallet

Reported in the Journal of Marketing Research, the study stopped short of accusing dealers of deliberate manipulation. Dealerships appear to be responding to a known quirk in how people process numbers, and the market rewards them for it. The effect is real, it’s measurable across millions of transactions, and it comes out of buyers’ pockets. A used car with 49,500 miles might be a good find. Whether the attraction is the vehicle or just the number on the dash is worth a second look.

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Disclaimer: The content of this article is for informational purposes only and does not constitute financial, legal, or consumer advice. The findings described are based on a single academic study conducted using used vehicle transaction data from Texas and may not apply universally. Readers are encouraged to consult the original research for full methodology and limitations.

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