Time Well Served

Gracious and unassuming, Jim Ellis is the classic southern gentleman. Yet, walking through the prestigious Atlanta Athletic Club for lunch in late October, it’s evident he is comfortable among the power brokers of Atlanta’s elite.

He is unfailingly polite as club employees greet him by name with the respect befitting one of Atlanta’s long-time business leaders.

Although polite and generous, Ellis is one tough businessman who took a small Volkswagen dealership in 1969 and turned it into one of the top family-run companies in Atlanta, and perhaps, the entire country.

Ellis is the kind of automotive dealer envisioned when Ward’s first began naming a Dealer of the Year in 2001. Along with being a stalwart in the Atlanta community, the Jim Ellis Automotive Group has grown to 11 dealerships with more than 700 employees, yet has not lost the employee- and customer-friendly philosophy that differentiates it from its competition.

Despite the bad stereotypes of dealers – some of them earned – that abound in the media and popular culture, dealers such as Ellis pepper communities with jobs, charitable donations and significant portions of state and local tax revenue.

Ellis’s commitment to maintaining a family-run organization that extends to the group’s employees is an example of the positive influence a dealership can have on its community.

Although Ellis has won numerous awards that have helped create a stellar reputation in Atlanta, it’s almost impossible to detect any sense of cockiness as he recounts his story at his understated office in the Volkswagen dealership.

Twice, he has been a finalist for the Time Magazine Dealer of the Year award, most recently in 2008. He also was one of nine dealers honored by Ford Motor Co. this year in its annual Salute to Dealers tribute for his charitable work as a Mazda dealer.

Ellis takes pride in his achievements, but he comes across more as a man who is grateful for his position in life.

Asked what he is most proud of, Ellis points to the group’s continued operation within the family after nearly 40 years. The family recently was a finalist in the Georgia Family Business of the Year award.

Ellis says he has no plans to sell. On the group’s website, Ellis says he hopes the dealerships remain family owned and operated for foreseeable generations.

Three Ellis generations already work in the dealer group. His son Jimmy worked his way through the service department and now is the vice president-operations for the group.

Jimmy’s son, Wesley Ellis, is general manager of the Hyundai store, while his daughter, Stacey Hodges, runs the Saab of Atlanta dealership.

Ellis’ wife Billie is the secretary-treasurer, while daughters Kristi Cohron and Karen Black are group officers and granddaughter Brooke Gatlin is an administrative assistant.

Another son, Greg, passed away at age 40 in 2000. Several times during the interview, Ellis chokes up as he talks about his family and Greg.

Ellis says his most important civic achievement is the funding and spearheading of the construction of the Norcross Cooperative Ministry Center, which since has been named after Greg.

Ellis and his family have contributed $380,000 along with significant time to the center, which provides food, clothing, lodging and numerous other services to people who are in and in crisis.

Importance of Employees

Ellis rejected several buyout offers from public dealer groups when they went on their buying spree several years ago, mostly due to a sense of responsibility to his employees. Once he sells, he knows he can’t protect his employees.

He also thinks he’s better off financially for not having sold out. “A lot of dealers weren’t smart,” he says. “Several of them took stocks and not cash. They’re probably regretting that now.”

Public dealer group stocks that were trading as high as $60 a share at one time have dropped to below the $10 level. The Asbury Automotive Group, whose Nalley Automotive Group is one of Ellis’ big competitors in Atanta, has been trading between $1 and $3 a share the last several weeks.

“You can’t say you’ll never sell,” he says, but it is clear he has no intention of doing so. “It would be good if the family keeps the business going. I’ve got enough security, but I want to watch my employees’ security grow. I enjoy watching our employees progress in their careers and lives. They got us to the point we are today and have helped us get through the downturns.”

Ellis says turnover is not as much a problem as it is for many other dealers. “The key is keeping good people. Strictly, that is the key to our success,” he says.

The group also does not lay off employees. It often will eliminate positions as people leave, but as a practice, it does not force employees out.

