Interpretation ID: 1982-3.13

TYPE: INTERPRETATION-NHTSA

DATE: 10/22/82

FROM: AUTHOR UNAVAILABLE; Frank Berndt; NHTSA

TO: Rynex Industries

TITLE: FMVSR INTERPRETATION

TEXT: This is in reply to your letter of September 15, 1982, detailing a plan of business and asking our comments on its legality under the National Traffic and Motor Vehicle Safety Act, and how you might accomplish your plan.

In essence, your wish is to import newly-manufactured Volkswagen Beetles which are complete except for the engine, and which do not meet Federal motor vehicle safety standards. Your intended customers are owners of older model Beetles the engines of which would be installed in the new Beetles, while the older cars would be scrapped.

Notwithstanding the lack of engine, we would view importation of the newly-manufactured Beetles as importation of "motor vehicles" which would have to be brought into conformance with all standards applicable to new motor vehicles. If you wished simply to install a new body on the old chassis, the resulting assemblage would nevertheless have to meet the standards in effect when the original vehicle was manufactured, i.e., if the vehicle being modified is a 1971 model, it would have to continue to meet the standards that were in effect in 1971 when the new body was installed but if the chassis were manufactured before January 1, 1968, none of the standards applicable to vehicles would have to be met. If no standards applied to the vehicle, nevertheless the Federal standards that currently apply to equipment items would have to be met by those items for them to be validly imported into the country.

You have asked about these standards. They are found at Part 571 of the Code of Federal Regulations and they are: No. 106 (brake hoses), No. 108 (lighting equipment and reflectors), No. 109 (tires), No. 116 (brake fluid), No. 205 (glazing materials), No. 209 (seat belt assemblies), and No. 211 (wheel covers and nuts).

In essence, while you term your business the "repair and restoration" of Beetles, you are neither repairing nor restoring an older motor vehicle, but simply planning to sell a vehicle that is entirely new except for its engine. It must therefore be treated as a new motor vehicle.

SINCERELY,

Rynex INDUSTRIES

September 15, 1982

Frank A. Berndt, Esquire Chief Counsel, Office of the Administrator National Highway Traffic Safety Administration

Dear Mr. Berndt:

Rynex Industries, an individual proprietorship which is the d/b/a of the undersigned and is registered with the Saratoga County Clerk, Ballston Spa, NY 12020, desires to begin a business project as an importer of new motor vehicle parts and equipment with a view toward providing a unique repair and restoration service for a specialized group of Volkswagen Beetle owners. We apply herewith for a legal determination in terms of which we will become able to complete and implement our business plan in a manner such that we would remain characterized by NHTSA as an importer of new automotive parts and equipment for the repair and restoration of existing VW Beetles, and not become characterized instead as an importer of new VW Beetles for resale.

OUR CUSTOMERS

Members of the customer group we wish to serve regard their Beetles not as mere transportation until they are no longer dependable, but as "members of the family" whose welfare, function, and concept must be perpetuated. They are hard-core Beetle Buffs who begin where others give up in their attempts to continue driving their faithful but aging Beetles.

Each such customer would like most of all to purchase a bew Beetle, but cannot because none have been imported here since 1979. Some have taken their Beetles to re-conditioning ("re-con") shops for restoration, but have been quoted prohibitive prices there without credible guarantees of quality results commensurate with the prices. Therefore, Rynex desires to fill this obvious need for repair and restoration service in a very economical manner by importing the necessary new body-chassis assemblies from countries where the Beetle is still being manufactured.

OUR PROPOSED BUSINESS PROCEDURE

We are tentatively planning to conduct our importing business according to the following basic procedures:

1) Upon receipt of a customer order for a Beetle body-chassis assembly, Rynex would forward the order to the foreign manufacturer.

Rynex would simultaneously forward to the customer an acknowledgement of the order together with complete instructions for the service garage designated by the customer.

