Federal Register: September 14, 1998 (Volume 63, Number 177)NoticesPage 49152-49153From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr14se98-101

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

Docket No. NHTSA-98-3782; Notice 2Laforza 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. 98-24593Filed9-11-98; 8:45 amBILLING CODE 4910-59-P