[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Notices]
[Pages 49152-49153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24593]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. NHTSA-98-3782; Notice 2]
Laforza Automobiles, Inc.; Grant of Application for Temporary
Exemption From Federal Motor Vehicle Safety Standard No. 208
This notice grants the application by Laforza Automobiles, Inc., of
Escondido, California, (``Laforza'') for a temporary exemption from the
automatic restraint requirements of Federal Motor Vehicle Safety
Standard No. 208 Occupant Crash Protection, as described below. The
basis of the application was that compliance would cause substantial
economic hardship to a manufacturer that has tried in good faith to
comply with the standard.
Notice of receipt of the application was published on May 20, 1998,
and an opportunity afforded for comment (63 FR 27784).
Laforza is a Nevada corporation established in August 1997. To date
it has produced no motor vehicles. It intends to purchase chassis from
Magnum Industriales s.r.l., an Italian company, ``where it will undergo
the necessary modifications for the US market.'' A Ford engine,
transmission, and associated emission control systems will be
installed, and the end result will be a multipurpose passenger vehicle
(sport utility) called the Prima 4X4. Laforza estimated that it will
produce a total of 400 units between the date of the exemption and
December 31, 2000. This is the date that its requested temporary
exemption would expire.
Laforza seeks an exemption from S4.2.6.1.1 and S4.2.6.2 of Standard
No. 208. Paragraph S4.2.6.1.1, in pertinent part, requires Laforza to
provide a driver side air bag on not less than 80 percent of all Primas
manufactured before September 1, 1998. Paragraph S4.2.6.2 requires all
Primas manufactured on and after September 1, 1998, to be equipped with
both driver and right front passenger airbags. Although the passenger
side air bag is not required until September 1 of this year, ``the
airbag development program has to include both the passenger and driver
side airbags since the development duration for a driver's side airbag
would overlap the time when a passenger's side airbag will be
required.'' Laforza continued, ``If the development is not combined,
many of these tests would have to be repeated with a significant
increase in test and material costs.''
In the first 6 months after its agreement with Magnum, Laforza
spent
[[Page 49153]]
``an estimated total of 200 manhours and $15,000'' on air bag
compliance issues. Lacking the resources to independently develop an
air bag system, it ``has contacted airbag development companies in the
US to assist with the project.'' Laforza concluded that it will take 2
years to develop and certify the system. If immediate compliance were
required, the cost would be $4,000,000. An exemption would permit
Laforza to generate revenues ``to meet the costs mandated by the airbag
development program'' and spread these costs over a period of time.
Because the company is less than a year old, it could not submit
corporate balance sheets and income statements for the three years
immediately preceding the filing of its application, as specified by
NHTSA's regulation. Its stockholder equity is $900,000.
Laforza argued that ``production of the Laforza Prima 4X4 is in the
best interest of the public and the U.S. economy,'' pointing to the
uniqueness of the vehicle, and the American components that it
incorporates, the powertrain from Ford Motor Company and the purchase
of ``other parts * * * from approximately five different U.S.
companies.'' The company currently employs 15 people full-time and
three people part time, which will grow as production increases.
Further, ``in addition, * * * at least 50 employees from other
companies are involved in the Laforza project.'' During the exemption
period, the Prima will be ``equipped with a conventional retractor
type, three-point driver and passenger seatbelt system that meets all
requirements of FMVSS No. 208.'' The vehicle otherwise complies with
all Federal motor vehicle safety standards that apply to it.
No comments were received on the application.
Laforza began its efforts to comply with the automatic restraint
requirements upon its agreement with Magnum Industriales to purchase
chassis from it (the term seems to encompass a body without the engine,
transmission, and emission control systems). Since taking this step
towards becoming a vehicle manufacturer, Laforza spent the time between
then and the filing of its application in beginning its efforts to
comply with the standard. It believes that it can comply by the end of
2000. On the other hand, a crash program to comply would cost it
$4,000,000. The company has not generated any income to establish a
retained earnings account. Any significant up-front expenses to comply
with Standard No. 208 would likely place it in a negative net worth
position. Negative operating cash flows combined with the required debt
load and resulting interest charges would probably be unsustainable,
and the company would never become a going concern. The enterprise to
produce the Laforza involves purchases from several different American
companies. The company has requested exemption from only one Federal
motor vehicle safety standard for a vehicle which will be equipped with
a ``conventional retractor type three-point driver and passenger
seatbelt system that meets all requirements of FMVSS No. 208.'' It
estimates that only 400 vehicles will be produced while the exemption
is in effect.
These facts and arguments are similar to those offered in other
instances in which NHTSA has granted temporary exemptions based upon a
manufacturer's hardship. In consideration of the foregoing, it is
hereby found that compliance with the automatic restraint requirements
would cause substantial economic hardship to a manufacturer that has
tried in good faith to comply with the standard. It is further found
that a temporary exemption from these requirements would be in the
public interest and consistent with the objectives of motor vehicle
safety. Accordingly, Laforza Automobiles, Inc., is hereby granted NHTSA
Temporary Exemption No. 98-6 from paragraphs S4.2.6.1.1 and S4.2.6.2 of
49 CFR 571.208 Standard No. 208, Occupant Crash Protection, expiring
January 1, 2001.
(49 U.S.C. 30113; delegation of authority at 49 CFR 1.50)
Issued on: September 2, 1998.
Ricardo Martinez,
Administrator.
[FR Doc. 98-24593 Filed 9-11-98; 8:45 am]
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