Inside Interview | Klaus D. Frers - The Man behind Artega

Interview with Klaus D. Frers | The man behind Artega

The story begins with a spectacular debut at the 2007 Geneva Motor Show, with industry insiders talking of a “new star in the sports car firmament”, as one headline put it, as Delbrück (Germany)-based paragon AG presented its new sports car in public under the name “Artega GT”. The successful carmaker had also created, with its exciting prototype sports model, a platform for showing off its prowess at trying out new innovations. Klaus D. Frers, paragon’s CEO and founding visionary of the project, had put heart and soul – and a large amount of know-how – into the venture. It was under his tutelage that the company was able to make the innovative, thoroughbred Grand Tourismo ready for low-volume series production and enjoy great, albeit temporary, success. The high-flying in the sports car firmament that the international motor press had enthused about in the course of their comparative testing was then followed by a sobering crash-landing that could not have been foreseen, given that all the boxes had been ticked so efficiently.

The original initiator of the Artega project talks in an exclusive interview about what nevertheless derailed this ambitious venture.

 

Interviewer:         Mr Frers, as a passionate amateur racing driver, North Loop specialist and CEO of a publicly-listed supplier to the automotive sector, you do not strike me as someone who would blunder blindly into a major financial venture. Indeed all your previous business start-ups made perfect sense. So what moved you to build your own sports car?

Klaus D. Frers (KF):  You mean that it should have been possible to foresee the failure of a project like this one? If that’s so, I must definitely contradict you. Artega can only really be understood in the context of paragon AG. The firm employs some 450 people across Germany, and our innovations in electronics for the car sector generated more than €70 million in turnover in 2013. Without this solid technical background, we would certainly never have created the car.

 

Interviewer:         So the Artega GT started life more as a prototype, as a sort of poster boy for paragon?

KF:         That was definitely the original intention, yes. We wanted to develop a technological platform capable of showing off our innovations and finished products directly, in the context of an actual vehicle. So we started off by holding exploratory talks with Erich Bitter, a car builder with various decades’ experience, and other small-volume manufacturers from Germany, the UK and the Netherlands. The many “fact-finding” visits to the firms involved made two things very clear.

First, none of them would have been able to handle paragon’s technologically-advanced products and, second, all of these manufacturers were far less technically-skilled than us. The decision on what to do was therefore staring me right in the face. Whatever they could do, so could we – starting from scratch and doing it much better.

 

Interviewer:         That sounds pretty self-confident.

KF:         I have been involved in this business for over 25 years now, and see myself as something of a “car geek”. This affinity with the sector has left me with a deep knowledge of both its present state and its past history. paragon AG did not become a supplier to major German marques like Audi, Porsche, BMW and Volkswagen by mere accident.

This made the whole thing a question of quality specifications, so I decided to tackle the project myself. A fatherly, Albrecht Graf Goertz, [Editor’s note: designer of the BMW 507, among other achievements] once gave me this piece of advice: “There are some things in life that you just have to do.”

 

Interviewer:         So when did the Artega project actually start to get going?

KF:         The whole project was meticulously designed and planned along almost-military lines. We really did draft it down to the tiniest detail, with specifications for every single screw. This obviously also included identifying the precise market niche for our sports car. The whole thing was ready to roll by the winter of 2005-2006.

 

Interviewer:         But the prototype was by now something more than just a mobile exhibition stand for paragon AG, right?

KF:         Exactly. It was still a platform for our technology of course, but it had clearly morphed – without personal emotion coming into the matter – into a precision-designed sports car. We put a lot of effort into recruiting creative stars from the sector during the development phase. These included car boffins like Professors Willi Diez, from the University of Nürtingen/Geislingen, and Ferdinand Dudenhöffer from the University of Duisburg, along with former BMW manager Karl-Heinz Kalbfell, who tragically died in an accident in 2013. They all helped the process along in their roles as our outside consultants. The name “Artega” was dreamt up by Manfred Gotta, Germany’s number one brand-development expert, while Henrik Fisker – whose design portfolio includes the BMW Z8 and Aston Martin DB9, for example – helped create the new car’s outlines.

 

Interviewer:         So the Artega was ready for its public debut by 2007. Had everything been done correctly up to that point?

