[Federal Register Volume 64, Number 129 (Wednesday, July 7, 1999)]
[Notices]
[Pages 36742-36743]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17236]
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DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
[Docket No. NHTSA-99-5607; Notice 2]
Qvale Automotive Group SrL; Grant of Application for Temporary
Exemption From Federal Motor Vehicle Safety Standard No. 208
For the reasons given below, we are granting the application by
Qvale Automotive Group, SrL of Modena, Italy (``Qvale''), for an
exemption until March 31, 2001, from the automatic restraint
requirements of Federal Motor Vehicle Safety Standard No. 208 Occupant
Crash Protection. Qvale applied for the exemption 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 published a notice of receipt of the application on May 5, 1999
(64 FR 24216), and received no comments in response.
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 inflatable 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 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 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.
[[Page 36743]]
Our Finding That Compliance Would Cause Substantial Economic
Hardship to a Manufacturer That Has Tried in Good Faith To Comply
With Standard No. 208
It is manifest that Qvale has already invested considerable sums in
its attempt to make the Bigua/Mangusta a viable commercial product,
taking over the project from DeTomaso Automobili who lacked the
financial resources to bring it to market. By the time production is
scheduled to begin in September 1999, Qvale will have committed
$10,000,000 to the enterprise. While denial of an exemption would not
cause the failure of Qvale, it would result in total net losses of
$4,800,000 before a car conforming to Standard No. 208 could be
produced in 2000, as compared with total net losses of $4,124,025 with
an exemption that would permit cars to be sold in the United States as
of November 1999. Although an added loss of $700,000 may not appear
significant in the overall context of an investment of $10,000,000, we
note that Qvale cannot begin to generate any income at all until it is
able to sell the Mangusta. Under the best of circumstances, the company
anticipates net losses through 2001.
From Qvale's application, we surmise that DeTomaso Automobili
intended to equip the Bigua with a Ford Mustang air bag system, but
that its own financial difficulties prevented it from fully assessing
its suitability to the vehicle's design. Since beginning the project
early in 1998, Qvale has reviewed these efforts and determined that
``significant re-engineering'' is required to incorporate a conforming
automatic restraint system. With its compliance project partners,
Visteon and Isis, Qvale is working towards a conformance date less than
a year away, May 2000. To allow for unanticipated difficulties it has
asked for an exemption of 10 months past the anticipated date that the
Mangusta will comply.
After reviewing these arguments, we find that compliance would
cause substantial economic hardship to a manufacturer that has tried in
good faith to comply with Standard No. 208.
Our Finding That an Exemption Would Be in the Public Interest and
Consistent With the Objectives of Motor Vehicle Safety
We note with approval Qvale's intent to retrofit exempted vehicles
with air bag systems when they become available for the estimated 200-
250 Mangustas that will be sold under an exemption. We also note that
the Mangusta will comply with all other applicable Federal motor
vehicle safety standards.
Qvale is owned by a new American company which is hiring a sales
and distribution staff for marketing the Mangusta in the United States.
The principal subcontractor responsible for the engine, interior, air
bags, and other parts, is also an American corporation.
After reviewing these arguments, we find that a temporary exemption
is in the public interest and consistent with the objectives of motor
vehicle safety.
Grant of NHTSA Temporary Exemption No. 99-8
For the reasons expressed above, Qvale Automotive Group, SrL, is
hereby granted NHTSA Temporary Exemption No. 99-8, from S4.1.5.3 of 49
CFR 571.208 Occupant Crash Protection, expiring April 1, 2001.
Authority: 49 U.S.C. 30113; delegation of authority at 49 CFR
1.50.
Issued on: July 1, 1999.
Ricardo Martinez,
Administrator.
[FR Doc. 99-17236 Filed 7-6-99; 8:45 am]
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