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Arnold Chatz Motors: Arnold Chatz

Entrepreneur talks to Arnold Chatz about Alfa Romeos, motor racing and how to build a personal brand that stands the test of time.

Juliet Pitman

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Arnold Chatz of Arnold Chatz Motors

If Obama’s presidential campaign has anything to teach business, it’s the about the power of the personal brand. Political beliefs don’t win elections; people do, which is something every astute politician understands. So while the American public may have been ready for a Democrat to take up a term in office again, it was the man, not the political party that swung people’s votes. What Obama did right was to use his name and personal values as a platform, and to create a brand that resonated with people on a personal level. He gave them a personal touchstone they could relate to and believe in.

It’s not a new recipe for success, in either politics or business, but it is a powerful one. Nelson Mandela and Richard Branson are prime examples of people who’ve used it particularly well. And on a less grandiose scale it’s what Arnold Chatz, South African entrepreneur, motor racing driver and self-confessed ‘car nut’ built a business on. Over a career that spanned more than 40 years, he built a reputation and personal brand that still stands today. It’s weathered massive changes to the motor manufacturing industry, the arrival and departure of various brands to and from the country, amalgamation into a large listed corporate and finally the buy-out and re-establishment as an independent business. What have remained constant are the brand attributes and ability to deliver on the brand promise. Now retired, Chatz looks back on what’s made him most proud. “What’s important to me, and I think I can speak with a fair degree of confidence on this, is that I enjoyed a good reputation. I doubt if there are many people who would say they ever had a conflict with me. In my 42 years of active business in the motor industry, I never once briefed an attorney. I would rather not do a deal than risk losing my reputation,” he says.

That reputation – or personal brand – was built on two core factors: genuine passion and an understanding of how to treat customers.

“But it all started with passion,” says Chatz, “I was absolutely besotted with cars. I loved everything about them. I overhauled the engine of my mother’s car when I was just 15. I suppose it was an innate thing, but I always knew it was what I wanted to follow.” After he matriculated, Chatz joined a finance company run by family friends in Krugersdorp. “Being a finance company, they had repossessions which they needed to sell. They knew about finance and I knew about cars, so I started off with them in a used car operation,” he says. With his eye ever on the motor industry, Chatz noticed a new arrival to the South African commercial vehicle market while working in the used car business. “Datsun, which was the predecessor of Nissan, brought out this little Japanese vehicle that could carry a ton. Compared to the American ¼ ton vehicles, it was so small, and I was so impressed with it that I called up the importer of the vehicles and asked if I could have the franchise. He said yes, I bought four vehicles and sold them within two to three days. Within six months, we were selling 40 units a month. That little car turned out to be the first really big-volume Japanese vehicle. It just took off,” he relates.

At the same time, Chatz was pursuing his personal passion for motor racing.  “I was a racing enthusiast and had got involved with a friend of mine, Basil van Rooyen, as his assistant spanner man. He asked me if I’d like to drive a race or two with him and use his car in one or two club events so I started racing,” he explains. By 1961 Chatz had been noticed by the Lawson Motor Group, which had acquired the Renault agency for Johannesburg and offered to sponsor the running of his vehicle if he raced one of their cars. A year later, Chatz applied for and was granted the Alfa Romeo dealership and handled both brands at the Krugersdorp branch. It was the beginning of a lifelong love affair with the Alfa Romeo brand. In 1968 the company approached him to be their works racing driver and a year later he was granted the dealership for the Johannesburg northern suburbs area. “We were selling a lot of vehicles into Johannesburg from our Krugersdorp branch, and when one of their dealers defaulted and the opportunity opened up for me to expand, I jumped at it,” says Chatz.

The net effect of this brand association was that Arnold Chatz built a reputation, in racing and in business, as ‘the Alfa Romeo man’. “People still remember me as the guy who raced and sold Alfa Romeos. Today they still come up to me and tell me that,” he says.

