Bugatti profit fear over airbag regulation
Bugatti could be driven out of business if the supercar manufacturer is forced to comply with new US airbag rules which come into force next month, the French subsidiary of Volkswagen has told safety regulators.
Bugatti told the National Highway Traffic Safety Administration in a letter last month that it would face "substantial economic hardship" from the new rules, which would require it to redesign its only model, the 1,001 horsepower €1m ($1.28m) Veyron. The cost would push up the price of the car 10 per cent and have a "catastrophic" effect on sales, it said.
Other sports car subsidiaries of major vehicle manufacturers have also petitioned for exemptions in an attempt to take advantage of a loophole designed for small carmakers.
Bugatti said in its letter it expected to lose €3.1m over the next three years even if it was exempted from the rules. If it was forced to introduce "smart" airbags, it could be forced to delay development of the next version of the Veyron, and the company's French factory would have to stop production in 2008.
"Ultimately, a denial of the petition could well put Bugatti out of business," said the letter, signed by Thomas Bscher, president. Bugatti wants a two-year exemption, giving it time to build the 150 cars it plans to sell in the US – cars it had hoped would be completed by now. Italian sister company Lamborghini warned in its letter to NHTSA that it expected after-tax profit of €1.7m next year would plummet to a €4.7m loss if its Murcielago supercar was not exempted from the rules. It said the next generation of the car, due in 2009, would meet the new airbag requirements at a cost of about €20m.
The US rules require "smart" airbags that can distinguish between adult and child passengers without seatbelts on and adjust airbag inflation for small drivers sitting further forward than is normal, to avoid injuries from the airbags themselves in a crash.
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