Kit Car New Law Allows for "Turn Key" Replica Cars

by Michael Satterfield

It’s a new era for the kit car industry. President Obama signed into law legislation that will permit low volume car manufacturers to produce turn-key replica vehicles for customers nationwide. The SEMA-supported provision is part of a larger highway construction bill. Rep. Markwayne Mullin (R-OK) and Rep. Gene Green (D-TX) introduced the "Low Volume Motor Vehicle Manufacturers Act of 2015" in June, legislation that SEMA has pursued since 2011. It received strong bi-partisan support and was inserted into the highway bill."With this new law, Congress has demonstrated that it understands the importance of enabling U.S. companies to produce classic-themed vehicles that are virtually impossible to build under the current one-size-fits-all regulatory framework," said SEMA President and CEO Chris Kersting. "This program will create auto sector jobs and meet consumer demand for cars that help preserve our American heritage."The low volume provision allows small automakers to construct up to 325 such replica cars a year subject to federal regulatory oversight. Replica cars resemble production vehicles manufactured at least 25 years ago. The U.S. currently has just one system for regulating automobiles, which was established in the 1960s and designed for companies that mass-produce millions of vehicles. The law recognizes the unique challenges faced by companies that produce a small number of custom cars.The measure establishes a separate regulatory structure within the National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA) for replica car manufacturers. The companies are required to register with NHTSA and EPA and submit annual reports on the vehicles they produce. The vehicles are required to meet current model year emissions standards, although companies are permitted to install engines from other EPA-certified vehicles to help achieve that requirement."This law gives enthusiasts the opportunity to buy turn-key replica cars while preserving their option to build one from a kit," said SEMA Chairman of the Board Doug Evans. "It recognizes the unique circumstances associated with limited production replica vehicles, such as the ’32 Roadster and ’65 Cobra, which are primarily used in exhibitions, parades, and occasional transportation. With the enactment of this new law, kit car companies and SEMA member companies that supply equipment and components can take advantage of this unique opportunity."Read the official text of the H.R. 22 below:H.R. 22, the "Fixing America’s Surface Transportation Act"SEC. 24405. TREATMENT OF LOW-VOLUME MANUFACTURERS.NHTSA ProvisionsEXEMPTION FROM VEHICLE SAFETY STANDARDS FOR LOW-VOLUME MANUFACTURERS.• The Motor Vehicle Safety Act is amended to add an exemption for low volume manufacturers [49 U.S.C. § 30114]• A "low volume manufacturer" is a motor vehicle manufacturer whose annual worldwide production (including by a parent or subsidiary of the manufacturer) is not more than 5,000 motor vehicles each year.• A low volume manufacturer may construct and sell up to 325 replica vehicles in the U.S. each year.• A replica vehicle is a vehicle that resembles the body of another motor vehicle produced at least 25 years ago. The vehicle is subject to a license agreement for the intellectual property rights for the replicated vehicle from the original manufacturer, its successor/assignee or the current owner of the replicated vehicle’s intellectual property rights.• Replica vehicles will be treated as an assemblage of automobile equipment and subject to any current motor vehicle equipment safety standards (lighting, tires, windshields, brake hoses, etc.). They are exempt from safety standards that apply to motor vehicles (roof crush, side impact, bumper standard, etc.). The exemption recognizes that it is impractical to apply current model year standards to vehicles designed decades ago (ex: 1930’s roadster) or crash a vehicle when only a few are being produced.• Replica vehicles are exempt from the country of original labeling requirement, fuel economy ratings and the Monroney label requirement.• Replica vehicle manufacturers are required to register with the National Highway Traffic Safety Administration (NHTSA) and file annual production reports. NHTSA has 90 days to approve or deny the registration application (and 30 more days if the application is incomplete). Once approved, a registration may be revoked if the company fails to comply with the program requirements or if NHTSA issues a finding of a safety-related defect which the company has not corrected.• A permanent label is to be affixed to the vehicle identifying the standards from which the vehicle is exempt and designating the model year that the vehicle replicates. NHTSA may require that the manufacturer provide a written notice of the exemption(s) to the dealer and first purchaser.• Aside from the provided exemptions, replica vehicle manufacturers will be treated as motor vehicle manufacturers subject to recordkeeping and defect/noncompliance notification and remedy requirements.• Replica vehicles are subject to state titling and registration laws and regulations.EPA ProvisionsVEHICLE EMISSION COMPLIANCE STANDARDS FOR LOW-VOLUME MOTOR VEHICLE MANUFACTURERS.• Section 206(a) of the Clean Air Act (42 U.S.C. 7525(a)) is amended to allow the replica vehicle to be equipped with a motor vehicle engine (including all engine emissions control equipment) which is already covered by an Environmental Protection Agency (EPA) certificate of conformity for the current model year in which the replica vehicle is produced. The replica vehicle will then be deemed emissions compliant.• The EPA will also deem the replica vehicle as being emissions compliantif the installed motor vehicle engine (including all engine emissions control equipment) has received an Executive Order from the California Air Resources Board (CARB) for the model year in which the replica vehicle is produced.• The replica vehicle manufacturer must install the engine in accordance with instructions provided by the engine manufacturer and self-certify the installation.• The replica vehicle manufacturer must affix emission control labels to the vehicle and provide the customer with emission control warranty information from the engine manufacturer, including where warranty repairs can be made, along with the EPA certificate of conformity number for the vehicle in which the engine was originally intended or the applicable CARB Executive Order (EO) number.• Replica vehicles are exempt from state-based emissions testing since the vehicles will have current model year engines.• Replica vehicle manufacturers are required to register with EPA and file annual production reports that include a description of the engine installed and the applicable vehicle certificate of conformity number or CARB EO number.• Except as otherwise provided, the replica vehicle manufacturer will be considered a vehicle manufacturer subject to applicable regulations, including being subject to civil penalties for compliance failures.NHTSA and the EPA will have 12 months after enactment to issue any necessary regulations to implement the law.