Replica Car Sales on Hold Due to Bureaucratic Red Tape

SEMA News—August 2018

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

Replica Car Sales on Hold Due to Bureaucratic Red Tape

SEMA Seeks to Jumpstart Production

  Replica
Highly anticipated consumer sales of replica cars have been on hold since 2016 as the National Highway Traffic Safety Administration (NHTSA) procrastinates over a regulation to implement the 2015 replica car law.
   

Highly anticipated consumer sales of replica cars have been on hold since 2016 as the National Highway Traffic Safety Administration (NHTSA) procrastinates over a regulation to implement the 2015 replica car law. Enacted three years ago, the law allows low-volume car manufacturers to each produce and sell up to 325 turnkey replica vehicles in the United States and a total of 5,000 worldwide under a simplified regulatory system. Consumers will be able to purchase turnkey cars that resemble production vehicles manufactured at least 25 years ago, including ’30s-era hot rods and ’60s-era Cobras. However, manufacturers and consumers alike are forced to wait until NHTSA produces regulations implementing the law.

Enacting bills into law in Washington, D.C., is a challenging process and usually takes time—four years, in this case. In 2011, SEMA worked with former U.S. Rep. John Campbell (R-CA), a car dealer by trade, to introduce the Low Volume Motor Vehicle Manufacturers Act. After Campbell retired, U.S. Reps. Markwayne Mullin (R-OK) and Gene Green (D-TX) championed the bill in 2015, along with U.S. Senators John Tester (D-MT) and Dean Heller (R-NV). The legislation was ultimately included in the FAST Act highway bill, which became law in December 2015.

Replica
Factory Five ‘33 Hot Rod.
 
Mustang
Revology Mustang GT 2+2 Fastback.
 

The FAST Act directed NHTSA to issue any necessary regulation by December 2016. Since the law was already very detailed, the only requirement was for NHTSA to develop a way for companies to register with the agency and file annual reports. NHTSA officials have indicated that they won’t likely issue a final rule until at least 2019. SEMA is pressing for October 1, 2018, a start date for the ’19 model year.

The replica car isn’t a new idea. Such vehicles have been marketed for decades as “kit cars,” where a manufacturer sells car parts, frequently assembled, and the buyer installs the engine/transmission. While states have often regulated kit cars by the model year they resemble, until now the federal government viewed a manufacturer-completed replica car to be a current model-year vehicle. That means NHTSA would regulate a ’33 replica by 2018 standards—a virtual impossibility to achieve.

  IconICON BR.
  DeLorean
DeLorean.

Low-volume vehicle manufacturing has been nearly non-existent in the United States for almost 50 years. When NHTSA was established in the ’60s, it designed just one system for regulating automobiles. It covered companies producing millions of cars. While many other countries set up rules for low-volume production, NHTSA chose not to pursue a program. The U.S. Congress finally intervened at SEMA’s request and established the replica car program.

The new law recognizes the inherent differences between mass-produced and custom-built cars and directs NHTSA to lift the regulatory and paperwork burdens. As a result, small companies will be able to produce a limited number of replicas that will be subject to NHTSA equipment standards (tires, lighting, glass, etc.) but not vehicle-based standards.

The replica cars will be clean cars, meeting current model-year emissions standards. The replica car law provides manufacturers with two options: They can install a current model-year engine system already used in a vehicle certified by the U.S. Environmental Protection Agency (EPA) or an engine package approved by the California Air Resources Board (CARB). By October, the EPA will be issuing SEMA-supported guidelines on demonstrating compliance. CARB is issuing an Executive Order (EO) regulation covering engine packages produced or sold in California. The CARB regulation will be an expansion of an existing EO engine-package rule for individuals who want to complete kit cars or specially constructed vehicles. It is expected to be finalized by October.

SuperformanceSuperformance MKIII.  
   

It should be noted that the new law complements the existing kit-car industry. Hobbyists will still have the freedom to assemble their own vehicles with the engine packages of their choice. The law simply provides consumers with the opportunity to buy completed replica cars.

The law was intended to create sales opportunities for companies throughout the supply chain, increase jobs and open new markets. It is time to start those engines of commerce—and replica cars.

For more information on the new law, visit the replica car page on SEMA’s website at www.sema.org/replica.

Replica Car Law—Questions and Answers
Why was this law necessary? Until 2015, all motor-vehicle manufacturers were treated the same, regardless of whether a company produced five cars or 500,000. Federal law now requires the NHTSA to recognize a simplified regulatory program that takes into account the unique differences between a company that mass-produces thousands of cars and one that handcrafts a limited number.

What is a low-volume manufacturer? A low-volume manufacturer is a company whose annual worldwide production (including by a parent or subsidiary of the manufacturer) is not more than 5,000 motor vehicles each year. These companies will each be able to sell up to 325 “replica” cars annually in the United States.

What is a replica vehicle? A replica vehicle resembles the body of another motor vehicle produced at least 25 years ago. The company producing a replica must obtain a license agreement from the original manufacturer, its successor/assignee, or be the current owner of the replicated vehicle’s intellectual property rights. Examples of popular vehicles that may will be replicated are ’30s Roadsters, ’40s Willys, ’60s Cobras and Mustangs, and ’80s DeLoreans.

What rules/regulations apply to replica cars manufacturers? The company producing replica vehicles is subject to NHTSA’s equipment standards, including lighting, brake hoses, glass and tires. However, the vehicles 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.

How will this law impact kit car hobbyists/consumers? Hobbyists will still have the freedom to assemble their own vehicles from kits if they prefer, including modern-era cars. The law expands the market of who can purchase a replica car to include those who don’t have the time or skills to complete a kit car. In short, this law means more business opportunities for the industry and more choices for consumers.

Will I be able to title/register the car? SEMA has worked with the states to establish specific categories for titling, registering and regulating vehicles called kit cars, street rods, customs and specialty constructed vehicles—categories that should also apply to completed replicas. The laws in many states allow these vehicles to be registered and titled by the model year of the production vehicle they replicate. For more information on the laws in your state, visit the “Titling & Registration” page on the SEMA Action Network’s website, www.semasan.com.
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