[Federal Register Volume 70, Number 128 (Wednesday, July 6, 2005)]
[Notices]
[Pages 39007-39009]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13250]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2005-20455, Notice 2]


Spyker Automobielen B.V.; Grant of Application for a Temporary 
Exemption From Federal Motor Vehicle Safety Standards No. 108, and 208; 
and Part 581 Bumper Standard

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Grant of Application for a Temporary Exemption from Federal 
Motor Vehicle Safety Standard No. 208, and Part 581 Bumper Standard. 
Partial Grant of Application for a Temporary Exemption from Federal 
Motor Vehicle Safety Standard No. 108.

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SUMMARY: This notice grants the Spyker Automobielen B.V. (``Spyker'') 
application for a temporary exemption from the requirements of S4.1.5.3 
and S14 of Federal Motor Vehicle Safety Standard (FMVSS) No. 208, 
Occupant crash protection, and Part 581 Bumper Standard. This notice 
also partially grants the Spyker application for a temporary exemption 
from FMVSS No. 108, Lamps, reflective devices, and associated 
equipment. The exemptions apply to the Spyker C8 vehicle line. In 
accordance with 49 CFR Part 555, the basis for the grant is that 
compliance would cause substantial economic hardship to a manufacturer 
that has tried in good faith to comply with the standard.\1\ While the 
exemption from FMVSS No. 208 and Part 581 will be effective for a 
period of three years, the exemption from FMVSS No. 108 is limited to 
the first 10 Spyker C8 vehicles imported and sold in the United States.
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    \1\ To view the petition and other supporting documents, please 
go to: http://dms.dot.gov/search/searchFormSimple.cfm (Docket No. 
NHTSA-2005-20455).
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    The National Highway Traffic Safety Administration (NHTSA) 
published a notice of receipt of the application on March 29, 2005, and 
afforded an opportunity for comment.\2\
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    \2\ See 70 FR 15987.

DATES: The exemption from FMVSS No. 208, and Part 581, Bumper standard, 
is effective from June 15, 2005 until June 15, 2008. The exemption from 
FMVSS No. 108 applies to not more than 10 Spyker C8 vehicles sold in 
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the United States.

FOR FURTHER INFORMATION CONTACT: George Feygin in the Office of Chief 
Counsel, NCC-112, (Phone: 202-366-2992; Fax 202-366-3820; E-Mail: 
[email protected]).

I. Background

    Spyker is a small publicly traded Dutch vehicle manufacturer 
established in 2002. Spyker manufactures hand-built high-performance 
automobiles similar to vehicles manufactured by Ferrari, Lamborghini, 
Saleen, and other high-performance vehicle manufacturers.\3\ Spyker has 
manufactured approximately 50 model C8 vehicles, and has back orders 
approaching 80 vehicles.\4\
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    \3\ For more information on Spyker, see http://www.spykercars.com/.
    \4\ http://www.spykercars.com/meta/investors/pdf/Financieel/first_halfjaar_report_2004.pdf.
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    To date, Spyker has been unable to develop compliant bumpers and 
air bags for the C8 and has requested a three-year exemption from the 
applicable air bag and bumper requirements in order to develop 
compliant bumpers and air bags. The petitioner anticipates that the 
funding necessary for these compliance efforts will come from immediate 
sales of Spyker C8 in the United States. These sales would amount to 
approximately 50 model C8 vehicles per year.
    If the exemption is granted, Spyker has indicated that it would be 
able to sell fully compliant vehicles by 2008. If the exemption is 
denied, Spyker has indicated that the company would be in danger of 
going out of business.

