Some former customers and disappointed investors, however, do not like the AAA Auto Company. Its expansion abroad was not very successful, but Denny’s company remains number one on the Czech market.
The founder, boss and chief co-owner of the AAA Auto Company likes used cars. His second-hand car stores buy and sell such cars and this business earned him millions. He collects special, valuable and luxurious old vehicles. The largest amount Anthony James Denny has ever paid was for a Jaguar from mid-sixties.
He loves ancient British cabriolets but otherwise he is fond of the contemporary technology.
He suddenly offered the author of this article that he would give him a digital dictating machine so that he would not need to turn the cassette during the interview.
Australian with Czech Ancestors
He was born in Australia but his father was Czech. He gives interviews in English in spite of the fact that he married a Czech woman and has been living in the Czech Republic for many years (he now lives in a family house in Prague 8).
He has a five-hectare ranch in Australia, about a kilometre away from the ocean. He flies by a hydroplane to the city from there.
The king of the Czech market with used cars is not educated as a technician or economist. He studies botany. “However, cars have always been my great hobby and passion,” says Denny, a vegetarian.
He got involved with the world of business when he was studying. After that he got fully engaged in trade. At the turn of the eighties and nineties, he spent two years in the USA and then he came to the Czech Republic. At first he only wanted to see the home of his ancestors but he soon discovered that an enterprising person had a great chance. If he stayed on the other side of the ocean, he would just be one of many tradesmen, but here he could play the first league.
Back to the Roots
While he exported luxurious American cars from California to the world, he founded the Auto USA Company in the Czech Republic, which was supposed to offer used American cars to Czech customers. However, American cars only attracted a limited group of fans and so Denny opened up a standard second-hand car store. He started modestly; there were dozens of companies like that in the 90s.
“The Czech market was insatiable,” says Pavel Tunkl, Secretary of the Car Importers Association. The huge hunger for cars, changes in lifestyle and liberalization of import played into the hands of second-hand car dealers. Some had an ephemeral existence but some took roots and managed quite well. However, Denny knew he could do better as he is a real businessman unlike many of his competitors.
Leading the Telephone Directories
The breakthrough came three years later. The name of the company changed and the three As brought it to the lead of telephone directories. “They also worked their way up because the owner took the business professionally, as if he was running a factory,” Tunkl presumes.
There was not an unshaved guy in a soiled overall waiting for customers in AAA stores but a trained and dressed seller radiating respectability, efficiency and success. The client was supposed to get the same impression as if he or she were buying a new vehicle. This approach definitely paid off. The company was very dynamic. However, according to some customers, it sometimes was on the edge of good manners.
A used car is not exactly a treasure; otherwise the owner would not want to get rid of it. However, AAAs pretended that they offered treasures on four wheels. Purchase contracts should be thoroughly studied but customers were dazzled by flashing wings, large signs and professional behaviour of the technicians. They could hardly wait for stepping on the gas so they did not study the documents to the last letter. When something broke down, they were often surprised to find what they had signed.
AAAs Getting Flak
Dissatisfied clients protested. Negative reports appeared in the media. However, the company stood through the disputes and began paying more attention to cars as well as indefeasibility of contracts. Moreover, Denny understood that even people who cannot afford a new car read a lot. Therefore he built a strong public relations department. He was a pioneer in this field as there was only one competitor who communicated with journalists at that time.
AAA Opened First Branch outside Prague in 2000 – in Brno
More and more branches followed which brought the company an advantage as the supply and demand differed locally. Old vehicles that Prague citizens were not interested in anymore were successfully sold in poorer regions and on the other hand, pricier newish cars that would wait too long for a new owner in the country could be sold fast in the capital.
“The company became so successful thanks to its activity in many places because there had not been anyone before whose name would be a sort of national guarantee,” Pavel Tunkl assumes. In 2004 the company first expanded abroad: it opened a store in Košice. Today, AAA Auto has a network of 25 branches in the Czech Republic and Slovakia and employs about 1,200 people. In 2008, the Group sold 60,500 cars.
Klenoty, Our Model
AAA started as one of many second-hand car dealers but it is now a leader on the market. According to Kamil Ziegler, a former financial manager, the company benefited from one Czech tradition. Before 1990, there was a company called Klenoty that used to purchase and then sell cars. Denny did it the same way, while many other second-hand car dealers did not have enough capital so they had to do consignment sale. During consignment sale the car dealer does not become the owner of the offered vehicle, but only displays it and then collects a premium for intermediation. But those who sell cars want to get the money as soon as possible. Thus it was convenient for the seller to go to AAA.
