[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