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

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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.


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.Start Printed 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,, 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 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.

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(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.

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[FR Doc. 02-30733 Filed 12-3-02; 8:45 am]