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Granatelli was born in Dallas, Texas. Along with his brothers Vince and Joe, he first worked as an auto mechanic and "speed-shop" entrepreneur, modifying engines such as the "flathead" Ford into racing-quality equipment. During World War II, he became a promoter of automobile racing events, such as the "Hurricane Racing Association," which combined racing opportunities for up-and-coming drivers with crowd-pleasing theatrics. Hurricane events, according to Granatelli in his autobiography They Call Me Mister 500, included drivers who were experts at executing—and surviving—roll-over and end-over-end crashes, and also an ambulance that not only got caught up into the race but also ejected a stretcher (with a dummy on it) into the way of the racers.
In 1946, the three brothers entered the first of several Indianapolis 500 races, as the Grancor racing team. They did their own mechanical work, and brought innovations like fully independent suspension, yet never made it to "Victory Lane". In 1948, Andy decided to try to qualify as a driver, and nearly did so, but a horrendous crash during his qualifying run ended that part of his career.
Granatelli eventually became very visible in the racing world in the 1960s as the spokesman for STP oil and gasoline treatment products, appearing on its television and radio advertisements as well as sponsoring racecars. He clad his pit crews in white coveralls with the oval STP logo scattered all over them, and once wore a suit jacket with the same STP-laden design. He made a cameo appearance in the Disney movie "The Love Bug".
His cars became a significant presence at the Indianapolis 500. While he first gained notoriety by re-introducing the legendary Novi, his most famous entries were his turbine-powered cars in 1967 and 1968. In both years, he endured the excruciating frustration of seeing probable race-winners fail near the end; Joe Leonard's breakdown in the Lotus 56 with 10 laps remaining in 1968 had been topped the previous year when Parnelli Jones, leading comfortably with just three laps to go, suffered the failure of a six dollar transmission bearing in the STP-Paxton Turbocar and retired, handing a sure victory to A. J. Foyt.
He was finally rewarded with an Indianapolis 500 winner in 1969. After his innovative Lotus 4-wheel-drive car was destroyed in practice upon establishing itself as one of the most dominants cars to date, his driver Mario Andretti, nursing the burns from the Lotus crash, won at the wheel of a year-old backup car. Before Andretti could be traditionally kissed in "Victory Lane" by the Queen of the "500 Festival", Granatelli got there first, and his joyful kiss on Andretti's cheek is one of the 500's most memorable images.
Granatelli bought Tuneup Masters in 1976 for $300,000. He sold it for $60 million in 1986. Game Show Icon and close friend, Dennis James, served as the original commercial spokesman.
He was inducted into the International Motorsports Hall of Fame in 1992 and the Motorsports Hall of Fame of America in 2001. Granatelli was inducted in the National Sprint Car Hall of Fame in 2011 and the National Midget Auto Racing Hall of Fame in 2013.