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Pagani Denied U.S. Air-Bag Hardship Waiver for $1.1 Million Car

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Aug. 4 (Bloomberg) -- Pagani Automobili SpA, the Italian supercar maker, will have to install advanced air bags in its $1.1 million Huayra gull-wing coupe after being denied a hardship exemption from the U.S. auto-safety regulator.

The U.S. National Highway Traffic Safety Administration, which said earlier this year it would stop giving waivers to an 11-year-old air bag safety regulation, denied Pagani’s exemption request in a Federal Register notice posted today.

U.S. regulation requires cars sold in the U.S. have so-called advanced air bags that have sensors to adjust deployment force based on occupants’ heights and weights. Tesla Motors Inc. and Lamborghini Holding SpA are among the limited-production companies that have won exemptions over the past five years on financial-hardship grounds.

Pagani, which said in February it hopes to sell five cars in the U.S. next year, said in a U.S. regulatory filing a denial of the air bag petition would cost it 3.2 million euros ($4.5 million) in net income from 2011 to 2014 because it wouldn’t sell vehicles in the U.S. until 2015 without a waiver.

“Although Pagani has realized profits in recent years, the company asserted that immediate compliance with the advanced air-bag requirements will cause substantial economic hardship,” NHTSA said in today’s notice. “Pagani stated that the company only operates on the cash on hand without lines of credit or debt financing, and its small profit margin is necessary to guard it from market fluctuations.”

A spokesman for Pagani didn’t immediately respond to an e-mail seeking comment sent after regular business hours.

The company estimated in the filing that developing an advanced air-bag program would cost it 4 million euros.

Tesla’s exemption is for its Roadster, for which production will end this year. The luxury electric-vehicle maker, based in Pal Alto, California, has said its Model S sedans, which it plans to sell next year, will comply with U.S. air-bag rules. Lamborghini’s last exemption expired in February.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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