The Group also bet on massive marketing. Famous people who claimed they drove a car from AAA and were happy with it performed in adverts. It was at a time when the Czechs had low immunity against such advertising, so the campaign worked.
Mistakes of Branded Opponents
However, other players have also contributed to the exceptional position of AAA.
Used cars are usually sold by dealers who sell new cars and take used cars in part exchange or by a skilful Joe who fenced a bit of land and opened a local second-hand car store there.
Branded stores are considered to be the ideal place for purchasing a reliable used car. If they sold the car originally, checked it regularly and repaired it, knew its history and owners, they had a great advantage. But the employees of branded stores and services made an unforgivable mistake. Instead of pampering their customers and waiting patiently to get rich by working, they started approaching the owners of old cars disparagingly and with disdain. Moreover, branded services set very high prices. So the customer suddenly found out that neighbour’s Joe who opened a private service in his garage could do the repair much faster and for half the price. And so the mistrust to branded services and stores was born. When then people wanted to sell their older car, they went somewhere else.
Joe Has a Problem
However, Joe’s local shop also lost reputation. In order to expand the offer and get rich, Joe started importing used cars from abroad and these cars were often very problematic, crashed, made look newer, with rewound tachometer and dubious documents. A normal person singes his feathers only once. And so even clean-handed cars were standing at Joe’s for too long. Customers started looking for something better, a company that would provide at least a minimal guarantee.
And they found AAA. It did not take them long as the company was able to break into the media. Whoever read an article about used cars in a motor magazine usually found out that information was provided by a professional from AAA Auto. The only company that could keep up with Denny at least a bit was Auto ESA, but it only operates in Prague.
Many Famous Names
The Australian also made himself visible by hiring well-know faces. For instance, he won the stars from Škoda Auto in Mladá Boleslav: Vratislav Kulhánek, former chairman of the board of directors and Milan Smutný, former spokesman. They are men with a great number of contacts, thanks to whom AAA was mentioned in the media.
Denny would be definitely offended if someone said he was an authoritarian boss, nevertheless, he liked to make decisions on his own. As the company grew, it was necessary to build a corresponding structure. Experts of good repute were joining in.
Some of them then left quickly as the owner wanted to have a functional modern management system but on the other hand, he was used to his absolute power. In particular, the chair of the financial manager in AAA is unstable. Kamil Ziegler only stayed on this position for a few months, David Thorley about a year.
Overburnt Expansion
The economic result of the company was not so good last year. The company expanded too much and its growth was therefore “overburnt” according to Vratislav Kulhánek. Moreover, the crisis started.
The company put its shares on the market but their value soon dropped rapidly. The company had to lay off employees, cut the promotion expenses, offer some of its property for sale and withdraw from Poland, Romania and Hungary. The announced entry to the Russian market was not accomplished.
There is one thing that has not changed even in the time of trouble. AAA still supplies newsrooms with all kinds of information.
And so people can learn that the company sells two thirds of its cars at the weekend and that the busiest time on workdays is after five pm. The company also introduced a scrap benefit, which is an advantaged part exchange. Black is the most demanded colour this year and it has pushed aside silver metallic, particularly in larger and newer models. We can say that the sworn non-smoker Denny now mainly lives on black cars.
The results of the company have been improving this year. The company made profit in the amount of EUR 693 thousand in the first half and the cumulated economic result for the nine months is EUR 1.6 million.
***
Anthony James Denny Date of birth: 17/04/1962 Address: Prague 8 Position: Manager and about 74 % owner of the AAA Auto Company Receipts: EUR 120 million for the 1st to 3rd quarter
TIME LINE
1962 Born in North Sydney
1980 to 1983 – Studied botany
1984 to 1989 – Did business in Australia
1990 to 1991 – Sold luxurious used cars and veterans in the USA
1992 – Started doing business in the Czech Republic, set up the Auto USA Company
1995 – The company was renamed to AAA AUTO Praha, s.r.o. 1985
2000 – The first second-hand car dealer outside Prague (in Brno)
2003 – The joint-stock company AAA AUTO was established
2004 – The first international second-hand car dealer – in Košice
2007 – The company entered the stock exchange
2008 – The company paid for its previous expansion
2009 – The year of consolidation
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