Saleen, Inc., of Irvine, California, has applied for a temporary exemption of two years from the automatic restraint requirements of Federal Motor Vehicle Safety Standard No. 208 Occupant Crash Protection. The basis of the request is that compliance would cause substantial economic hardship to a manufacturer that has tried to comply with the standard in good faith. 49 U.S.C. 30113(b)(3)(B)(i).

We are publishing this notice of receipt of an application in accordance with the requirements of 49 U.S.C. 30113(b)(2). This action does not represent any judgment of the agency on the merits of the application.

Saleen refers to itself as a “small volume US manufacturer which currently produces the Saleen S281 and the XP8 Explorer.” Saleen receives completed and certified Mustangs and Explorers from Ford Motor Company drop shipped at the direction of the dealers who own them. Saleen adds a supercharger, makes “other minor engine modifications, front and rear bumper outer skin designs, the seat trim, [upgrades] the tires, wheels/suspension/brakes, and [adds] appliques to the exterior and interior of the vehicle. Saleen does not make any structural changes to the Mustang or the Explorer.” Under NHTSA regulations, Saleen is considered an alterer, rather than a manufacturer, since it modifies previously certified vehicles. (See 49 CFR 567.7). Although it may have altered several hundred Ford vehicles in the year preceding the filing of its application, we do not regard Saleen as a “manufacturer.”

The company now wishes to become a manufacturer of a motor vehicle of its own design. As the vehicle has not entered production, Saleen has manufactured no motor vehicles in the year preceding the filing of its application. The vehicle is called the S7 and is a “two seat, coupe, sportscar.” The S7 has been shown in prototype form at automobile shows around the country. The prototype does not fully comply with the lighting requirements of Motor Vehicle Safety Standard No. 108, Lamps, Reflective Devices and Associated Equipment, but Saleen assures us that the next prototype and the production models to follow will meet Standard No. 108 and all other standards as well, with the exception of the automatic restraint requirements of Standard No. 208, paragraph S4.1.5.3.

Saleen has asked for a three-year exemption for the S7 and anticipates that it will sell a total of 112 of them by the end of 2003. According to the petition, preliminary compliance-related development of the S7 was started in July 2000. By the time it filed its petition in December 2000, the company had “spent an estimated total of 180 man-hours and $18,000 relating to the installation of a driver and passenger side airbag system on the S7.” The monies spent thus far “have been in the areas of exterior and interior design necessary for the installation of airbags.” It has been advised that the airbag development process would cost approximately $1,000,000 not including the cost of test prototype vehicles and airbags, and tooling. This process cannot be completed by the time the company expects to launch the S7, in the summer of 2001. Indeed, the company estimates that it will take up to 20 months to fully develop a system and that the total costs will approach $3,000,000.

Saleen has cumulative net losses before taxes for the past three fiscal years of $9,716,334. It states that it “simply cannot afford to develop the air bags in either the first (2001)or second (2002) year” because of these losses. The company “has exhausted all of its borrowing capacity and must sell and ship S7 vehicles (as well as its other products) to generate cash flow sufficient to defray airbag development costs as well as other S7 development costs.” Although “funding for the S7 was secured through a private investor,” it states that “all further funding for airbags must come from our ordinary income.” Even with an exemption, Saleen projects net losses continuing through the end of the period though earnings before interest, taxes, depreciation and amortization would be positive. It plans to spread out air bag development costs over the next three years to achieve compliance by the end of the exemption period. If the petition is denied, the company believes that it would lose credibility with dealers and negatively impact the demand for altered Saleen vehicles.

The company argues that a temporary exemption is in the public interest because the S7 “is a unique super car designed and produced in the US utilizing many US sourced components.” An exemption would also allow it to maintain its payroll of 122 full time employees and to continue its purchase of US sourced components for the Mustangs and Explorers that it modifies. Its business with US suppliers “indirectly provides employment for several hundred other Americans.” An exemption is consistent with vehicle safety objectives because the S7 otherwise will conform to all applicable Federal motor vehicle safety standards.

Interested persons are invited to submit comments on the application described above. Comments should refer to the docket number and the notice number, and be submitted to: Docket Management, Room PL-401, 400 Seventh Street, SW., Washington, DC 20590. It is requested but not required that 10 copies be submitted.

All comments received before the close of business on the comment closing date indicated below will be considered, and will be available for examination in the docket at the above address both before and after that date. The Docket Room is open from 10:00 a.m. until 5:00 p.m. To the extent ( printed page 20521) possible, comments filed after the closing date will also be considered.

Notice of final action on the application will be published in the Federal Register pursuant to the authority indicated below.

Comment closing date: May 23, 2001.