[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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