KF:         If we go by everything that was said in the media, the answer definitely has to be “yes”. The reviews were seamlessly positive, and the press saw the Artega as “a new star in the sports car firmament”, going on to describe it as “the Porsche-killer from the backwoods”. None of these comments came from us, so we were all the more flattered by them. I think the initial outcome proved that we had got the basics just right. The GT was absolutely stunning to look at, and its innovative aluminium space-frame and carbon-fibre-reinforced body shell left it tipping the scales at just 1,285 kilos. When it comes to sports-car construction, a difference of just 50 kilos makes a whole world of difference with respect to competitors. The V6 engine delivering a genuinely-gutsy 300 horsepower and the direct-shift gearbox, both of them supplied by our contractual partner VW by the way, drew a lot of attention in 2007 and 2008. You have to remember that the days of every third Golf Diesel being equipped like this were still far off.

 

Interviewer:         You mentioned the reactions of the press. How did they portray the Artega GT?

KF:         Well, I think the facts speak for themselves. The Artega won something of a class-war victory over its established competitors when it was selected as the top sports car of 2008 by Sport Auto magazine. This was followed by further top placements and outstanding results in direct-comparison tests organised by various international magazines. By 2013 – i.e. four years after its initial launch – the Artega GT was still ahead of cars like the current Porsche Cayman in terms of circuit times at Hockenheim and braking tests.

 

Interviewer:         So all this happened on the basis of the original paragon AG project?

KF:         Not at all. At the same time as we were registering Artega as an independent manufacturer with the German Federal Motor Transport Authority, we were busy investing €6.5 million in our own production plant in Delbrück. Vehicle development was financed privately to begin with, and later by means of bank credits. At the end of 2008, we entered into talks with a financially-solvent investor from Mexico, an event which would prove to be fateful for us. The titular head of “Tresalia Capital” was Maria Aramburuzabala, a Mexican billionairess and still one of the most influential women in South America. This heiress to a successful corporate dynasty assured us that we would have tens of millions at our disposal, and we began to be fully convinced of having drawn the right straw.

 

Interviewer:         But events were soon to change things. What went wrong, in your opinion?

KF:         The Mexicans were absolutely enthralled by the Artega GT to begin with, but they were far too alien to the sector. This was Tresalia Capital’s first European investment venture, and its first of any kind in a production or development enterprise. This is something that we had not really considered until then. Their previous experience had consisted of providing support for private universities and for developing fashion brands. The car sector, let alone a highly-specialised manufacturer within it, had never before appeared on Tresalia’s radar – a fact that subsequent experience was unfortunately to make very clear.

 

Interviewer:         What difficulties did this suppose?

KF:         Things like organisational timescales and marketing and sales structures were never properly considered, which led to a series of problematic meetings once the process was under way. I also think that the geographical distance between us created a serious disadvantage. We were dealing before long with a constantly-changing series of outside consultants from Frankfurt, who in my opinion understood little or nothing about the car industry.

 

Interviewer:         Your exit from Artega is associated with rumours of a hostile takeover. How much of this is speculation, and is any of it true?

KF:         By the summer of 2009, we had just obtained the type-approval homologation needed to put the Artega GT on the road. This was not something to be taken lightly, as you can imagine. We were of course still benefiting from the technical know-how of paragon AG. Then, in June and just as type-approval had been assured, I received a blunt demand to reduce my share to 5% and withdraw from the entire project. Tresalia then proceeded, despite its written assurances that payments would be made, to apply pressure by shutting off the financial tap.

It turned out that the people in Frankfurt  including their supporter, former BMW executive Dr. Wolfgang Ziebarth, had been plotting behind our backs (and I’m referring to the entire Artega team there) and a takeover was in fact already under way. Just when we had finally and definitively ensured that the car would be produced and launched, we were shown the door – you can decide for yourself whether that amounted to a hostile takeover bid! I can in any case confirm that I did not leave voluntarily.

 

Interviewer: Dr. Ziebarth announced, with respect to joining Artega, that you had actually begun to build vehicles in 2010 at his behest.

KF:         This statement is quite simply not true. We had already delivered 43 units of the Artega GT by the end of 2009, and had pre-orders for a further 800 cars, until the rumours about takeovers and insolvency began to circulate.

