[Federal Register Volume 67, Number 233 (Wednesday, December 4, 2002)]
[Notices]
[Pages 72267-72268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30733]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-02-13956, Notice 1]


Lotus Cars Ltd.; Receipt of Application for Renewal of Temporary 
Exemption From Federal Motor Vehicle Safety Standard No. 201

    Lotus Cars Ltd. (``Lotus'') of Norwich, England, through Lotus Cars 
USA, Inc., has applied for a renewal of NHTSA Temporary Exemption No. 
99-12 from S7, Performance Criterion, of Federal Motor Vehicle Safety 
Standard No. 201, Occupant Protection in Interior Impact, as described 
below. The basis of the application is that compliance would cause 
substantial economic hardship to a manufacturer that has tried in good 
faith to comply with the standard.
    We are publishing this notice of receipt of the application in 
accordance with the requirements of 49 U.S.C. 30113(b)(2), and have 
made no judgment on the merits of the application.

Background

    On November 10, 1999, NHTSA granted Lotus Cars Ltd. NHTSA Temporary 
Exemption No. 99-12 from S7, Performance Criterion, of Federal Motor 
Vehicle Safety Standard No. 201, Occupant Protection in Interior Impact 
(64 FR 61379). The basis of the grant was that compliance would cause 
substantial economic hardship to a manufacturer that has tried in good 
faith to comply with the standard. The exemption covered the Esprit 
model, and was to expire on September 1, 2002. However, Lotus applied 
for a renewal of its hardship exemption on May 10, 2002, thereby 
staying the expiration date until the agency has acted upon its 
petition (49 CFR 555.8(e)). The reader is referred to the 1999 notice 
for information on the original application and Administrator's 
decision to grant it.

Why Lotus Needs a Temporary Exemption

    In early 1997, Lotus decided to terminate production of the Esprit 
on September 1, 1999, and to homologate the Elise for the American 
market beginning in 2000. This decision allowed it to choose the option 
for compliance with S7 provided by S6.1.3, Phase-in-Schedule 
3, of Standard No. 201, to forego compliance with new 
protective criteria for the period September 1, 1998--September 1, 
1999, and to conform 100% of its production thereafter.
    But a fresh look was taken at the direction of the company, and the 
plans of early 1997 were abandoned. In due course, new management 
decided to continue the Esprit in production beyond September 1, 1999, 
until September 1, 2002, while developing an all-new Esprit, and to 
remain in the American market without interruption. However, as 
described in its original petition, the company found itself unable to 
conform the current Esprit to Standard No. 201. It petitioned for, and 
received, a temporary exemption until September 1, 2002. Its continued 
need for an exemption is explained in the next section.

[[Page 72268]]

Why Compliance Would Cause Substantial Economic Hardship and How Lotus 
Has Tried in Good Faith To Comply With Standard No. 201

    Lotus remarks that the entity that ultimately controls Lotus Cars 
is ``the Malaysian company Perusahan Otomobile Nasional Berhad.'' 
However, Lotus' balance sheets and income statements do not indicate 
that this Asian entity, itself a motor vehicle manufacturer, makes 
capital contributions to Lotus or otherwise participates in the 
management of this British company. Lacking these indicia of control, 
NHTSA has decided not to count cumulatively the production of the two 
companies which, if totaling at least 10,000 units would render Lotus 
ineligible for a hardship exemption. In 1999, Lotus produced 2,569 
Lotus automobiles; in 2000, 2,993 Lotus automobiles plus 127 Opel/
Vauxhall automobiles; and in 2001, 5,181 Lotus automobiles and 3,046 
for Opel/Vauxhall. Over the same three-year period it exported 112,162, 
and 48 vehicles respectively to the United States. Notwithstanding the 
increase in production, Lotus submitted financial information on 
September 16, 2002, indicating a total operating loss of 7,513,000 
pounds for its fiscal year 2001-2002, a loss of 20,244,000 pounds for 
its fiscal year 2000-2001, and an operating profit of 12,368,000 pounds 
for its fiscal year 1999-2000. This represents a cumulative loss of 
15,389,000 pounds, or $24,622,400 computed at a rate of $1.6=1 pound.
    Lotus had intended to cease production of the exemption Esprit by 
August 31, 2002, but the successor project was cancelled in early 2001 
because of lack of capital. A back-up plan was conceived for a project 
called M260, but ``was unable to launch itself.'' By the end of 2001, 
Lotus had laid off 197 employees, and, by early 2002, ``an additional 
241 employees were made redundant.'' However, it had located ``an 
additional supply of air bags and transmissions * * * permitting the 
construction of up to an additional 140 vehicles.'' The company stated 
that its ``only hope for keeping the U.S. market alive [is] to build 
the additional 140 Esprits, ending production on December 31, 2003,'' 
the period for which it has requested an exemption. No further 
exemption will be requested for the Esprit as its V8 engine is not 
designed to meet Model Year 2004 U.S. emissions standards. It hopes to 
``find a way to finance'' the M260 project for introduction in the U.S. 
in 2004. Lotus's petition thus implies that the M260 is being designed 
to conform with Standard No. 201.
    Absent an exemption until 2004, Lotus will suffer the loss of the 
U.S. market, a substantial economic hardship.

Why an Exemption Would Be in the Public Interest and Consistent With 
the Objectives of Motor Vehicle Safety

    Lotus simply said that ``the extension will continue to be 
consistent with the public interest and the objectives of the Safety 
Act.'' In the past, Lotus argued that after many years of sales of the 
Esprit with its current body shape, the company knew of no head 
injuries suffered by occupants contacting the upper interior of the 
cockpit. The number of vehicles anticipated to be sold during the 
exemption period is insignificant in terms of the number of vehicles 
already on the roads.
    If Lotus USA is required to close because of a denial, its 
employees will be out of work. In its new application, the company adds 
that its ``image and credibility would be ruined.'' An exemption would 
be consistent with the public policy of affording consumers a wide 
choice of motor vehicles.

How You May Comment on Lotus's Application

    We invite you to submit comments on the application described 
above. Your comments should refer to the docket number and the notice 
number, and be submitted to: Docket Management Facility, room Pl-401, 
400 Seventh Street, SW., Washington, DC 20590. We ask, but do not 
require, that you submit your comments in duplicate. You may submit 
your comments by hand, mail, fax (202-493-2251) or electronically: log 
onto the DMS Web site, http://dms.dot.gov, and click on ``Help and 
Information'' or ``Help/Info'' to obtain instructions.
    We shall consider all comments received before the close of 
business on the comment closing date indicated below. You may examine 
comments in the docket (from 10 a.m. to 5 p.m.) at the above address 
both before and after that date. You may also view them on the internet 
at Web site http://dms.dot.gov. To the extent possible, we shall also 
consider comments filed after the closing date. We shall publish a 
notice of final action on the application in the Federal Register 
pursuant to the authority indicated below.
    Comment closing date: January 3, 2003.

(49 U.S.C. 30113; delegations of authority at 49 CFR 1.50 and 501.8)

    Issued on: November 27, 2002.
Stephen R. Kratzke,
Associate Administrator for Rulemaking.
[FR Doc. 02-30733 Filed 12-3-02; 8:45 am]
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