[Federal Register Volume 60, Number 182 (Wednesday, September 20, 1995)]
[Notices]
[Pages 48745-48747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23262]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. 95-40; Notice 2]
Vector Aeromotive Corporation Grant of Application for Temporary
Exemption From Federal Motor Vehicle Safety Standard No. 208
Vector Aeromotive Corporation of Jacksonville, Florida, applied to
be exempted from paragraph S4.1.4 of Federal Motor Vehicle Safety
Standard No. 208 Occupant Crash Protection. The basis of the
application was that compliance will cause substantial economic
hardship to a manufacturer that has tried to comply with the standard
in good faith.
Notice of receipt of the application was published on June 26,
1995, and an opportunity afforded for comment (60 FR 33029). This
notice grants the application.
According to its application, Vector intends to begin production of
a two-seat high performance sport car in September 1995 called the
Vector Avtech SC (``Avtech''). Design concept specifications were
developed several years ago for the Avtech, and a prototype shown at
the Geneva Automobile Show in March 1992. During this time, Vector
produced a sports car called the Vector W8. This car went out of
production in early 1993 after a run of 22 vehicles, and Vector has
produced no motor vehicles since.
Vector's single largest shareholder is V'Power Corp., a Bahamian
Corporation, which is also the controlling shareholder of Automobili
Lamborghini S.p.A. Lamborghini, which manufactured 1,475 cars between
1989 and 1994, was recently granted a temporary exemption from Motor
Vehicle Safety Standard No. 214 Side Impact Protection (59 FR 59458).
V'Power will provide Vector with $5.5 million in funds to finance
Vector's proposed development schedule over the next 12 months.
Vector's cumulative net losses in the three years preceding the filing
of its application were approximately $12,400,000.
Vector evaluated ``the original Avtech prototype'' in order to
determine ``what changes had to be made to install a driver and
passenger side airbag system. The specific areas which are projected to
require design changes or additional development are related to the
main chassis design forward of the A pillar, instrument panel, steering
column, steering wheel, and seats.'' The applicant has begun to
integrate these design changes into the Avtech SC. Vector has received
airbag development program cost estimates of approximately $1,500,000
from airbag suppliers. At the time of its application, it stated that
it had already spent $56,000 in pursuit of the project and an estimated
1000 man hours. Vector estimates that a year will be required in order
to complete development, and that vehicles conforming to Standard No.
208 will be available in the time period June-September 1996. However,
to allow for development problems, Vector asked for an exemption until
May 1, 1997. In the meantime, it promises that the Avtech will be
equipped ``with an active, three point, seat belt system that meets, or
exceeds, all FMVSS performance requirements.''
The applicant also argued that an exemption would be in the public
[[Page 48746]]
interest as its development and production ``will result in additional
employment at the factory, vendor, dealer, and service levels.'' Its
success ``should establish the US as a major source for ultrahigh
performance vehicles and technology''. The Avtech will be equipped with
``the only twelve cylinder engine offered by a US manufacturer.'' In
its view, an exemption would be consistent with traffic safety
objectives because the vehicle will otherwise comply with all
applicable Federal motor vehicle safety standards. In addition, the
company's production would be limited. It estimated sales of 60 cars
through the second quarter of 1996.
No comments were received on the petition.
Pursuant to 49 U.S.C. 30113(b)(3)(B)(i), small manufacturers such
as Vector may be temporarily exempted from a Federal motor vehicle
safety standard such as Standard No. 208 if ``compliance with the
standard would cause substantial economic hardship to a manufacturer
that has tried to comply with the standard in good faith.'' The
application must contain ``a complete description of the manufacturer's
good faith effort to comply'' with the standard (49 U.S.C.
30113(c)(1)).
As a general rule, the agency is sympathetic to the economic
problems of small manufacturers and tends to equate a cumulative net
loss position to a per se showing of ``substantial economic hardship.''
NHTSA recognizes that the engineering and testing of prototypes are
costly and may be more easily borne by small manufacturers if conducted
over a more extended period of time than is the custom with the major
manufacturers. With the cumulative net losses of over $12,000,000 as
mentioned above, Vector has made a sufficient demonstration to convince
the agency that, to require immediate compliance with the automatic
restraint requirements of Standard No. 208 would cause it substantial
economic hardship.
However, in order for the agency to make the requisite finding of
good faith, a manufacturer who applies for an exemption under section
30113(b)(3)(B)(i) must demonstrate that it has made at least a
colorable attempt to meet the requirements of the standard from which
it requests exemption.
