This paper is concerned with the estimation of the velocity variables (when the position variables are the measured outputs) for non-linear mechanical systems subject to non-smooth impacts, both elastic and inelastic (i.e., with coefficient of restitution e = 1 and e is an element of (0, 1), respectively). A reduced-order observer is proposed, which guarantees that the corresponding error system, despite the possible presence of an infinite sequence of non-smooth impacts, is locally exponentially stable. An estimate of the basin of attraction is also given.