By: Anne Marie Ellis and Eleni Swank
Federal Motor Vehicle Safety Standards normally prohibit a person from selling any motor vehicle or motor vehicle equipment that does not comply with federal motor laws, including EPA emissions standards and FMVSS safety standards. This requires manufacturers to undergo emissions and crash testing procedures that are often extraordinarily expensive and time consuming, which has discouraged entrepreneurs from manufacturing custom vehicles in low volumes. However, in December 2015, the legislature passed the Low Volume Motor Vehicle Manufacturers Act, opening the doors for a new industry in the US—replica vehicle manufacturing.
Promising News for Replica Manufacturers: The Passage of the Low Volume Motor Vehicle Manufacturers Act
Under the Low Volume Motor Vehicle Manufacturers Act of 2015, manufacturers who fall within the definition of a replica motor vehicle manufacturer will be exempted from complying with most FMVSS safety and emissions standards. The legislation defines replica motor vehicle as “ a motor vehicle produced by a low-volume manufacturer and that (i) is intended to resemble the body of another motor vehicle that was manufactured not less than 25 years before the manufacture of the replica motor vehicle; and (ii) is manufactured under a license for the product configuration, trade dress, trademark, or patent, for the motor vehicle that is intended to be replicated from the original manufacturer, its successors or assignees, or current owner of such product configuration, trade dress, trademark, or patent rights.”
For this exemption to apply, the low volume manufacturer is treated as a vehicle manufacturer and must follow an application process to be implemented by the Secretary of Transportation. For the manufacturer’s application for the exemption to be granted, the following must be true:
- The manufacturer must not produce more than 5,000 motor vehicles per year total;
- The manufacturer must not produce more than 325 replica motor vehicles per year;
- The manufacturer must register with the Secretary of Transportation as a replica motor vehicle manufacturer when the application process opens;
- The manufacturer must affix a permanent label to the vehicle that identifies it as a replica and designates the model year it is intended to replicate;
- The manufacturer must give notice of the vehicle’s status as a replica to the dealer and first purchaser;
- The manufacturer must submit an annual report to the Secretary of Transportation regarding each vehicle produced that year after the exemption has been approved;
- The vehicle must be manufactured under a license for the product configuration, trade dress, trademark, or patent, for the motor vehicle that is intended to be replicated; and
- The vehicle must intend to resemble the body of a motor vehicle that was manufactured at least 25 years prior.
Delays in Implementation
Under the Low Volume Motor Vehicle Manufacturers Act of 2015, NHTSA was required to issue regulations necessary to implement this exemption by December of 2016. However, the application process and specific regulations have not yet been put into place as required. We recently spoke with a NHTSA representative who stated they hope to publish draft regulations in the upcoming months and hold a period for commentary, but there is no clear date when implementation should be expected to occur.
Advice for Manufacturers in the Interim
In the interim while waiting on NHTSA, replica motor vehicle manufacturers should either hold off on the manufacture of the replicas until this exemption is fully implemented, or begin complying with the regulations with the intention of applying for the exemption when it becomes available.
No matter which route a manufacturer takes, there are small steps that low volume manufactures can take to make the smoothest transition possible when the application becomes available. First, design and create labels to affix to the vehicle that identifies the vehicle as a replica and designates the year it is intending to replicate. Second, update your purchase agreement to make required disclosures to your future customers and to minimize your liability. We recommend that you add provisions to the purchase agreement that discloses whether any safety testing is done, that the manufacturer does not warrant that the vehicle will be eligible for registration by any state department of motor vehicles, and that the vehicle is a replica of a particular year and model. Third, insure your agreements with your suppliers, contractors, body shops, etc. are in order and offer clear protections. Fourth, continue to be aware of and comply with state regulations that govern replica vehicles.
This is an exciting time for replica vehicle manufacturers and we can assist you in navigating these murky waters.