II. Why Spyker Needs a Temporary Exemption

    Spyker indicates that it has invested significant resources into 
making the C8 compliant with applicable Federal regulations. However, 
because of the limited resources as well as the fluctuating value of 
the U.S. dollar, the petitioner argues that it cannot bring the C8 into 
compliance with FMVSS No. 208 and Part 581 without generating immediate 
U.S. sales revenue. The petitioner indicates that it is experiencing 
substantial economic hardship. Specifically, the company's consolidated 
balance sheet shows a net loss of [euro]1,245,000 ([ap] $1,527,868) \5\ 
in 2002; a net loss of [euro]4,216,000 ([ap] $5,173,889) in 2003; and a 
net loss of [euro]4,912,000 ([ap] $6,028,022) in 2004. This represents 
a cumulative net loss for a period of 3 years of [euro]10,373,000 ([ap] 
$12,729,778). Since Spyker is a publicly traded company, their 
financial information is available to the public.\6\
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    \5\ All dollar values are based on an exchange rate of [euro] = 
$1.23 as of 6/5/2005.
    \6\ See http://www.spykercars.com/meta/investors/pdf/Financieel/Annual_Report_2004.pdf and http://www.spykercars.com/meta/investors/pdf/Financieel/spyker_anual_report_2003.pdf.
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    In short, the petitioner indicates that the cost of making the C8 
compliant with FMVSS No. 208 and Part 581 is beyond the company's 
current capabilities. Spyker thus requests a three-year exemption in 
order to develop compliant bumpers and advanced air bags. The 
petitioner anticipates the funding necessary for these compliance 
efforts will come from immediate sales of the C8 in the United States.

[[Page 39008]]

III. Why Compliance Would Cause Substantial Economic Hardship, and How 
Spyker Has Tried in Good Faith To Comply with the Applicable 
Requirements

    The petitioner contends that it cannot attain profitability unless 
it receives a temporary exemption for the C8. Specifically, Spyker 
offers the following projections as a consequence of grant or denial of 
their petition:

----------------------------------------------------------------------------------------------------------------
                    Net profit                             2005                 2006                 2007
----------------------------------------------------------------------------------------------------------------
If exemption is granted...........................   [ap](-$3,500,000)        [ap]$500,000       [ap]$6,000,000
If exemption is denied............................   [ap](-$6,000,000)    [ap](-$6,000,000)    [ap](-$6,000,000)
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    In short, a grant of the petition would amount to [ap] $3 million 
in potential revenue that would be used to develop a fully complaint 
vehicle. Spyker indicates that absent this revenue stream, the company 
would be precluded from developing a fully compliant vehicle and its 
long term-viability would be in question.
    In an effort to develop a fully compliant vehicle, Spyker turned to 
other companies for technical assistance. Spyker's supplementary 
petition indicates that its compliance efforts are being directed by 
Lotus Engineering.\7\ However, the petitioner states that the Spyker's 
current assets cannot support air bag development, and that testing 
expenses, as well as re-engineering and re-design delays would bankrupt 
the company.
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    \7\ See Docket No. NHTSA-2005-20455-8.
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    Spyker indicates that it has experienced great difficulty in 
finding suppliers willing to provide air bag systems to an ultra low-
volume manufacturer. For example, the company has been in discussions 
with Siemens Restraint Systems and TNO in order to develop and produce 
air bags. However, these efforts have not yet produced the necessary 
results. The petitioner indicates that it now plans on concentrating 
its efforts on designing advanced air bags that become mandatory in 
2006.
    Spyker indicates that it failed to design compliant bumpers for the 
C8. The petitioner argues that the only viable method for bringing the 
C8 into compliance with Part 581 is to re-engineer the front end of the 
vehicle. The petitioner states that it cannot bear these costs at this 
time. However, Spyker indicates that if it were able to sell C8 in the 
U.S. for the next 3 years, it would be able to redesign the vehicle 
such that it would incorporate complaint bumpers.
    Finally, in a supplement to their petition, Spyker has indicated 
that their vehicle may not comply with S7 of the requirements of FMVSS 
No. 108.\8\ Subsequent to filing this supplement, however, Spyker 
indicated that it would be able to meet the headlighting requirements 
of FMVSS No. 108 for all but the first ten vehicles imported into the 
U.S. On May 16, 2005, George Feygin from the NHTSA Office of Chief 
Counsel met with Victor R. Muller, the Chief Executive Officer of 
Spyker. At the meeting, Mr. Muller explained that Spyker was able to 
resolve the lighting issue, and all but the first 10 C8 vehicles will 
have compliant lighting. Mr. Muller further indicated that retrofit 
headlamps would be made available for the first ten vehicles imported 
into U.S.
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    \8\ See Docket No. NHTSA-2005-20455-9.
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IV. Why an Exemption Would Be in the Public Interest

