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Feb 25, 2011

Pretorius reflects on the automotive industry as his 38-yr career draws to a close

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McCarthy Limited CEO Brand Pretorius has always been a car fanatic. “Maybe my oldest brother Hennie is to blame for this. He was six years older, and he would often pinch my parents’ 56 Chev for a joyride, and I was a more than willing passenger,” he recalls.

But how does a red-headed Afrikaans boy from the rural Free State town of Steynsrus, where his father was a school master, end up as the CEO of McCarthy Limited, one of the country’s largest vehicle retailers?

Believing that studying for an engineer would perhaps secure him a career in the automotive industry, he attended the Pretoria University on a bursary from Iscor, now better known as ArcelorMittal South Africa.

However, “I studied for one year before I realised that this is not what I wanted to do with my life, so I had to go back to my father and explain to him that applied mathematics was not for me. My father said I must do what I’m passionate about, so I started a B.Com degree at the Free State University. After that I did my masters degree thesis on the motor retail industry, and applied to several car companies for a position. Toyota reacted first and I started there in March 1973.”

And now, 38 years later, the 62-year-old gentlemen of the automotive industry will at the end of February close the door on a short stint as a freelance motorsport correspondent for Car magazine, as well as 22 years at the Toyota group, where brand, market share and reputation were all gospel, and 16 years at McCarthy, with its shorter-term outlook on cash flow and profitability.

Constant Change
Pretorius’ first car was a white Renault Dauphine, but the car he loved the most was his 1960 Renault Caravelle. Being the CEO of a vast retailer carrying 32 brands, Pretorius now drives a new car every six months, which is something of a little-boy dream come true.

However, retirement means that he will now have to venture anew into the world of vehicle ownership. “For years, I owned only a Venter trailer and a Yamaha motorbike.”

Another subject of change is the 2011 motor vehicle market compared with the 1973 market when Pretorius first started earning a salary cheque. “The change has been so fundamental that the motor industry I started in almost doesn’t exist anymore,” explains Pretorius.

He says that 1973 still saw an Apartheid South Africa where a mere 1% of new vehicles were sold to black consumers. The new vehicle market numbered 342 000 units a year, and the local manufacturing industry was protected by an effective 115% tax on imported vehicles.

There were also only 13 brands in South Africa at that point in time, and no consumer protection such as the new National Credit Act. The Internet did not exist, and the entire South African vehicle parc was around five-million vehicles.

Today, the vehicle parc is eight-million units strong, with annual sales at 492 000 units last year. Import tax comes to 26%.

“Our customer profile has also changed dramatically,” says Pretorius.

The Good, The Bad & The Ugly
It would be impossible to achieve a perfect score in a nearly 40-year career in the motor industry.

Pretorius admits openly to his biggest business follies. “Years ago at Toyota, there was a production manager who said that ‘quality is job one’. This stayed with me throughout my career. However, I have made two errors in this regard over the past six years, and that was importing the Gaz and Meiya brands.”

Gaz was a minibus imported from Russia for use by the local taxi industry, and Meiya a range of one-ton bakkies from China.

“My intuition told me that the quality was not what it was supposed to be, but the price was so attractive, and the South African National Taxi Council’s enthusiasm for the Gazelle taxi so infectious that we went ahead anyway. I forgot that quality is suppose to be job one. And consumers forget about price within the first day of their purchase.

“This mistake cost the company millions. I blame myself for making such a basic mistake.”

Pretorius is, however, quick to point out that McCarthy’s and Imperial’s importation of the Chinese Chery and Foton brands is a completely different matter altogether, as the quality here is acceptable, offering “great value”.

As for career highlights, Pretorius says becoming the CEO of the listed company McCarthy Retail in 1999, and then salvaging the ailing company, will always rank as one of his favourite memories.

“McCarthy was technically insolvent, with an enormous debt burden,” says Pretorius. “We wrote off R1,3-billion in bad debt in the furniture, clothing and building supplies divisions.”

The McCarthy of the 1990s was a very different company from the motor retailer it is today.

It owned the Game and Beares range of stores to name but a few, while it also imported Peugeot into the country, a distributorship it subsequently lost.

“We sold Game for R750-million so we could remain solvent,” says Pretorius. “And today US retail giant Walmart is buying Massmart, which includes Game, for R30-billion.”

