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Lower gears in the rear end means that the wheels will turn more than expected for a given gear and engine rpm, so the odometer will read higher than it should.

These days, most odos and speedos are electronic, they count pulses coming from a pickup in the gearbox/tranny. And each set number of pulses represent a certain distance travelled. If you're OK with electronic DIY, you get a part called a pulse divider, and install it between the pickup and the instrument cluster. But you also need to figure out what to set it to, the correction ratio. Use a GPS to figure out how much your speedo is off. Let's say your speedo shows 21 MPH but the GPS shows 20 - then you tell the pulse divider to give out 20 pulses for each 21 received and you're done.

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