The fit was a natural one. Alfa Romeo was a niche brand that appealed to motoring enthusiasts, many of whom Chatz got to know on the race track. “Alfa Romeo customers liked to deal with people who knew about cars, which I did,” he said, “They knew if they didn’t find me on the showroom floor, they’d find me in the workshop.”Perhaps more than anything, it was this personal touch that appealed to Chatz’s target market. “Alfas were never a high volume seller and the people who bought them wanted special attention. We were as passionate in our workshop about cars as the customers were, and I think that kind of enthusiasm is either there or it’s not. It can’t be faked,” he explains.

Unsurprisingly, the biggest challenge for the business was finding the right people. Living out personal values might come naturally to a leader, but the real challenge lies in getting other people to follow suit. “I think the secret lay in teaching staff how to handle customers. When you’re running a big business, things don’t always go right all of the time. The important thing is to make sure your people know how to manage customer relations when things go wrong. First of all you must know how to talk to people. You must know how to receive them if they are unhappy – with empathy.  When things go wrong all people want is for you to fix their problem with as little further irritation as possible,” Chatz explains, adding, “My instruction to the switchboard was to answer in three rings and to never ask who wanted to speak to me. If someone wanted to speak to me, they were to be put through.” Chatz was granted permission to trade as Alfa Romeo Cars, which was unusual at the time. And his public image as a racing champion was also being entrenched as he won the Saloon Car Championships in 1972, 1975, 1977 and 1979. “I was lucky in that I had a public profile in racing apart from my business, which made my name become synonymous with Alfa Romeo. I had a lot of lucky breaks which I suppose is the story with anything. You need to be in the right place at the right time,” he says. It also helped that motor racing provided the South African public with much-needed live entertainment and attracted an enormous following. “Remember that television only arrived in 1975 and then only for a few hours a day, so when there was a race on at Kyalami, people would camp over the night before just to get a good vantage point,” he says.

 

But while Chatz undoubtedly happened to be the right person with the right skills in the right place at the right time, he also understood the importance of marketing his reputation and harnessing the power of his public image. “I did all my own radio adverts, and I’d always end them with ‘And remember, when you call, please call me Arnold.’” Stretching his marketing buck, Chatz also took out a small advert every two days in the main body of the daily newspaper. “It was really simple and really economical but it worked. Everyone became aware of our existence,” he explains. The Arnold Chatz name may not yet have been on the outside of the building, but the brand was gaining traction and the public was left in no doubt about the identity of the man behind the business.


Changing gears

Alfa Romeo granted Chatz sole representation for the area north of Braamfontein, and eventually a dealership in the city as well. “My payoff line then was ‘Arnold Chatz is Alfa Romeo’, which used to drive the other dealers mad,” he recalls. At the height of his success, Chatz was selling over 175 cars a month, an impressive volume for the time and the brand. But then in 1985 everything changed. Alfa Romeo took a decision to withdraw from South Africa. “It broke my heart because the brand was my life. It was in my veins,” says Chatz. With his name so closely associated with Alfa, Chatz faced the real prospect of losing the brand equity he’d worked so hard to build. It was a challenge he managed to turn to his advantage, once again employing the power of smart marketing. “Everyone wondered what brand we were going to go with, and even if such a transition was possible, after having been the Alfa Romeo people for so long. So I started a billboard teaser campaign during the five-month Alfa wind-down period. Instead of ‘Arnold Chatz is Alfa Romeo’, the billboards read ‘Arnold Chatz is (?)’.”

