Sales of new classic cars and SUVs stalled in regulatory limbo

A change to U.S. law could open the door to a flood of companies building new versions of classic vehicles like the ‘ 65 Ford Mustang, first-generation Ford Bronco, ‘ 63 Chevy Corvette Stingray and ‘ 60s-80s Toyota FJ Land Cruisers.

But first, the National Highway Traffic Safety Administration must issue a regulation required by the law, which has been on the books for nearly four years. Businesspeople involved say that’s the only thing keeping a new industry from growing.

Tom Scarpello, CEO of Revology Cars, which restores classic Mustangs at about $180,000 apiece, expects his Orlando, Florida, company to expand almost immediately when NHTSA sets the rules for what safety features the replicas must have.

“We just need to find a bigger building,” he said. “In less than a year, we could double, triple or quadruple our business,” from the three restored classic Mustangs Revology currently builds each month.

Nationwide, the law could create $ 120 million-$ 150 million a year in U. S. sales and several times that much from exports, according to the Specialty Equipment Market Association, which represents parts and vehicle makers for classic and modified cars, trucks and motorcycles.

“Investors see the potential the law has to create a new business segment,” Scarpello said.

Customers waiting

Loosely referred to as the Replica Car Bill, the law was part of a package President Barack Obama signed into law on Dec. 4, 2015. The law called for the Environmental Protection Agency (EPA) and NHTSA to create regulations to guide companies making new versions of classic vehicles. The EPA did its part, signing off on engine, transmission and emissions packages that meet current standards and can be used in replica cars, said Stuart Gosswein, SEMA director of government affairs. SEMA is suing NHTSA to allow manufacturers to start making replica cars immediately.

“We have a lot of eager customers waiting to order their cars,” Gosswein said. “We expect there to be 20-30 cars making up to 1,500 replicas a year” for U.S. customers. The law allows each company to sell up to 5,000 vehicles annually, with a limit of 325 in the U.S.

“The agency is aware of the filing but does not comment on matters relating to pending litigation,” said a spokesman for the U.S. Department of Transportation, which includes NHTSA.

Bringing a classic car into rough compliance with modern standards isn’t easy, but you can argue the EPA’s half of the process was simpler than NHTSA’s. Emissions standards are ameasurable goal. Safety is a fuzzier concept.

SEMA argues the cars must meet standards for features like lights and brakes. “Modern” advances like antilock brakes, shoulder belts — or in the case of classics like the ‘32 Ford, any seat belt at all — should be left to the maker’s discretion.

Let the buyer beware

“The customer for these vehicles knows what they’re buying and how it should be used,” Gosswein said. Essentially, SEMA believes the cars will be used occasionally by drivers who know what they’re getting into. A 45-year-old CPA on a Saturday jaunt in an $80,000 Stingray replica is less likely to drive like an idiot than a 16-year-old in a Hyundai Tiburon. Caveat emptor.

Companies can currently sell classics without those features because regulations distinguish between “restored” vehicles — those built when the car was new and refurbished or fitted with modern engines, audio systems, etc. — and replicas, which are brand new vehicles built to the specifications of the original. Basically, if you’ve got a piece of metal attached to the vehicle identification number (VIN) of an old vehicle, you can build anything you like around it. Without a VIN, specialty companies can build a “rolling chassis” a replica without an engine. The customer can add an engine and have a drivable car. The company can’t.

It’s an arbitrary distinction SEMA argues is blocking the creation of a small industry of replica car builders.

Clarity from NHTSA would reduce prices and increase supply of new versions of classic vehicles, Scarpello said. “Restoring old vehicles isn’t a scalable, predictable business, because it’s dependent on finding the old vehicles. To do it at any kind of reasonable price, you’ve got to have a predictable business model.

“The law could create a new market for specialty reproduction vehicles.”

Contact Mark Phelan: 313-2226731 or mmphelan@ freepress.com. Follow him on Twitter @mark_ phelan. Read more on autos and sign up for our autos newsletter.