Petition for Exemption From the Federal Motor Vehicle Theft Prevention Standard; Volkswagen Group of America, Inc.

Raymond R. Posten
National Highway Traffic Safety Administration
19 September 2016

[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Pages 64268-64269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22060]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration


Petition for Exemption From the Federal Motor Vehicle Theft 
Prevention Standard; Volkswagen Group of America, Inc.

AGENCY: National Highway Traffic Safety Administration (NHTSA), 
Department of Transportation (DOT).

ACTION: Grant of petition for exemption.

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SUMMARY: This document grants in full the Volkswagen Group of America, 
Inc.'s (Volkswagen) petition for exemption of the mid-size sports 
utility vehicle (SUV) line in accordance with 49 CFR part 543, 
Exemption from the Theft Prevention Standard. This petition is granted 
because the agency has determined that the antitheft device to be 
placed on the line as standard equipment is likely to be as effective 
in reducing and deterring motor vehicle theft as compliance with the 
parts-marking requirements of 49 CFR part 541, Federal Motor Vehicle 
Theft Prevention Standard (Theft Prevention Standard). Volkswagen also 
requested confidential treatment for specific information in its 
petition. While official notification granting or denying its request 
for confidential treatment will be addressed by separate letter, no 
confidential information provided for purposes of this document has 
been disclosed.

DATES: The exemption granted by this notice is effective beginning with 
the 2018 model year (MY).

FOR FURTHER INFORMATION CONTACT: Ms. Carlita Ballard, Office of 
International Policy, Fuel Economy and Consumer Programs, NHTSA, West 
Building, W43-439, 1200 New Jersey Avenue SE., Washington, DC 20590. 
Ms. Ballard's phone number is (202) 366-5222. Her fax number is (202) 
493-2990.

SUPPLEMENTARY INFORMATION: In a petition dated April 28, 2016, 
Volkswagen requested an exemption from the parts-marking requirements 
of the Theft Prevention Standard for its mid-size SUV line beginning 
with MY 2018. The petition requested an exemption from parts-marking 
pursuant to 49 CFR part 543, Exemption from Vehicle Theft Prevention 
Standard, based on the installation of an antitheft device as standard 
equipment for the entire vehicle line.
    Under 49 CFR part 543.5(a), a manufacturer may petition NHTSA to 
grant an exemption for one vehicle line per model year. In its 
petition, Volkswagen provided a detailed description and diagram of the 
identity, design, and location of the components of the antitheft 
device for its mid-size SUV line. Volkswagen stated that its MY 2018 
mid-size SUV line will be installed with its fifth generation, 
transponder-based electronic engine immobilizer antitheft device as 
standard equipment on the entire vehicle line. Key components of the 
antitheft device will include an immobilizer, engine control unit 
(ECU), instrument cluster, warning sign, reading coil and an adapted 
transponder ignition key (key fob). Volkswagen also stated that it will 
offer an audible and visible alarm system as optional equipment on its 
mid-size SUV line.
    Volkswagen's submission is considered a complete petition as 
required by 49 CFR 543.7, in that it meets the general requirements 
contained in Sec.  543.5 and the specific content requirements of Sec.  
543.6.
    In addressing the specific content requirements of 543.6, 
Volkswagen provided information on the reliability and durability of 
its proposed device. To ensure reliability and durability of the 
device, Volkswagen stated that the antitheft device has been tested for 
compliance to its corporate

[[Page 64269]]

