Dave Plowman (News) brought next idea :
So you start out with a speedo dead accurate with new tyres. Then the
maximum error would be 2%. Not 10% as allowed. Things have moved on since
that reg was written.

It was written with in mind a cable drive from the back of gearbox and
an instrument which used a cable driven magnet and a clock-spring.
Rather than the precise electronics we can make so easily these days..