In order to save McCarthy, Pretorius had to seal a deal with eight banks to recapitalise the company. In the end, this group of banks owned 85% of McCarthy, in a contract signed at 02:00 in the morning.

He says the deal was signed based on the argument that McCarthy Motor Holdings still offered value as a business, and on his own relationship with the bankers.

“If I didn’t have solid relationship with those bankers, they might not have agreed to the deal.”

Once back on track, McCarthy was taken over by Brian Joffe’s Bidvest group in 2004.

Other career highlights include working for Toyota as it became the market leader in terms of sales and customer satisfaction in South Africa, morphing from ‘Jap Crap’ in people’s minds to the South African automotive industry’s hallmark of quality.

“The lessons I have learned is that one should do quality business, and that relationships and cash flow are the most important things when doing business. These factors are more important than anything else,” emphasises Pretorius.

Talent Spotting
Pretorius is a keen mentor. He is credited for bringing Johan Van Zyl, the Toyota South Africa president, from the North West University into the car marker’s fold. The same is true for Calvyn Hamman, Toyota’s new sales and marketing vice-president.

“I have converted waitresses into sales people. It is incredibly fulfilling to see people reach their full potential.”

When considering the foundation of success, Pretorius says his opinion on the subject has changed over the years.

“I have come to realise that it’s not about power, or wealth or position. It’s about character, making a contribution and wisdom. It’s about making a difference.”

Pretorius’ business icons include the well-known local business giant Anton Rupert and Toyota South Africa founder Albert Wessels, who he describes as “visionary”.

“He was an industrialist which brought something to life in South Africa. On his deathbed, at 82, he still spoke to me about tomorrow. He lived in the future. He never wanted to reminisce about the past.”

Pretorius also has admiration for former General Electric boss Jack Welch.

“He has that combination of hard and soft that I think works well. He said that one must be hard when it comes to results, and soft when it comes to people. That is the principle I have aspired to through the years. I believe you have to touch people’s hearts before you can ask for their hands.”

Pretorius says he has also had the opportunity to meet with Nissan turnaround king Carlos Ghosn, and that he was impressed with the CEO’s character, determination and humility.

Quo Vadis MaCarthy
McCarthy Limited is currently being unbundled by its parent company, Bidvest.

The divisions of the group, including its car and van rental, fleet management, financial services, as well as Yamaha, are to be absorbed into the bigger Bidvest structure.

However, says Pretorius, the McCarthy motor division is to become an independent company, called the McCarthy Motor Group, to be headed by Graham Damp, who will report directly to Brian Joffe.

Damp has already been overseeing the motoring group for a number of months in the position of MD.

“McCarthy is in capable hands,” assures Pretorius.

The company is, however, also in somewhat of a difficult position.

As it has no access to some of the country’s fastest growing vehicle brands such as Kia and Hyundai, imported by Bidvest rival Imperial, it is struggling to maintain market share.

The company can also not grow its dealership numbers in the Toyota, BMW, Mercedes-Benz and Volkswagen franchises, as it has reached the ceiling here in terms of what these manufacturers deem positive for the balance of power in the motor retail industry.

“What we can do is grow our business through more Ford, Nissan and General Motors dealerships. We have Suzuki, and we are looking at a bigger share of the second-hand car market.”

As for Pretorius, he is not done yet, he warns.

He has accepted several positions as a non-executive director, including one on the Absa board. He has also started his own business focused on consulting work, while several agencies have also approached him to lecture on leadership and client service.

Pretorius is also a guest lecturer at the Gordon Institute of Business Science on leadership, as well as a visiting executive at the Centre of Responsible Leadership at the University of Pretoria. Honorary professorates at the Universities of Johannesburg and the Free State also ensure his involvement at these tertiary institutions. He also remains a Read Educational Trust director, and as well as an ambassador of the Value Citizens Initiative which works with schools to teach primary school kids principles.

Pretorius says he will also continue his role as mentor and coach to young black professionals.

“I have been lucky that my hobby and passion could be my work,” says Pretorius, adding that retirement should see also him becoming better acquainted with his wife, three sons and seven grandkids.

“I have been away from home so much over the last twenty years.”

Pretorius’ sons are all still in South Africa, perhaps because they inherited the McCarthy boss’ optimism for the country’s future.

“We are all positive about South Africa –and not naively positive. South Africa is high-risk, high-opportunity country.

“It remains a wonderful country, where you can make a difference every day. ”
 

Edited by: Creamer Media Reporter
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