When he eventually filled in the blank with ‘Nissan’, people were more than a little surprised. “It was a very different market to Alfa Romeo. Nissan was commercially-orientated, was into the fleet business, wasn’t a niche specialised vehicle and it didn’t have a strong presence in the Northern suburbs, which had become my stamping ground. But I’d had a long-standing pleasant relationship with Datsun, which had become Nissan, and I felt it was the right move,” he says. So the Alfa Romeo signs came down, the Arnold Chatz Cars signs went up and Chatz changed his strategy to suit an entirely new market. He won over some of the biggest fleets in the country, including the entire Automobile Association fleet, eventually becoming one of the largest Nissan dealerships in South African. Within a few years, Nissan brought out models like Car of the Year-winner, Maxima, and the 300ZX, which appealed to the northern suburbs market. “By that time, the Arnold Chatz name had become associated not only with the Alfa Romeo brand, but with good customer service and integrity, and I think it was this brand equity that made the transition surprisingly easy,” he relates.

The 1990s ushered in a new era for the business. “Nissan approached Fiat to bring the Uno into South Africa, and with Fiat being the parent company of Alfa Romeo, it was a natural progression for Nissan South Africa to get Alfa Romeo in 1995 when the brand came back to us,” Chatz explains. A year later, the company was approached to join Super Group for a listing. “I agreed to stay on with them for four years and then retire, which I did, but it was a very very difficult period for me. Being part of a large corporate with 26 dealerships is a very different game to running your own operation, but we made a success of it,” Chatz says. Before joining the Super Group, Chatz had taken on a partner in Derik Scorer, formerly from Fiat, and originally brought into the business to turn around the struggling Krugersdorp Nissan dealership. “Derik is a very, very smart man. He took that dealership from under 10 units a month, to 40 units a month and eventually became Nissan South Africa Dealer of the Year. After we joined Super Group he ultimately went on to become Managing Director of their Motor Division,” Chatz explains.

Three years ago, well after Chatz’s retirement in 2000, Scorer bought back the Arnold Chatz brand and original Hyde Park dealership from Super Group and went on his own. Chatz relates: “He called me up and told me he wanted to re-inject the original passion into the brand and asked if I’d help him, which I was more than happy to do. I am retired but I still read his ads for him and I am often in the dealership.” He concludes, “People still walk in and tell me they bought their first Alfa Romeo from me and are back to buy another. It gives me a great sense of satisfaction and continuity.”

Juliet Pitman is a features writer at Entrepreneur Magazine.

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Entrepreneur Profiles

6 Lesson Gems From Appanna Ganapathy That Helped Him Launch A High-Growth Start-Up

Twenty years after first wanting to own a business, Appanna Ganapathy launched ART Technologies, a business he aims to grow throughout Africa, starting with Kenya thanks to a recently signed deal with Seacom. As a high-growth entrepreneur with big plans, Appanna spent two decades laying the foundations of success — and now he’s starting to collect.

Nadine Todd

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Like many entrepreneurs before him, Appanna Ganapathy hadn’t even finished school and he was already thinking about his first business venture. A friend could secure the licensing rights to open Nando’s franchises in Mozambique, and they were very keen on the idea — which Appanna’s mom quickly dampened. “You can do whatever you want,” she said. “As long as you finish your degree first.”

Unlike many other entrepreneurs however, Appanna not only finished his degree, but realised that he had a lot of skills he needed to develop and lessons to learn before he’d be ready to launch the business he wanted.

“We launched ART Technologies just over two years ago. If I had started any earlier, I don’t think I would have been as successful as I am now,” he says.

Here are six key lessons that Appanna has learnt along his journey, which have allowed him to launch a high-growth start-up that is positioned to make an impact across Africa.

1. You don’t just need a product – you need clients as well

Business success is the ability to design and execute a great product and solution, and then be able to sell it. Without sales, there is no business. This is a lesson Appanna learnt while he was still at university.

“I was drawn to computers. I loved figuring out how they worked, playing computer games — everything about them,” he says. “My parents lived in Mozambique, and during my holidays I’d visit them and a friend who had a computer business. I helped him assemble them and thought I could do this too while I was studying. I convinced my dad to buy me a car so that I could set up my business — and never sold or assembled a single computer. I delivered pizzas instead.”

