The future was uncertain when Jim Ellis and his wife Billie sold off their assets, depleted their savings, cashed in a retirement fund, and borrowed $165,000 to launch Jim Ellis Volkswagen in 1971.
The couple only knew they wanted to follow their dreams.
But Jim was used to taking risks and working hard. By the time he graduated from West Georgia College and Georgia State University, he had worked as a prison guard and foreman; sold insurance, IBM products and real estate; and held other jobs to work his way through college. He’d worked in the automotive industry for over a decade and was ready for the next step.
Fifty years later, Jim Ellis Automotive Group thrives. It boasts 21 dealerships, employs 1,400 people, and has three generations working in the family business. Industry recognition has piled up, with Jim Ellis Automotive Group receiving the coveted Consumers’ Choice Award for 17 consecutive years. Carfax Top-Rated Dealer Awards and manufacturer awards round out the company’s accolades.
But though success has followed the dealership for five decades, Jimmy Ellis, son of Jim and Billie and now CEO, reports uncertainties remain. The automotive industry was, and still is, an industry in a constant state of flux, impacted by fluid economics, supply chain backlogs, inventory and technician shortages, and ever-more demanding consumers.
Jimmy reports a successful dealership in today’s business climate is one with strong leadership; a sustainable company culture that is “recognizable, unique and reputable;” and employees that deliver an unparalleled customer experience.
“You can’t have one without the other,” he says. “You can’t have great culture without the right leadership, and you can’t have great culture without great people, who communicate well and deliver and execute a great call.”
The Move to Omni-channel Sales
Even when the pandemic darkened the global business climate, Jim Ellis Automotive Group continued to shine. The company shifted its business online when shutdowns prevented dealerships from opening,
The move went off without a hitch because the business had established an omnichannel buying platform three years earlier. Dubbed the Jim Ellis Express Way, the platform allows consumers to shop for vehicles from the convenience of home.
Customers can shop thousands of vehicles, configure their payments, value their trade, secure financing and more from the platform. They can complete purchases online and have vehicles delivered to their home, find a vehicle and complete the purchase at the dealership, or as the pandemic recedes, shop at the dealership.
“The Jim Ellis Express Way injects flexibility and transparency into purchasing or leasing a new or pre-owned vehicle,” he says.
Since launching the Jim Ellis Express Way, the company sees fewer consumers shopping on site. According to Jimmy, today’s customers do not want to spend hours at a dealership test driving vehicles and negotiating a deal. Rather, most consumers prefer a hybrid sales model, where they find what they want online then complete their transaction at the dealership.
Jimmy reports that even during the pandemic just 10% of customers purchased vehicles online. He’s quick to add that he expects online transactions to soar as consumers become more comfortable purchasing $50,000 to $70,000 vehicles online. “Eventually we will complete 30% to 50% of vehicle sales online,” he says.
He advises dealerships to proceed slowly and carefully to ensure they deliver a positive experience online. Some dealers use their online platform to “capture” customers and force them into the dealership, he says, “and many times, it’s not a great experience for the customer.”
Full transparency into products and pricing must be available online. “It’s all about transparency in the digital entry to the retail process,” he says. “There needs to be someone on the other end of the online communication tool that is professional, informative and responsive. Consumers do not want to use multiple sources to buy a car. They want a quick, convenient, and transparent sale and dealers must make it that way.”
Jimmy recommends training salespeople in consultive selling and allowing customers to drive the purchase experience. Most sellers feel they must “manage and control the process” and meet “face to face to present products, financing options, and other programs,” he says.
“That’s what sellers were taught, and it’s a difficult change for them,” he stresses. “Many employees have changed this mindset, but we still have some who are apprehensive. We continue to work with them because they are very productive FSMs; they just need to learn to do things differently.”
The pandemic also produced a semiconductor chip shortage that has pressed inventory levels as more people seek to buy vehicles. Top auto manufacturers warn that without needed chips a potential 1.3-million shortfall in U.S. car and light-duty truck production could result.
Dealers are already reeling from inventory shortages. Cox Automotive subsidiary vAuto puts current vehicle inventories at a 44-day supply and warns supply may bottom out in the low 30s. Historically, supply averages 60 days.