    The petitioner put forth several arguments in favor of a finding 
that the requested exemption is consistent with the public interest. 
Specifically:
    1. The petitioner argues that Part 581 is not a safety standard, 
but a standard designed to reduce costs associated with minor impacts.
    2. With respect to air bags, the petitioner argues that the 
vehicles are designed with a ``frontal crush structure and occupant 
protection cell for use as a race vehicle.'' Specifically, the 
occupants are positioned in a protective ``cell'' with the main chassis 
structure surrounding them. Further, The C8 will meet the injury 
criteria specified in FMVSS 208 S4.2.3 when tested with belted dummies.
    3. The vehicle would be equipped with labels reminding drivers to 
buckle up. Specifically, in addition to the labels required on exempted 
vehicles under 49 CFR Part 555, Spyker would place an additional label 
on the instrument panel informing occupants of the exemption and the 
need to buckle up.
    4. Spyker's engineering analysis shows that at impact speeds of 
less than 5 mph, there is no damage to the C8's safety equipment (other 
than license plate lights).
    5. The likelihood of minor damage is very low. The vehicle costs in 
excess of $200,000, and it is reasonable to assume that it would not be 
subject to normal ``wear-and-tear'' associated with typical bumper 
impacts.
    6. Spyker does not anticipate selling more than 200 vehicles for a 
period of 3 years covered by the requested exemption. Thus, the impact 
of the exemption is expected to be minimal.
    7. Spyker argues that granting the exemption would be consistent 
with the Agency's previous decisions.\9\
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    \9\ See 69 FR 5658 (February 5, 2004); 69 FR 3192 (January 22, 
2004); 64 FR 6736 (February 10, 1999).
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    8. Spyker argues that granting the exemption would increase choices 
available to the U.S. driving population in the high-performance 
vehicle segment.
    9. Spyker argues that granting the exemption would increase jobs in 
the U.S. associated with sales and maintenance of the C8.
    10. Finally, because of its price and exclusivity, the petitioner 
anticipates that the C8 would not be used extensively.

V. Comments Regarding the Spyker Petition

    The agency received two comments from David H. Nguyen and David 
Smith in response to the notice of the application.
    Mr. Nguyen indicated support for granting the petition for the 
following reasons. First, because of the limited number of cars that 
would be sold and the limited exemption period, the overall safety 
impact will be negligible. Second, most buyers of exotic automobiles 
such as those produced by Spyker do not use their vehicles on a daily 
basis for transportation due to practical considerations such as 
comfort and utility. As a result, the C8 would be driven considerably 
less than the average vehicle. Mr. Nguyen estimated that, based on 
Fatality Analysis Reporting System (FARS) data, the exemption would not 
result in any additional fatalities. Third, Mr. Nguyen suggested that 
the C8, which is already being sold in Europe, is reasonably safe 
because it complies with the European

[[Page 39009]]

Union safety requirements. Finally, Mr. Nguyen stated that there is 
strong societal interest in having unique vehicles available for sale 
and use in the U.S.
    Mr. Smith indicated that he was against granting of the exemption. 
First, Mr. Smith suggested that Spyker cars are already being offered 
for sale in the U.S. Second, Mr. Smith expressed concerns that if 
Spyker is indeed experiencing economic harm, it would be unable to meet 
potential obligations related to recalls and early warning 
notifications. Third, Mr. Smith noted that Spyker has failed to provide 
proof that the C8 complies with other applicable requirements.

