[Federal Register Volume 64, Number 86 (Wednesday, May 5, 1999)]
[Notices]
[Pages 24216-24217]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11301]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration
[Docket No. NHTSA-99-5607; Notice 1]


Qvale Automotive Group SrL; Application for Temporary Exemption 
From Federal Motor Vehicle Safety Standard No. 208

    We are asking your views on the application by Qvale Automotive 
Group, SrL of Modena, Italy (``Qvale''), for an exemption until March 
31, 2001, from the automatic restraint requirements of Motor Vehicle 
Safety Standard No. 208 Occupant Protection Systems. Qvale has applied 
on the basis that ``compliance would cause substantial economic 
hardship to a manufacturer that has tried in good faith to comply with 
the standard.'' 49 CFR 555.6(a).
    We are publishing this notice of receipt of the application in 
accordance with our regulations on temporary exemptions. This action 
does not represent any judgment by us about the merits of the 
application. The discussion that follows is based on information 
contained in Qvale's application.

Why Qvale Needs a Temporary Exemption

    Qvale is an Italian corporation, formed in January 1998. It is 
controlled by an American corporation owned by the Qvale family of San 
Francisco, California, which was also formed in January 1998. The 
American corporation does business as DeTomaso Automobiles, Ltd.
    DeTomaso Modena SpA, a small manufacturer of automobiles which 
produces less than 100 motor vehicles a year, developed a convertible 
passenger car, the Bigua, but was financially unable to produce it. 
Qvale has obtained the worldwide rights to manufacture and sell the 
Bigua under the name DeTomaso Mangusta. As of March 1999, Qvale had 
invested more than $7,000,000 in the Mangusta project, and anticipates 
an additional investment of $3,000,000 by the time production begins in 
September 1999.
    When the project began in early 1998, Qvale expected that a Ford 
Mustang air bag system could be easily integrated into the Mangusta, 
because DeTomaso Modena had anticipated that the U.S. would be the 
primary market for the car. However, it has developed that significant 
re-engineering will be required to incorporate an automatic restraint 
system that complies with S4.1.5.3 of Standard No. 208. Qvale believes 
that it will be able to manufacture a conforming car beginning in May 
2000, but says that it needs an exemption so that it may sell the 
Mangusta in the United States, beginning in November 1999, to generate 
funds under its business plan. It has asked to be exempted through 
March 31, 2001, to allow for unforeseen problems during development. 
The applicant intends to retrofit exempted vehicles with air bag 
systems when they become available. It anticipates sales of 200-250 
Mangustas under the exemption.

Why Compliance Would Cause Qvale Substantial Economic Hardship

    Neither Qvale nor its American parent has had any income or sales 
since their

[[Page 24217]]

inception in January 1998. Qvale had a net loss of $685,000 for 1998, 
with a negative cash flow of $511,000. If an exemption is not granted 
and U.S. sales do not begin until May-June 2000, the company 
anticipates total net losses of approximately $4,800,000 in 1999 with a 
total negative cash flow of over $3,000,000. Even with an exemption 
that would permit U.S. sales to begin in November 1999, Qvale expects a 
net loss for 1999 of $4,124,025 and a negative cash flow of $2,502,025. 
In fact, even with an exemption, Qvale anticipates net losses through 
at least 2001 though the cash flow would become positive in 2000 and 
increase slightly in 2001.
    Qvale's U.S. parent has already hired a sales and distribution 
staff, and would suffer losses of $1,800,000 if it cannot begin sales 
of the Mangusta in November 1999.

How Qvale Has Tried To Comply With the Standard in Good Faith

    Qvale's production plan involves the use of the 4.6L Ford Cobra V-8 
engine as well as a significant number of Ford parts including the air 
bag system. Ford's parts division, Visteon, is the prime subcontractor 
responsible for the interior and air bags. Isis Automotive, an 
engineering company in the United Kingdom, has been chosen as the 
safety engineering project manager.
    It was anticipated that the Ford air bag system could be integrated 
into the Mangusta but the final and chassis engineering that had 
continued during the Fall of 1998 indicated otherwise. Visteon found it 
necessary to redesign the dashboard, including the passenger side air 
bag door in order to make the Mangusta commercially viable, but is not 
able to furnish the redesigned interior parts until the Summer of 1999. 
Without these parts, an air bag system cannot be properly tested. In 
addition, the construction of 10 pre-production prototypes necessary 
for safety testing has been delayed until July 1999 because of problems 
with the prototype manufacturer (an outside supplier) and ongoing 
design changes. Finally additional time is needed to organize the 
supplier and engineering personnel and resources necessary for the air 
bag system development work (e.g., laboratory testing and sensor 
calibration).
    Because of these factors, Qvale's plans to incorporate an air bag 
system have been delayed from September 1999 to May or June 2000.

Why Exempting Qvale Would Be Consistent With the Public Interest 
and Objectives of Motor Vehicle Safety

    Qvale believes that the small number of vehicles that will be 
produced under an exemption will have no discernable effect upon 
safety. It intends to equip all of its U.S. vehicles with manual three 
point belts, and will meet the injury criteria specified in S4.1.5.3 
when tested with belted dummies. The company will affix a label to the 
instrument panel informing occupants of the exemption and the need to 
fasten their safety belts. Qvale plans to re-engineer its air bag 
system so that it may be installed as a retrofit in exempted vehicles. 
Mangustas will comply with all other applicable Federal motor vehicle 
safety standards.
    In Qvale's opinion, an exemption would permit the availability in 
the U.S. of the Mangusta's ``high technology, light weight TRM 
composite body.'' The success of the project will have a beneficial 
effect upon Visteon, a division of Ford Motor Company, as well as 
employment elsewhere in the U.S. of sales and service personnel.

How To Comment on Qvale's Application

    If you would like to comment on Qvale's application, send two 
copies of your comments, in writing, to: Docket Management, National 
Highway Traffic Safety Administration, Room PL-401, 400 Seventh Street, 
SW, Washington, DC 20590, in care of the docket and notice number shown 
at the top of this document.
    We shall consider all comments received before the close of 
business on the comment closing date stated below. To the extent 
possible, we shall also consider comments filed after the closing date. 
You may examine the docket in Room PL-401, both before and after that 
date, between 10 a.m. and 5 p.m.
    When we have reached a decision, we shall publish it in the Federal 
Register.
    Comment closing date: May 25, 1999.

    Authority: 49 U.S.C. 30113; delegations of authority at 49 CFR 
1.50 and 501.4.

    Issued on: April 30, 1999.
L. Robert Shelton,
Associate Administrator for Safety Performance Standards.
[FR Doc. 99-11301 Filed 5-4-99; 8:45 am]
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