2) The manufacturer would ship the assembly with Rynex's Customs declaration directly to the customer's service garage for us by dropshipment, through a suitable freight-forwarding firm if necessary, on and for the account of, and in the name of, Rynex Industries.

3) Upon receipt of the new assembly, the garage would remove the engine from the customer's old Beetle and install it in the new assembly.

4) In compliance with applicable state regulations, the garage would also transfer the chassis number from the old assembly to the new one, together with the license number plates.

5) The garage would then make all necessary modifications to the new assembly to bring it into full compliance with applicable NHTSA Equipment Standards, and with applicable state inspection standards for the condition and performance of automotive equipment.

6) The garage would then apply a complete undercoating treatment to the new assembly to prevent the recurrence of rust damage.

7) The garage would then road-test the restored Beetle and return it to the customer.

8) The garage would then take possession of the customer's old body-chassis assembly and dismantle it for parts and scrap metal, because the customer would no longer need it, because it would no longer have an identification number, and because it would probably have become unsafe for continued use by anyone.

9) The customer would then apply to his underwriter for "stated amount" comprehensive, fire, theft, and collision (Coverage D) insurance to protect the larger equity he or she would then have in the restored Beetle.

10) The customer would then contact his or her state motor vehicle bureau concerning changes in registration. However, this step would be unnecessary unless the color of the restored Beetle were different, inasmuch as the customer would have legally the very same car described on his registration certificate or title. He would have the same engine and engine number, same license number plates, same chassis number in particular; and of course the make, year, model, and all other required information would be the same.

WHY BODY AND CHASSIS MUST BE REPLACED TOGETHER

We must point out why it would be necessary to restore a VW Beetle in this manner by replacing the body and chassis as a unit, and never by attempting to replace just one or the other. It is a fact that an aging Beetle is subject to severe and irreparable rust damage to both members all around the bottom edge precisely where the body is joined to the chassis. This rust damage, once it appears in an aging Beetle, continues until the entire assembly is unsafe -- the driver's seat and/or the battery might begin to come through the floor pan, for example.

Therefore, to render worthwhile and thoroughgoing service to the customer and in the public interest of highway safety, Rynex must replace the entire body-chassis assembly for each customer, and must provide undercoating to prevent rust damage to the new assembly. However, the customer would benefit not only from gaining this essential safety, but also from having his or her repaired and restored Beetle become as much like a new car as possible, as it would indeed become with a complete new body-chassis assembly.

THE LEGAL HELP WE THINK WE NEED

Desiring as we do to comply with all Federal regulations which would apply to this business project, it appears to the undersigned that we would need to learn at least the following through a legal determination:

1) On Form HS-7, 39 CFR 12.80, the Customs declaration, we would check paragraph 7 and the box therein to declare that our automotive equipment was being imported for repairs and alterations, in accordance with the statement to be attached to the HS-7, which statement would describe fully the use and final disposition to be made of the merchandise. We would need advice concerning, in view of our business procedure described above, the exact content our attached statement should have in order to satisfy Customs officials so that they could admit our shipments without delay.

2) Our proposed business plan calls for the importing-to-order of a VW Beetle complete except for the engine, which we have called herein a "body-chassis assembly". Our question about doing this would be whether we could do precisely that, or whether we would have to import a less-complete body-chassis assembly and have the customer retain and re-use more of the parts from his old car, in order that we sustain our characterization as an importer of automotive equipment for repair and restoration; in this latter event, we would need to know which parts in addition to the engine the customer would have to retain and re-use.

3) We would need a list of the NHTSA Equipment Standards which the body-chassis assemblies we would import would have to meet -- such as those for lamps, tires, brake fluid, window glass, and the like. These equipment items could be brought into compliance after being imported, or be specially ordered to be in compliance when imported, if necessary.

We therefore request a legal determination concerning the viability of our plans as described above for conducting our importing business for the repair and restoration of VW Beetles, and concerning changes which you might decide that we would have to make in our plans before we proceed further.

Donald F. Conine President