VI. The Agency's Findings

    Spyker is typical of small volume manufacturers who have received 
temporary exemptions in the past on hardship grounds. With limited 
resources, the petitioner developed a high-priced automobile for a 
specialty market. In evaluating Spyker's current situation, the agency 
finds that to require immediate compliance with FMVSS No. 208 and the 
bumper standard would cause petitioner substantial economic hardship, 
and could even result in the company going out of business.
    The agency concludes that the Spyker application for a temporary 
exemption demonstrates that the company has made a good faith effort to 
bring the C8 into compliance with applicable air bag and bumper 
requirements. Spyker has also demonstrated the requisite financial 
hardship.
    Traditionally, the agency has found that the public interest is 
served by affording consumers a wider variety of motor vehicles. In 
this instance, denial of the petition is likely to put Spyker out of 
business in the U.S. and cause the company to lose approximately 
$3,000,000 in potential profits.
    The term of this exemption will be limited to three years and the 
agency anticipates that the C8 will be sold in very limited quantities. 
In total, we anticipate that Spyker will sell not more than 150 
vehicles. We anticipate that with the help of revenues derived from 
U.S. sales, Spyker will be able to introduce a fully compliant vehicle 
by the time this exemption expires.
    While we disagree with Mr. Nguyen's suggestion that compliance with 
the European Union motor vehicle safety standards means that a vehicle 
need not meet applicable FMVSSs, we agree that this exemption will have 
negligible impact on motor vehicles safety because of the limited 
number of vehicles sold and because each vehicle is likely to travel on 
public roads only infrequently.
    In respect to Mr. Smith's comments, we first note that a temporary 
exemption does not excuse vehicle manufacturers from applicable 
notification and remedy requirements. This is the case with all 
manufacturers that have previously obtained temporary exemptions on 
financial hardship grounds. Second, we note that Spyker is not required 
to show proof that it complies with other applicable requirements. 
Instead, under 49 U.S.C. Chapter 301, the manufacturers are required to 
self-certify that their vehicles and equipment meet applicable 
requirements. Finally, the agency is aware that several Spyker vehicles 
were temporarily imported in the U.S. for display purposes and for EPA 
certification. Along with Immigration and Customs Enforcement, the 
agency has taken appropriate steps to insure that no Spyker vehicles 
were sold in the U.S. prior to issuing our decision on the petition.
    Because the Spyker C8 will be manufactured in limited quantities 
and because each vehicle is likely to be operated only on a limited 
basis, the agency finds that this exemption will likely have a 
negligible impact on the overall safety of U.S. highways. The agency 
notes that the vehicle subject to this petition complies with all 
applicable Federal motor vehicle safety standards.
    In consideration of the foregoing, it is hereby found that 
compliance with the requirements of S4.1.5.3 and S14 of FMVSS No. 208, 
Occupant crash protection, and 49 CFR Part 581 Bumper Standard would 
cause substantial economic hardship to a manufacturer that has tried in 
good faith to comply with the standard. It is further found that the 
granting of an exemption would be in the public interest and consistent 
with the objectives of traffic safety.
    In accordance with 49 U.S.C. 30113(b)(3)(B)(i), Spyker C8 is 
granted NHTSA Temporary Exemption No. EX 05-2, from S4.1.5.3 and S14 of 
Sec.  571.208 and 49 CFR part 581, Bumper Standard. The exemption shall 
remain in effect until June 15, 2008. In accordance with 49 U.S.C. 
30113(b)(3)(B)(i), not more than 10 Spyker C8 vehicles are exempted 
from S7 of Sec.  571.108.

    Authority: 49 U.S.C. 30113; delegations of authority at 49 CFR 
1.50. and 501.8.

    Issued on: June 29, 2005.
Jeffrey W. Runge,
Administrator.
[FR Doc. 05-13250 Filed 7-5-05; 8:45 am]
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