05-656. Morgan Motor Company Limited Receipt of Application for a Temporary Exemption From Part 581 Bumper Standard

In accordance with the procedures of 49 CFR Part 555, Morgan Motor Company Limited (“Morgan”) has applied for a Temporary Exemption from Part 581 Bumper Standard. The basis of the application is that compliance would cause substantial economic hardship to a manufacturer that has tried in good faith to comply with the standard.^[1]

We are publishing this notice of receipt of the application in accordance with the requirements of 49 U.S.C. 30113(b)(2), and have made no judgment on the merits of the application.

I. Background

Founded in 1910, Morgan is a small privately owned vehicle manufacturer producing approximately 400 to 500 vehicles per year. The vehicles manufactured by Morgan are uniquely styled open top roadsters. In recent years, the only model exported into the United States was the Morgan Plus 8.^[2]

Petitioner states that in preparing to replace the Morgan Plus 8 with a new model in the U.S., Morgan sought to use a V6 engine and a manual transmission supplied by Ford Motor Company (Ford). However, it became apparent that Ford would be unable to supply a suitable engine coupled with a manual transmission due to the change in the production plans. The planned Morgan replacement vehicle for the U.S. market could not accommodate an automatic transmission. Because no other alternatives were available, Morgan was unable to proceed with designing a replacement vehicle for the U.S. market. Thus, petitioner stopped selling vehicles in the United States in January of 2004.

After an unsuccessful attempt to manufacture a new vehicle that would replace the Morgan Plus 8, Morgan turned its attention to an existing vehicle designed specifically for the European market, the Morgan Aero 8 (Aero 8).^[3] The petition states, that after prolonged efforts to develop an air bag system and to make other changes to the vehicle, it was able to bring the Aero 8 into compliance with all the Federal motor vehicle safety standards. However, because Aero 8 was not originally intended for the U.S. market and because the petitioner was working on a different vehicle intended for the U.S. market, this latest effort required significant financial expenditures in a short period of time. Petitioner states that as a consequence, it has not been able to develop bumpers that comply with the requirements of Part 581, Bumper standard.

For additional information on the company, please go to http://www.morgan-motor.co.uk/​.

II. Why Morgan Needs a Temporary Exemption

Petitioner indicates that it has experienced substantial economic hardship, especially in light of decreasing sales and substantial costs incurred in bringing Aero 8 into compliance with FMVSSs. Specifically, Morgan indicates it spent a total of £8,000,000 on developing Aero 8. Petitioner's financial submission shows a net loss of £1,964,872 (≉ $3,668,648) for the fiscal year 2003; a net gain of ≉ 68,082 (≉ $127,126) for the fiscal year 2002; and a net gain of £148,425 (≉$277,165) for the fiscal year 2001. This represents a cumulative net loss for a period of 3 years of £1,748,365 ($3,264,887).^[4]

According to the petitioner, the cost of making the Aero 8 compliant with the bumper standard is beyond the company's current capabilities. Petitioner contends that developing and building a compliant bumper cannot be done without redesigning the entire body structure of the Aero 8. Morgan estimates the cost of developing a Part 581-compliant bumper to be approximately £3,000,000 and could involve significant structural modifications to the vehicle's chassis.

Morgan requests a three-year exemption in order to develop compliant bumpers. Petitioner anticipates the funding necessary for these compliance efforts will come from immediate sales of Aero 8 in the United States.

III. Why Compliance Would Cause Substantial Economic Hardship and How Morgan Has Tried in Good Faith To Comply With the Bumper Standard

Petitioner contends that it cannot return to profitability unless it receives a temporary exemption from the bumper standard for the Aero 8. Specifically, if the exemption is granted, Morgan anticipates a net profit of £596,923 for the first year of Aero 8 being sold in the U.S. Morgan also projects that an exemption would have a similar impact in the next year. If the exemption is denied, Morgan will not be able to sell Aero 8 in the U.S. Resulting loss in sales revenue will result in a projected net loss of £2,242,527. Morgan indicates that a temporary exemption would provide U.S. Morgan dealers with a source of revenue. Without Aero 8 being available in the U.S., some dealers will find it difficult to remain in business and support existing customers. The petitioner will also be forced to cut back on existing customer support in the U.S.