So, what went wrong? The simple truth was that at the time Appanna had the technical skills to build computers, but he lacked the ability to sell his product.

“If someone had said, ‘I’ve got an order for 30 computers’, I would have filled it — but to go out and get that order — I didn’t really even know where to start.”

2. Price and solution go hand-in-hand

As much as you need the ability to sell your solution, you also need a market that wants and needs what you’re offering, at a price point that works for everyone.

In 2007, Appanna was approached by a former supplier whom he had worked with while he was based in Mozambique. The supplier had an IT firm and he wanted to expand into South Africa. He was looking for a local partner who would purchase equity shares in the company and run the South African business.

“I loved the opportunity. This was something I could build from the ground up, in an area I understood well,” says Appanna. The firm set up and managed IT infrastructure for SMEs. The value proposition was simple: “We could offer SMEs a service that they could use for a relatively low cost, but that gave them everything an enterprise would have.”

The problem was that although Appanna and his team knew they had a great product, they were competing on price with inferior products. “If we couldn’t adequately unpack the value of our solution, an SME would choose the cheaper option. It was a big lesson for me to learn. It doesn’t matter how good the solution is that you’re offering — if it’s not at a price point that your target market accepts, they won’t choose you.”

It was this understanding that helped Appanna and his team develop the Desktop-as-a-Service solution that ART Technologies now offers the SME market.

“While I was developing the idea and the solution, I needed to take three key things into account: What do SMEs need from an IT infrastructure perspective, what is the most cost-effective way to offer them that solution, and what will the market pay (and is it enough to cover our costs and give us a small profit margin)?”

Appanna’s experience in the market had already taught him how cost-conscious SMEs are, and so he started developing a solution that could deliver value at a price point SMEs could accept. His solution? A unique Desktop-as-a-Service product that combines all the processing power and Microsoft products a business needs, without any capex outlay for servers or software.

“It’s a Cloud workstation that turns any device into a full Windows computer,” Appanna explains. “We hold the licences, and our clients just access our service. A set-up that would cost between R180 000 and R200 000 for 15 users is now available for R479 per user per month.”

It took Appanna and his partners time to build the solution, but they started with the price point in mind, which meant a solution could be designed that met their needs as well as the needs of the market.

“Too many businesses set everything up, invest in the solution, and then discover they can’t sell their product at the price point they need. My time in the market selling IT and infrastructure solutions gave me invaluable insights into what we needed to deliver on, and what we could realistically charge for our service.”

3. Get as much on-the-ground experience as you can

appanna-ganapathy-art-technologies

The time that Appanna spent building the IT firm he was a part-owner of was invaluable. “I started as a technical director before being promoted to GM and running the company for three and a half years. Those years were very, very important for me. They’re where I learnt everything about running a business.

“When I started, I was responsible for sales, but I didn’t have to actually go out and find clients, I just had to meet them, compile quotes and handle the installations. Everything I did was under the guidance of the company’s CEO, who was based in Mozambique. Being the guy who did everything was the best learning ground for me. It set me up for everything I’m doing today. In particular, I learnt how to approach and deal with people. Without people and clients your business is nothing.”

Appanna didn’t just learn by default — he actively worked to expand his understanding of all facets of the business. “At the time I wasn’t planning on leaving to launch my own business,” he says. “I was a shareholder and I wanted to grow that business. That meant understanding as much as possible about how everything worked. If there was something I wasn’t sure of — a process, the numbers, how something worked — I asked. I took personal responsibility for any errors and got involved in every aspect of the business, including areas that weren’t officially ‘my job’. I wanted to really grow and support the business.”

4. Stay focused

Interestingly, while the experience Appanna has accumulated throughout his career has allowed him to build a high-growth start-up, it also taught him the importance of not wearing too many hats as an entrepreneur.

