Interpretation ID: nht91-3.26

DATE: April 22, 1991

FROM: Paul Jackson Rice -- Chief Counsel, NHTSA

TO: Kent Morris -- President, Memory Motors

TITLE: None

ATTACHMT: Attached to letter dated 3-6-91 from Kent Morris to Paul Jackson Rice (OCC 5812)

TEXT:

This responds to your letter of March 6, 1991, with reference to compliance of your product, the M-53 replica of the 1953-55 Corvette, with Federal regulations. You have also asked two specific questions which I shall answer first.

You report that Texas does not consider a "manufacturer" to include persons assembling vehicles with any used components, and you ask whether this is correct, and whether it matters "on a national basis". We are unable to advise you on Texas law. However, whether a person is a "manufacturer" under the laws that this agency administers is determined with reference to Federal statutory definitions and not State laws. Under the National Traffic and Motor Vehicle Safety Act, a "manufacturer" is defined in pertinent part as "any person engaged in the manufacturing or assembling of motor vehicles or motor vehicle equipment . . . ." As no qualifier is used in the definition, a "manufacturer" is any person assembling more than one motor vehicle, whether or not the parts are new.

Your second question is whether production quantity has "any bearing on compliance with federal safety laws or emissions." We are unable to answer your question with respect to emissions, as relevant statutes and regulations are enforced by an agency outside the Department of Transportation, the Environmental Protection Agency. However, production quantity is irrelevant to the obligation to comply with the Federal motor vehicle safety standards, even if only one vehicle per month is produced (such as the turnkey version of the M-53). Nevertheless, the Safety Act permits low-volume manufacturers (those producing 10,000 or less new motor vehicles a year) to petition for a temporary exemption of up to three years from any standard where immediate compliance would create a substantial economic hardship for the manufacturer.

Kit cars, especially those manufactured from a combination of new and previously used parts, have presented problems of interpretation for the agency from the beginning. The root of the difficulty is that Congress apparently did not consider this type of manufacturing operation when it promulgated the Safety Act, and we have had to use the authority that was provided us to fashion interpretations on an ad hoc basis as varied fact situations arise.

With respect to the M-53, you state that it is sold both as a "kit" and as a "turnkey." As a kit, the M-53 is sold as a rolling unit, and you have enclosed a list of "Donor Parts Necessary to complete the M-53", the items that the kit purchaser must furnish. As both a "kit" and a "turnkey", a

new fiberglass body is mounted on "a used chassis from a 1978-85 Chevrolet Monte Carlo", but one that is shortened and given new side rails. The Memory kit retains the existing rear axle assembly and front end components. On the turnkey, Memory installs a new engine and a used (but rebuilt) automatic transmission.

Under our interpretations, the kit M-53, lacking an engine, is an assemblage of motor vehicle equipment, not a motor vehicle. None of the Federal motor vehicle safety standards apply to assemblages of this nature, or continue to apply to assemblage equipment items previously in use on the Monte Carlo that may have been refurbished for use on the M-53. Certain of the safety standards do apply to new equipment items. The standards that apply to components that appear to be used in the M-53 cover brake hoses, brake fluid, lighting equipment, tires, glazing, and seat belt assemblies. Thus, if your company is fabricating (or causing to be fabricated) any of these items for the M-53 kit, they must meet Federal standards that apply to them. In general, items manufactured in the United States for sale in the aftermarket ought to comply with these standards. However, the windshield and other glazing for the M-53 will be newly fabricated and you must ensure that they comply with Federal Motor Vehicle Safety Standard No. 205. In addition, as the manufacturer of the assemblage, Memory is responsible for notification of owners should an item in the kit fail to comply with a Federal standard or if the assemblage contains a safety related defect, and for remedy of the noncompliance or defect. After a kit is sold, the person completing the assemblage into a motor vehicle is legally responsible for ensuring its compliance with the Federal safety standards that apply to passenger cars, if the motor vehicle appears to be "new", as subsequently discussed.

With respect to the "turnkey" vehicle, different considerations apply. The Safety Act states that Paragraph (1)(A) of subsection (a) (which establishes the requirement that motor vehicles must comply with all applicable Federal motor vehicle safety standards) shall not apply to the sale, the offer for sale, or the introduction or delivery for introduction in interstate commerce of any motor vehicle or motor vehicle equipment after the first purchase of it in good faith for purposes other than resale" (15 U.S.C. 1397(b)(1)). The basic legal question with respect to a turnkey kit car is whether it has so deviated from the original components (such as engine and chassis), and attributes (such as VIN and original registration) of a donor car that it may be considered a new vehicle, and one for which compliance with the safety standards is legally required, or whether it has retained a sufficient number of components and characteristics to be considered a vehicle which has been previously purchased. For example, a kit car consisting of a new body on a used Volkswagen chassis, and which continues the original VW registration is considered to be a used vehicle, and one not required to conform to safety standards applicable to newly manufactured vehicles.

After review of this matter, we have decided that if the chassis of a donor vehicle has been modified to such an extent that it would no longer accept the original body, the chassis will be considered "new". Under your operation, the chassis is shortened, so that the original Monte Carlo body will no longer fit. Further, the body is new, and a new engine is used. The old Monte Carlo components retained include the rear axle

assembly and front end components. On balance, we believe that the M-53 turnkey is a "new" passenger car, and one that must comply with all today's safety standards, including the requirement for automatic restraint systems.

I hope that this information is useful to you. We appreciate your efforts to determine your responsibilities.