Indeed, Ellis views downturns, such as the one the industry is experiencing now, as an opportunity to improve the group’s ranks.

“If someone goes out of business, we’ll recruit the top people,” he says. “We’ll squeeze good people in, even if we don’t have a place for them. Our attitude is that we’ll get more business hiring them.”

Through the years, qualified mechanics have proven to be the most difficult to find. “We’ll never turn down a good mechanic,” Ellis says.

While downturns provide opportunities, Ellis recognizes the challenges, but he talks about them from the perspective of his employees rather than one who is focused only on the bottom line.

“I ask myself, what can we do to help our employees during the downturn?” Ellis says. “Their attitude is the most important thing that will help us survive the tough times.”

Often, employees are not aware of what’s going on in the industry or how events are affecting the business, says Ellis. So he demands that management communicate to each employee how the group is faring.

Management looks at many areas, such as possibly extending the number of hours the stores and their service departments are open. Ellis often evaluates the pay for his key people during downturns – but not to cut it. Instead, he says he increases pay for those employees to offset lack of work.

Early Years

Ellis started somewhat late in the automotive retail business, going to work for Chris Motors Volkswagen as business manager at age 33 in 1965. Four years later, Volkswagen awarded Ellis with an open point in Chamblee due to his outstanding performance.

It took two years and all of his limited resources before Ellis was able to open the new store. He and his wife sold all their assets, cashed in Billie’s retirement from 15 years at Georgia Tech and used up their savings to generate a mere $35,000. The rest – $165,000 – was obtained in loans.

“The local bank told me to raise as much money as I could and then they would help make up the rest,” he says. The owner of Chris Motors came in as an investor with a 5-year buyout plan, and Volkswagen bought the land and built the facility, letting Ellis lease with an option to buy, which he did later.

Ellis remembers the early years as being difficult. The popular Beetle was being phased out. Meanwhile, Volkswagen’s vehicle-allocation system was not set up to enable dealers to grow fast.

The challenging times provided good training.

“I traveled all over the Southeast looking for used vehicles to help us make some money,” hesays. He tried to buy as many large vehicles as possible, at a time when most were trying to get rid of them because of the fuel shortage.

“When the numbers get real low, I buy,” he says. Ellis then sold them for a profit. “People will still buy if they think they’re getting a steal.” He’s doing the same thing today with trucks and SUVs.

It took 13 years before Ellis was able to begin adding other franchises. In 1983, he bought a Porsche and Audi store and in the late 1980s added two Mazda dealerships. Ellis was the top selling Mazda dealer in the country for almost six years in the 1990s. He since has added Chevrolet, Saab and Hyundai stores to his portfolio.

Prior to selling cars, Ellis worked as an accountant for General Motors Corp. He then worked for GMC Coach and Truck Div. During that time, he goofed around with selling used vehicles that he bought at a local auction from his front yard.

Ellis doesn’t have a favorite vehicle and admits he’s not a car nut. Often, he’ll drive what he wants members of the Atlanta Athletic Club to see. When pressed, he admits to liking the Chevrolet Traverse and Trailblazer.

Yet, Volkswagen is his favorite brand. “It’s the one I started with,” he says. “And when people hear the name Jim Ellis in Atlanta, they think of Volkswagen.”

Ellis decided to go into the dealership business when GMC wanted him to move from Atlanta, a decision he’s never regretted.

“I never really envisioned getting this big,” he laughs. “But once I got into it, I got pretty competitive.”

Ellis admits he may have moved slow in adding stores to his company, but he often was limited by resources and real estate. In addition, he’s refrained from paying the Blue Sky values (a variable amount based on projected value) that some of the premium brands, such as Toyota and Lexus, command today.

“I need a quick return on my investments,” Ellis explains.

Seven of his stores, anchored by the Volkswagen dealership, are clustered along a stretch of Peachtree Industrial Blvd., to the northeast of Atlanta. The other four are in Marietta, about 15 miles (24.13 km) away.

Ellis says he drifted through some of his early years. When Ellis was 10 years old, his father moved the family to the Atlanta Prison Farm property after accepting a job as a foreman there. Ellis’ grandfather was the prison’s superintendent.