requirements, including those for electrical and electronic assemblies 
in motor vehicles related to performance.
    Volkswagen stated that its immobilizer device is aimed to actively 
incorporate the engine control unit into the evaluation and monitoring 
process. Volkswagen also stated that activation of its immobilizer 
device occurs automatically after the engine is switched off. 
Deactivation of the immobilizer device occurs when the ignition is 
turned on or the key fob is recognized by the immobilizer control unit. 
Specifically, when turning on the ignition on/off switch, the key 
transponder sends a fixed code to the immobilizer control unit. If this 
is identified as the correct code, a variable code is generated in the 
immobilizer control unit and sent to the transponder. Volkswagen stated 
that a secret arithmetic process is then started according to a set of 
specific equations and that a new variable code is generated every time 
the immobilizer goes through the secret computing process. The results 
of the computing process are evaluated in the control unit and if 
verified, the vehicle key is acknowledged as correct. The engine 
control unit then sends a variable code to the immobilizer control unit 
for mutual identification. If all the data matches, the vehicle can be 
started.
    In support of its belief that its antitheft device will be as or 
more effective in reducing and deterring vehicle theft than the parts-
marking requirement, Volkswagen referenced the effectiveness of 
immobilizer devices installed on other vehicles for which NHTSA has 
granted exemptions. Specifically, Volkswagen referenced information 
from the Highway Loss Data Institute which showed that BMW vehicles 
experienced theft loss reductions resulting in a 73% decrease in 
relative claim frequency and a 78% lower average loss payment per claim 
for vehicles equipped with an immobilizer. Volkswagen also stated that 
the National Crime Information Center's (NCIC) theft data showed that 
there was a 70% reduction in theft experienced when comparing the MY 
1987 Ford Mustang vehicle thefts (with immobilizers) to MY 1995 Ford 
Mustang vehicle thefts (without immobilizers). Additionally, Volkswagen 
stated that the proposed device is similar to the antitheft device 
installed on the Audi Q5 and the Lexus RX vehicle lines. The agency 
granted in full the petition for the Audi Q5 vehicle line beginning 
with model year 2009, (see 73 FR 18606, April 4, 2008), and the Lexus 
RX vehicle line beginning with MY 2017, (see 81 FR 8592, February 19, 
2016). The agency notes that the average theft rate for the Audi Q5 
vehicle line using three MYs' data (MYs 2012 through 2013) is 0.5014 
respectively. There is no current theft rate data available for 
Volkswagen's new mid-size SUV line. The agency agrees that the device 
is substantially similar to devices installed on other vehicle lines 
for which the agency has already granted exemptions.
    Based on the evidence submitted by Volkswagen, the agency believes 
that the antitheft device for the mid-size SUV line is likely to be as 
effective in reducing and deterring motor vehicle theft as compliance 
with the parts-marking requirements of the Theft Prevention Standard 
(49 CFR 541). The agency concludes that the device will provide four of 
the five types of performance listed in Sec.  543.6(a)(3): Promoting 
activation; preventing defeat or circumvention of the device by 
unauthorized persons; preventing operation of the vehicle by 
unauthorized entrants; and ensuring the reliability and durability of 
the device.
    Pursuant to 49 U.S.C. 33106 and 49 CFR 543.7 (b), the agency grants 
a petition for exemption from the parts-marking requirements of Part 
541, either in whole or in part, if it determines that, based upon 
substantial evidence, the standard equipment antitheft device is likely 
to be as effective in reducing and deterring motor vehicle theft as 
compliance with the parts-marking requirements of Part 541. The agency 
finds that Volkswagen has provided adequate reasons for its belief that 
the antitheft device for the mid-size SUV line is likely to be as 
effective in reducing and deterring motor vehicle theft as compliance 
with the parts-marking requirements of the Theft Prevention Standard 
(49 CFR part 541). This conclusion is based on the information 
Volkswagen provided about its antitheft device.
    For the foregoing reasons, the agency hereby grants in full 
Volkswagen's petition for exemption for the Volkswagen mid-size SUV 
line from the parts-marking requirements of 49 CFR part 541. The agency 
notes that 49 CFR part 541, Appendix A-1, identifies those lines that 
are exempted from the Theft Prevention Standard for a given model year. 
49 CFR part 543.7(f) contains publication requirements incident to the 
disposition of all Part 543 petitions. Advanced listing, including the 
release of future product nameplates, the beginning model year for 
which the petition is granted and a general description of the 
antitheft device is necessary in order to notify law enforcement 
agencies of new vehicle lines exempted from the parts-marking 
requirements of the Theft Prevention Standard. As a condition to the 
formal granting of Volkswagen's petition for exemption from the parts-
marking requirements of 49 CFR part 541 for the MY 2018 mid-size SUV 
line, the agency fully expects Volkswagen to notify the agency of the 
nameplate for the vehicle line prior to its introduction into the 
United States commerce for sale.
    If Volkswagen decides not to use the exemption for this line, it 
must formally notify the agency. If such a decision is made, the line 
must be fully marked according to the requirements under 49 CFR parts 
541.5 and 541.6 (marking of major component parts and replacement 
parts).
    NHTSA notes that if Volkswagen wishes in the future to modify the 
device on which this exemption is based, the company may have to submit 
a petition to modify the exemption. Part 543.7(d) states that a Part 
543 exemption applies only to vehicles that belong to a line exempted 
under this part and equipped with the antitheft device on which the 
line's exemption is based. Further, Part 543.9(c)(2) provides for the 
submission of petitions ``to modify an exemption to permit the use of 
an antitheft device similar to but differing from the one specified in 
that exemption.''
    The agency wishes to minimize the administrative burden that Part 
543.9(c)(2) could place on exempted vehicle manufacturers and itself. 
The agency did not intend in drafting Part 543 to require the 
submission of a modification petition for every change to the 
components or design of an antitheft device. The significance of many 
such changes could be de minimis. Therefore, NHTSA suggests that if the 
manufacturer contemplates making any changes, the effects of which 
might be characterized as de minimis, it should consult the agency 
before preparing and submitting a petition to modify.

    Issued in Washington, DC, September 8, 2016, under authority 
delegated in 49 CFR part 1.95.
Raymond R. Posten,
Associate Administrator for Rulemaking.
[FR Doc. 2016-22060 Filed 9-16-16; 8:45 am]
 BILLING CODE 4910-59-P