Time Well Served
By Cliff Banks Ward's Dealer Business, Dec 1, 2008 12:00 PM

Gracious and unassuming, Jim Ellis is the classic, southern gentleman. Yet, walking through the illustrious Atlanta Athletic Club for lunch in late October, it's evident that 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 he is polite and generous, Ellis is one tough business man who took a small Volkswagen dealership in 1971 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 we envisioned when we first began naming a Ward's 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.

Despite the bad stereotypes of dealers — some of them earned, unfortunately — 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 a sense of cockiness as he recounts his story in an interview 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.

Sure there is pride in his achievements, but it is a matter-of-fact pride, and he comes across more as a man who is grateful for his position in life than one who credits himself.

When asked what he is most proud of, Ellis points to the group's continued operation within the family after nearly 40 years of existence. 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 web site, Ellis says he hopes the dealerships remain family-owned and -operated for foreseeable generations.

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

Ellis's grandson, Wesley Ellis, is the general manager of the Hyundai store, while his granddaughter, Stacey Hodges, runs the Saab of Atlanta dealership.

His 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 construction of the Norcross Cooperative Ministry Center, which has since 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 needy and in crisis.

Ellis rejected several 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 selling 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 at one time have dropped to below the $10 level.

“You can't say you'll never sell,” he says. “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 employee's 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 a problem for the group 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 close positions as people leave them, but as a practice, it will not force employees out.

Ellis also views downturns, such as the one the industry is experiencing now, as an opportunity to recruit top people and upgrade positions.

“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, good mechanics have proven to be the most difficult to find for the group. “We'll never turn down a good mechanic,” Ellis says.

While downturns provide opportunities, Ellis recognizes the challenges, but he talks about the challenges 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 always aware of what's going on in the industry or how events are affecting the business, says Ellis. So he demands management communicates 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 also says he often evaluates the pay for his key people during downturns. But not to cut it. Instead, he says he'll increase pay for those employees to offset lack of work.

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

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

Ellis says he got good training coming into the business during a time that was difficult.

“I traveled all over the Southeast looking for used vehicles to help us make some money,” Ellis says. 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.”

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.

Prior to selling cars, Ellis worked as an accountant for General Motors Corp. He then worked for GMC Coach and Truck Div.

He 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 often was limited by resources and real estate. Besides, he's refrained from paying the Blue Sky values that some of the premium brands, such as Toyota and Lexus, command today.

“I need a quick return on my investment,” 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 away.

When Ellis was 10 years old, his father moved the family to the Atlanta Prison Farm property after accepting a job as foreman at the prison. Ellis' grandfather was the prison's superintendent.

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

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

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 also 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 web site, and then make sure you respond immediately to leads.”

Another key to getting in front of customers today is getting their e-mail addresses, Ellis says.

“You have to sell it to them, that it's to their benefit to provide it,” he says. “We 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 communication from consumers. While some are positive, some aren't so, 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.

He 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.”

The elder Ellis served on numerous dealer councils as national chairman. He's also 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.

The number of charities Ellis helps is almost too many to mention. Ellis makes it a rule to only give to organizations whose financial statements he can see. He wants to make sure the money donated doesn't get used 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 it manages out of which contributions are made.

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 Ellis uses to raise nearly $70,000 to help needy employees. Vendors, employees and manufacturers contribute to the cause.

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 industry) 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. We're seeing it a lot with our Chevrolet customers. We just have to be honest with our customers.”

Ellis predicts a number of dealerships might 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 also thinks some brands may have to merge and likely will see less rebadging of vehicles. Some brands, such as Volvo, may have to back off its requirements that dealers have exclusive facilities. “A lot of single franchises won't make it,” Ellis argues.

Despite the challenges, Ellis, for now, is confident in his, and his family's future.