Ellis began working at the prison in his early teens at the prison, along with running laundry, milk and paper routes and a concession stand at Grant Park in Atlanta.

At age 15, he replaced a prison guard on the graveyard shift who had been killed while on duty. Ellis worked that shift off and on the next eight years while attending college and captaining the football team and serving a also 2-year stint in the military.

Customer Satisfaction

Across the board, Ellis’ business practices stand in sharp contrast to those of another high-profile and long-time dealer in the Atlanta market that recently declared bankruptcy.

The group’s 11 dealerships consistently outperform the average customer-satisfaction scores both in sales and service in their respective regions.

In addition, the Harris Poll of Atlanta consumers for automotive dealership excellence in service and sales has awarded the Consumer’s Choice Award to the Ellis group.

Ellis’s numerous brands have been in the top 10 dealerships for sales in their markets, while also performing well nationally.

The group has been a pioneer in the Internet space, making it onto the top 10 of the Ward’s e-Dealer 100, a ranking of dealerships based on number of vehicles sold online.

“We started early and then tried really hard,” Ellis says. “The key is to have a great website, and then make sure you respond immediately to leads.”

Another key to getting in front of customers today is getting their e-mail addresses. “You have to sell it to them, that it is for their benefit to provide it,” he says. “We also have to offer incentives to our employees to ask for it today.”

A business-development center handles all of the customer communication, including phone and e-mails. Ellis’ son, Jimmy, sees all of the responses and messages from consumers. While most are positive, some are not, he admits.

“Those are the ones we get excited about,” he says. “It gives us an opportunity to turn those people into long-term customers. We were into customer satisfaction before J.D. Power and Associates figured out you could make a business out of customer surveys.”

Ellis’ son believes being family-owned gives the group an advantage, especially when compared with publicly owned dealerships. “Customers can actually get to me,” he says.

Jimmy learned how to manage customers working as a service advisor for a few years, a position he calls the guts of the dealership. “If you can succeed there, you can pretty much handle anything in the dealership.”

Giving Back

The elder Ellis has served on numerous dealer councils as national chairman. He has been active in the National Automobile Dealers Assn. and the American Import Automobile Dealers Assn.

Ellis is a devoutly religious man who views the wealth he’s accumulated as an opportunity to give back to the community. He teaches Sunday school and serves as deacon at the Johns Creek Baptist Church.

The number of charities Ellis helps is too much to mention. Ellis makes it a rule only give to organizations whose financial statements he can see. He wants to make sure a majority of the money donated doesn’t get used solely to pay salaries of people running the charities.

In 2000, he established the Jim Ellis Foundation and funds it each year with 8% to 10% of company profits. The foundation now has more than $7 million for charities.

Ellis spends a lot of time with the charities to which he donates. “When you get involved, you get a sense of the needs that are out there,” he says.

The Jim Ellis group also is known for its annual golf outing that raises nearly $70,000 to help needy employees. Vendors, employees and manufacturers contribute to the cause.

State of the Industry

Ellis says what’s happening today in the industry might be the “craziest thing I’ve seen.”

Although the industry has enjoyed a long cycle of strong sales and profits, it now is paying for past decisions, he says.

“We (automotive and financial industries) moved subprime into markets that couldn’t handle it,” Ellis says. “We created the negative equity many customers have now. We saw it coming, but we still participated to an extent. And now we have to work through it.”

Ellis predicts a number of dealerships could go out of business the next several months because of the growing inability to obtain floor-plan financing, along with the sharp sales decline.

He likes how his group is positioned, saying it doesn’t rely on captive financing but has great long-term relationships with a few banks.

He also thinks some brands may have to merge and the industry likely is to see less rebadging of vehicles. Some brands, such as Volvo, may have to back off requirements that dealers have exclusive facilities. “A lot of single franchises won’t make it,” Ellis argues.

Despite the challenges, Ellis is confident in his dealership’s and his family’s, future.

cbanks@wardsauto.com