Jimmy views the inventory shortage as an opportunity for savvy dealerships. He says navigating inventory issues differs from adjusting to challenges like the financial market collapse during the Great Recession, interest rates of 21% or more in the early 1980s, and the oil embargo of 1973. -
“The current inventory shortage at a time of higher demand is driving up market transaction prices on new and pre-owned vehicles,” he says. “Auto dealers are operating out of inventories they have never seen so low. We now have to sell into the pipeline.”
This means dealers must take orders on incoming vehicles instead of selling out of floor plan inventory. “That is a paradigm shift for many dealerships, particularly for brands like Ford or Chevrolet that historically have a 60- to 90-day supply. But we are learning through this process that it’s more efficient and profitable to not have inventory sitting, waiting for someone to buy it.”
Delivering a Quality Experience
Because exemplary service sells cars, Jim Ellis Automotive Group puts quality service at the center of all it does.
“A successful, well-operated service department could be the best sales tool you have,” says Jimmy. “You can create customer loyalty through good service. Conversely, you can alienate customers quickly with poor service. The service and sales department must work together to ensure every customer has a satisfactory ownership experience.”
Jim Ellis Automotive Group boasts a Satisfaction Index Score in the low-90s, a noteworthy score for a dealership service department. The company makes every effort to repair and return vehicles quickly, but also expanded its loaner fleet to soften the blow of service delays.
“And we communicate well with customers and ask them how we can make the service process quick, easy and convenient for them,” he says.
“[Still] we have some room for improvement,” he adds, noting that recruiting enough technicians to meet routine maintenance needs and complete complex repairs remains a struggle.
“We can get C- and D-level techs to replace tires, change oil, and do alignments, but diagnosing software, electronics and computer issues takes another level of training,” he says. “Today’s vehicles are super computers on wheels. We need bright individuals able to understand, diagnose and repair these sophisticated vehicles.”
Jim Ellis Automotive Group does its part to change negative perceptions about the work to draw more techs to the industry. The company regularly visits high schools and local vocational schools to tell students about “a great career that can take you anywhere in the world, where you can make a big annual salary,” he says.
The company also launched Jim Ellis University, a fully equipped off-site service center, where paid apprentices can train as repair technicians. “It’s a real investment. An apprentice might be there three months to a year, depending on their level of confidence, before they get sent off to one of our dealerships,” he says.
Many dealerships handle the shortage by poaching talent from other dealerships. “That always creates problems,” Jimmy says. “If you want to be successful long term, you must structure a way to develop your own technicians. Many of our best technicians came in at the entry level. All they’ve known is our organization and our culture.”
A Platform for the Future
Readying a business for the next 50 years also takes careful planning. The Ellis family recognizes that creating a successful business that younger generations want to work at takes foresight and inspiration.
“Once you get into the second generation, sometimes the business starts to fall apart. The kids don’t want to go into the family business or lack the skill set to be successful,” he says. “It’s important to make sure you have a great company and operation that inspires and motivates the next generation to join it. No one wants to join an operation that looks like it won’t have long-term success.”
Successful transitions require excellent training and development opportunities for family members but give younger generations the freedom to make their own mistakes and learn from them, he says.
Jim Ellis Automotive Group now employs three generations, but Jimmy hopes some of the nine members of the fourth generation will join the company as well.
The company also sees that future success hinges on maintaining the positive company culture Jim and Billie fostered so long ago. A good company culture “inspires and motivates employees to treat customers well,” he says.
Jim Ellis Automotive Group trains every new hire in the founder’s service philosophy. Employees learn to greet customers warmly, remember their names, treat them like family, listen to their needs, show them respect and tailor each experience to their needs.
“We want every customer to have a Ritz-Carlton, Chick-fil-A experience,” he says.
They then reward employees for their efforts. Every month the automotive group gives a “Client Champion Award” to an employee. Any employee can nominate someone for the award. They announce the Client Champion on the employee portal, present them with a congratulatory letter, and a small monetary gift.
“Employees can see what others do to win the award,” he says. “The portal might say, ‘Bob, received this award because he came into the dealership after hours to help an out-of-state customer with a broken-down vehicle. He ordered the part and repaired their vehicle so the customer could continue their journey.’”
Treating employees well ensures they treat customers well. Jimmy says this involves treating employees as you’d like to be treated, providing employees with the tools and resources they need to grow in their careers, and then compensating them fairly.
“You have to protect the culture of trust and reputation at all costs,” he says. “Today’s customers have lots of choices.”