“I’m glad I’ve had the experience of wearing multiple hats, because I’ve learnt so much, but I’ve also learnt that it’s important to pick a lane, not only in what you do as a business, but in the role you play within your business. I also race superbikes in the South African Kawasaki ZX-10 Cup; through this I have learnt how important it is to focus in the moment without distractions and this is a discipline I have brought into the business.”

“If you’re the leader of an organisation, you need to let things go. You can’t be everything to everyone. When I launched ART Technologies, I knew the key to growth would be the fact that although I’m technical, I wasn’t going to run the technical side of the business. I have strong technical partners whom I trust, and there is an escalation framework in place, from tech, to tech manager, to the CTO to me — I speak tech and I’m available, but my focus is on strategy and growth. I believe this is the biggest mistake that many start-ups make. If you’re wearing all the hats, who is looking at where you’re going? When you’re down in the trenches, doing everything, it’s impossible to see the bigger picture.”

Appanna chose his partners carefully with this goal in mind.

“All the partners play a very important role in the business. Ruaan Jacobs’s strength is in the technical expertise he brings to the business and Terry Naidoo’s strength is in the support services he provides to our clients. Terry is our technical manager. He has the most incredible relationship with our customers — everyone wants to work with Terry. But there’s a problem with that too — if we want to scale this business, Terry can’t be the technical point for all of our customers.

“As partners we have decided what our blueprint for service levels will be; this is based on the way Terry deals with clients and he is developing a technical manual that doesn’t only cover the tech side of the business, but how ART Technologies engages with its customers.

“Terry’s putting his essence down on paper — a step-by-step guide to how we do business. That’s how you build a service culture.”

5. Reputation, network and experience count

Many start-ups lack three crucial things when they launch: Their founders haven’t built up a large network, they don’t have a reputation in the market, and they lack experience. All three of these things can (and should) be addressed during start-up phase, but launching with all three can give the business a valuable boost.

Appanna learnt the value of networks at a young age. Born in India, he moved to Zambia with his family as a young child. From there he moved to Tanzania and then Mozambique, attending boarding school in Swaziland and KwaZulu Natal. At each new school, he was greeted by kids who had formed strong bonds.

“I made good friends in those years, but at each new school I recognised how important strong bonds are, particularly as the outsider.”

Appanna’s early career took him back to Mozambique, working with the UN and EY on various projects. When he moved to South Africa, as a non-citizen he connected with his old boss from the UN who offered him a position as information officer for the Regional Director’s team.

His next move would be to the tech company that he would run for just over three years — also the product of previous connections. “Who you know is important, but how you conduct yourself is even more so,” says Appanna. “If your reputation in the market place is good, people will want to do business with you.”

Appanna experienced this first hand when he left to launch his own business. “Some key clients wanted to move with me,” he says. “If I had brought them in it would have settled our business, but I said no to some key customers who hadn’t been mine. I wasn’t ethically comfortable taking them with me.”

One of those multinational clients approached Appanna again six months later, stating they were taking their business out to tender and that they were hoping ART Technologies would pitch for it. “Apart from the Desktop-as-a-Service product, we also provide managed IT services for clients, particularly larger enterprise clients. Due to the client going out on tender and requesting for us to participate, we pitched for the business and won. The relationship with this client has grown, allowing us to offer them some of our services that they are currently testing to implement throughout Africa.”

“I believe how we conduct ourselves is essential. You need your own personal code of ethics, and you need to live by it. Business — particularly in our environment — is built on trust. Our customers need to trust us with their data. Your reputation is key when it comes to trust.”

Interestingly, although Appanna and his team developed their product based on a specific price point, once that trust is built and a certain standard of service is delivered, customers will pay more.

6. Start smart and start lean

Appanna was able to launch ART Technologies with the savings he and his wife, Kate, had put aside. He reached a point where he had ideas he wanted to take to market, but he couldn’t get his current business partners to agree to them — and so setting up his own business became inevitable.