Ziebarth committed two really grave errors, in my opinion, which effectively sealed the fate of Artega. First, he let the production line stand idle for several months while a couple of modifications were carried out on the car to meet his personal tastes. This naturally caused the customers to flee in droves. However, I feel that Dr. Ziebarth’s really fateful decision was to try to turn the Artega GT into a sort of European Tesla, by betting everything on electric traction. It was completely unnecessary and, in my opinion, much too soon to terminate the agreement with VW, the supplier of gearboxes and engines; and the sales and distribution of the GT were also generally neglected. With the electric version nowhere near ready, the distribution network shrank to just five or maybe six German car dealerships, and to even fewer abroad.

 

Interviewer:         What were the consequences of all this?

KF:         Sales stagnated even further, and the Mexicans definitively withdrew their financial backing. My understanding is that a number of Chinese buyers had come on board by this stage, with a commitment to purchase, but with no upfront payment of the agreed price. Tresalia Capital had already withdrawn by now however, and had stopped settling bills, so payments – be they from Mexico or China – were no longer coming in. The logical consequence of all this was insolvency, which the then management finally admitted to in July 2012. That October, I bought back all of Artega’s share assets, and incorporated twenty members of its workforce into paragon AG.

And to anticipate your next question: No, and we do not have any ambitions to restart car production. We are rather far more concerned with the firm’s goodwill and technical know-how and also, to some extent, with its emotional significance.

 

Interviewer:         You speak of emotions. What would you do now, if you had to retake the same decisions?

KF:        You mean, would I do it all over again? Basically yes, although I would not let so much depend on the promises of outsiders. The relationship between investors and developers should ideally be based on trust. My position is quite clear in this respect. If everyone involved had kept at all times to what had been agreed, Artega would still exist in its original form, and more of its cars would almost certainly now be on the road. Even so, we should remember that we once had an order book containing 850 names. The Delbrück plant was designed to turn out some 500 cars a year, but just 240 per year would have seen us go beyond the break-even point and start earning profits. Our financial partners put an end to all this unfortunately.

 

Interviewer:         You have bought back Artega, along with its means of production, machine tools, components and trademark rights. What do you plan to do with your purchase?

KF:         There are in fact two good reasons for me to keep Artega as a going concern.

The first is personally-motivated, as I intend to develop the brand in the long-term. There are after all 153 Artega GT cars still on the road. We naturally intend to continue providing support for the owners of these vehicles, by guaranteeing the full technical service that they require. All components and production equipment are now under our ownership, and many original employees have rejoined our ranks, so there is an extremely high likelihood of being able to provide optimum technical and customer service.

The second reason is an almost-inevitable consequence of the first. We have accumulated, during the development of the Artega GT, a wide range of technical know-how and experience that should prove highly useful for many sectors of industry. The homologation and type-approval of just a single component, let alone an entire vehicle, is a highly-complex process. We can now offer this highly-specialised knowledge to our customers on a one-to-one basis for use in their own projects. From initial-development phase right up to late-stage field trials. We start by developing all the vehicle’s relevant components at a theoretical level. Then we test them under actual running conditions and in accordance with technical specifications to make them ready for use on the road and in motorsport.

 

Interviewer:         A good headword: How significant is motorsport to the new Artega?

KF:        Building on the knowledge and experience obtained from our successful participation in the Nürburgring 24-hour race in 2011, we have created a new Artega GTR racing car, which has already delivered us a number of successes in 2013, some of them outright wins, against apparently-stronger competition.

This is what made us decide, in the winter of 2013, to act on requests received and produce a batch of eight “Cup-Artega” cars for outside customers. One race organiser is now in fact planning to hold a single-marque trophy event as part of the DMV-TCC series. We can be present, with a team up to six-strong, at individual incentive-type events, for example, and can also attend – and provide technical service at – full-scale race meetings. We have already been able to test the enormous potential of this moderately-priced, all-inclusive service with an initial group of delighted customers at the new Bilster Berg race circuit.

 

Interviewer:        One final question, Mr Frers: Have you managed to secure an Artega GT for yourself?

KF:        I have indeed – and the last one off the production line, no less. I am also the owner of the only driveable prototype from 2008, and of the 2009 model with the chassis-number “1”.