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Strapped Automaker Appeals NHTSA Rule on Air Bags

By Cindy Skrzycki
Tuesday, February 22, 2005; Page E01

The National Highway Traffic Safety Administration isn't usually in the business of letting companies off the hook on federal safety requirements -- or paying attention to affairs of state. But a fledgling car company has asked the agency to do both, pleading for regulatory leniency on the grounds of economic hardship, both for the company and for the country of Romania.

Cross Lander USA wants to make and sell vehicles in the rugged sport-utility class of the Hummer H1 for the U.S. market. It has asked NHTSA to exempt it for three years from a federal requirement to provide air bags on the driver and passenger sides of the Cross Lander 244X.

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The Miami-based automaker plans to build a modified version of ARO's multipurpose vehicle, which the Romanian national company has built since 1957 to supply armies in Africa, Europe and the Far East. ARO also made custom cars for former Romanian dictator Nicolae Ceausescu and his wife, Elena.

Cross Lander completed the purchase of the ARO factory in Campulung, Romania, in 2004 for $27 million. It plans to build 10,000 vehicles when it is retooled. It expects to export 6,000 of the four-wheel-drive vehicles to the United States at a base price of about $20,000 and says it has lined up 150 U.S. dealerships to carry them. In 2004, the factory turned out 1,000 vehicles for markets other than the United States.

The company said it cannot stay afloat without mercy from the regulators.

The hitch came when the engines Cross Lander was able to purchase for its U.S.-bound-vehicles turned out to be lighter than expected, dropping the 244X into a weight class that requires air bags. (The Hummer H1, for example, does not have to have air bags because it weighs more than 5,500 pounds unloaded. Two models of smaller Hummers must.) Cross Lander said it didn't have enough cash to pay for the $2 million to $3 million design and installation of air bags. So it asked regulators to let it sell the vehicle in the United States without air bags so it can raise enough money to pay for them.

"Cross Lander has negotiated with an airbag manufacturer for the design and testing of an airbag system; however, the economic viability of this company will not allow for the immediate completion of the air bag development program without some sales in the U.S.," said the company's petition to NHTSA, which became public Feb. 9.

If an exemption is granted, the SUVs would have to be permanently labeled that they are not equipped with air bags.

In a supplemental filing with NHTSA in late January, the company said it must sell some vehicles in the United States by the end of this year. Cross Lander estimates a net loss of $108,000 in 2005 if an exemption is granted. If not, the loss would balloon to $8.5 million by next year. It does not foresee having air bags in the model until 2008.

Cross Lander also pleaded with NHTSA regulators to consider how important their decision will be to Romania, where the company said it employs 1,200 people. "Granting this petition will, at the minimum, speed the recovery of their economy by 18 months," the petition said. "This will have an extremely important impact on the Romanian people."

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