Although he was fortunate to have savings to bootstrap the business, it was essential for the business to be lean and start generating income as quickly as possible. This was achieved in a number of ways.

First, Appanna and Kate agreed on a start-up figure. They would not go beyond it. “We had a budget, and the business needed to make money before that budget was reached.” The runway Appanna gave himself was only six months — highly ambitious given the 18-month runway most start-ups need. “Other than my salary we broke even in month three, which actually extended our runway a bit,” says Appanna.

Appanna had a server that he used to start with, and purchased a second, bigger server four months later. He also launched another business one month before launching ART Technologies — ART Call Management, a virtual PA services business that needed a PABX system, some call centre technology and two employees.

“I’d been playing around with the idea for a while,” says Appanna. “We were focused on SMEs, and I started noticing other challenges they faced. A lot of entrepreneurs just have their cellphones, but they aren’t answering them as businesses — it’s not professional.

“In essence we sell minutes — for R295 you get 25 incoming calls and 50 minutes of transferred calls. We answer the phone as your receptionist, transfer calls and take messages. How you use your minutes is up to you. For example, if you supply the leads, we can cold call for you. ART Technologies uses the call management business as a reception service and to do all of our cold calling. It’s kept the business lean, but it’s also brought in an income that helped us with our runway.” In 2017 ART Call Management was selected as one of the top ten in the SAGE-702 Small Business Awards.

The only problem with almost simultaneously launching two businesses is focus. “It’s incredibly important to know where you’re putting your focus,” says Appanna. “The call management business has been essential to our overall strategy, but my focus has been pulled in different directions at times, and I need to be conscious of that. The most important thing for any start-up is to know exactly where your focus lies.”


Into Africa

Thanks to a distribution deal signed locally with First Distribution, ART Technologies was introduced to Seacom, which has available infrastructure in a data centre in Kenya.

“It’s a pay-per-client model that allows us to pay Seacom a percentage of every client we sign up,” says Appanna. “First Distribution will be our sales arm. They have a webstore and resellers, and we will be opening ART Kenya with a shareholder who knows the local market.”

From there, Appanna is looking to West Africa and Mauritius. “We have the product and the relationship with Seacom gives us the foothold we need to grow into East Africa.”

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Entrepreneur Profiles

Kid Entrepreneurs Who Have Already Built Successful Businesses (And How You Can Too)

All over the world kids are abandoning the traditional notion of choosing a career to pursue until retirement. Gen Z aren’t looking to become employable job-seekers, but creative innovators as emerging business owners.

Diana Albertyn

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Do kids have an advantage or disadvantage when it comes to starting and building a company? It depends on how you look it. Juggling school, friends, family and other aspects of childhood and adolescence comes with its own requirements, but perhaps this is the best age to start.

“Being an entrepreneur means having to learn, focus, and connect to people and these are all traits that are valuable throughout life. Learning this when you are young is especially crucial, and will set you up for success and to be more open to other opportunities,” says billionaire investor, Shark Tank personality and author Mark Cuban.

Here are some of the most successful kidpreneurs who have cashed in on their hobbies, interests and needs to start and grow million dollar businesses borne from passion and innovation:

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30 Top Influential SA Business Leaders

Learn from these South African titans of industry to guide you on your entrepreneurial journey to success.

Nicole Crampton

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Entrepreneurship is said to be the answer to South Africa’s unemployment challenges and slow growth, but to foster entrepreneurship we ideally need business leaders to impact grass root efforts. Business leadership is vital to improved confidence and growth. These three titans of global industry say:

  • “As we look ahead, leaders will be those who empower others.” – Bill Gates
  • “Leaders are also expected to work harder than those who report to them and always make sure that their needs are taken care of before yours.” – Elon Musk
  • “Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could.” – Steve Jobs

Here are 30 top influential SA business leaders forging the path towards a prosperous South African future.

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