In 1991, Congress decided that 95% of passenger cars manufactured
between September 1, 1996, and September 1, 1997, must be equipped with
a driver and front seat passenger airbag, plus a manual lap/shoulder
belt, and that 100% of all cars manufactured on and after September 1,
1997, be so equipped. This requirement originated in Section 2508 of
the NHTSA Authorization Act of 1991 (part of the Intermodal Surface
Transportation Efficiency Act of 1991, known as ``ISTEA''), enacted in
December 1991. To implement this requirement, NHTSA published a notice
of proposed rulemaking (NPRM) on December 14, 1992 and a final rule on
September 2, 1993.
Thus, by the time Vector displayed its prototype at Geneva in March
1992, the industry had been aware for at least three months that it
would eventually have to provide air bags for the driver and front seat
passenger. By the time of the Geneva show, Vector was on notice that,
four and one-half years later, 95% of its production would have to be
so equipped. When the production of the Vector W8 terminated in early
1993, NHTSA had already issued the NPRM reiterating the compliance
schedule mandated by Congress. The final rule was issued 20 months
before Vector's application. These regulatory actions were widely
publicized at the time.
Vector identified the Avtech SC shown at Geneva as a ``prototype'',
rather than a ``concept'', indicating to NHTSA that the vehicle was
intended for eventual production. NHTSA believes that a good faith
effort to conform the Avtech SC to the automatic restraint requirements
of Standard No. 208 (whether automatic belts or airbags) should have
begun as part of the further development of the prototype for
production, and that the modification of the chassis, instrument panel,
seats, etc. mentioned in the application should have commenced years
earlier than it apparently has. Although the applicant states that it
has spent $56,000 on its efforts to conform, this figure represents
less than two percent of the amount that it has spent on research and
development, a total of $3,178,501 for its fiscal years 1992, 1993, and
1994.
Very simply, NHTSA expects an American manufacturer to develop and
engineer new products to conform to all applicable Federal motor
vehicle safety standards, especially when a leadtime of this length has
been provided.
However, NHTSA recognizes that the applicant was experiencing well-
publicized problems when the W8 went out of production which eventually
resulted in a complete change of corporate management. It may have been
that, until these problems were resolved, the applicant had not decided
as to the course of its future production and whether such would
include the Avtech. Thus, NHTSA is willing to give Vector the benefit
of the doubt in finding that it has made a good faith effort to comply
with Standard No. 208. However, in the belief that it might have done
more, NHTSA is providing an exemption that will expire on September 1,
1996, eight months less than Vector requested.
In granting an exemption of only one year instead of twenty months,
NHTSA has taken into account the company's financial position. Its
single largest shareholder intends to provide it with $5.5 million in
funds to finance its proposed development schedule over the next 12
months, and a short exemption period will encourage Vector to achieve
conformance by September 1, 1996.
The applicant believes that an exemption would be in the public
interest as its development and production ``will result in additional
employment at the factory, vendor, dealer, and service levels.'' In the
past, NHTSA has found such an argument sufficient to uphold the public
interest in granting an exemption, no matter how minimal the positive
impact might be on the economy.
In its view, an exemption would be consistent with traffic safety
objectives because the vehicle will otherwise comply with all
applicable Federal motor vehicle safety standards. NHTSA notes also
that the market for so-called ``supercars'' like the Vector has
softened considerably and that the company's projected estimate of
sales of 60 cars through the second quarter of 1996 may be unduly
optimistic. Vector's limited exemption is likely to have only the most
minimal impact upon motor vehicle safety. Finally, one of the
objectives of Chapter 301 is to provide temporary relief to small
manufacturers attempting to comply with the Federal motor vehicle
safety standards.
In consideration of the foregoing, it is hereby found that to
require immediate compliance with Standard No. 208 would cause
substantial economic hardship to a manufacturer that has tried in good
faith to comply with the standard, and that an exemption is consistent
with the public interest and 49 U.S.C. Chapter 301--Motor Vehicle
Safety. Accordingly, Vector Aeromotive Inc. is hereby granted NHTSA
Exemption No. 95-3 from paragraph S4.1.4 of 49 CFR 571.208 Motor
Vehicle Safety Standard No. 208 Occupant Crash Protection, expiring
September 1, 1996.
(49 U.S.C. 30113; delegation of authority at 49 CFR 1.50).
[[Page 48747]]
Issued on September 13, 1995.
Ricardo Martinez,
Administrator.
[FR Doc. 95-23262 Filed 9-19-95; 8:45 am]
BILLING CODE 49l0-59-P