According to its petition, Morgan examined a number of bumper solutions in order to bring the Aero 8 into compliance with Part 581. First, Morgan considered mounting bumpers from another Morgan vehicle onto Aero 8. However, because of Aero 8's unique shape, there were no structures that would accommodate suitable bumper mountings without interference with headlamps. Second, Morgan considered installing rubber bumpers. However, they too caused interference with lighting equipment. Finally, Morgan considered foam-based bumpers. This proved to be the only solution that did not result in interference with lighting equipment. However, it required a change to front and rear aluminum body panels and chassis at a cost of approximately £3,000,000.

As previously stated, Morgan plans to introduce a fully compliant Aero 8 in 2007.

IV. Why an Exemption Would Be in the Public Interest

Petitioner put forth several arguments in favor of a finding that the requested exemption is consistent with the public interest. Specifically:

1. Petitioner notes that Aero 8 complies with all Federal motor vehicle safety standards and therefore, the exemption would not increase the safety risks on U.S. highways.

2. Although the Aero 8 bumpers do not comply with Part 581, the cost of bumper repairs is comparable to similarly priced vehicles.

3. Petitioner argues that denial of the petition would limit consumer choices by permanently eliminating Morgan from the marketplace. As previously stated, Morgan manufacturers unique automobiles for which there is no direct competition or a substitute.

4. Morgan remarks that due to the nature of the Aero 8, it will, in all likelihood, be utilized infrequently and each car would not travel in excess of 3,000-4,000 miles annually.

5. Morgan does not anticipate selling more than a 100 vehicles annually, and therefore, the impact of the exemption is expected to be minimal.

V. How You May Comment on Morgan Application

We invite you to submit comments on the application described above. You may submit comments [identified by DOT Docket Number NHTSA-2005-20053] by any of the following methods:

• Web Site: http://dms.dot.gov. Follow the instructions for submitting comments on the DOT electronic docket site by clicking on “Help and Information” or “Help/Info.”
• Fax: [phone].
• Mail: Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590.
• Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
• Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

Instructions: All submissions must include the agency name and docket number or Regulatory Identification Number (RIN) for this rulemaking. Note that all comments received will be posted without change to http://dms.dot.gov, including any personal information provided.

Docket: For access to the docket in order to read background documents or comments received, go to http://dms.dot.gov at any time or to Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.

Privacy Act: Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78) or you may visit http://dms.dot.gov.

We shall consider all comments received before the close of business on the comment closing date indicated below. To the extent possible, we shall also consider comments filed after the closing date. We shall publish a notice of final action on the application in the Federal Register pursuant to the authority indicated below.

Comment closing date: February 14, 2005.

(49 U.S.C. 30113; delegations of authority at 49 CFR 1.50. and 501.8)

FOR FURTHER INFORMATION CONTACT:

George Feygin in the Office of Chief Counsel, NCC-112, (Phone: [phone]; Fax [phone]; E-Mail: [e-mail]).

Issued on: January 6, 2005.

Stephen R. Kratzke,

Associate Administrator for Rulemaking.

Footnotes

1.  To view the petition, please got to: http://dms.dot.gov/​search/​searchFormSimple.cfm (Docket No. NHTSA-2005-20053).

2.  See http://www.Autosite.com/​buyersguide/​2004-morgan-plus-8.asp.

3.  A description of the Aero 8 vehicle is attached to the petition and can be viewed online at http://dms.dot.gov/​search/​searchFormSimple.cfm (Docket No. NHTSA-2005-20053).

4.  All dollar values are based on an exchange rate of £1 = $1.87 as of 11/23/2004.