Kelley Blue Book Company, Inc.

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Kelley Blue Book Company, Inc.

195 Technology
Irvine, California 92618
U.S.A.
Telephone: (949) 770-7704
Fax: (949) 837-1904
Web site: http://www.kbb.com

Private Company
Incorporated: 1918 as Kelley Kar Company
Employees: 100
Sales: $11.7 million (2006)
NAIC: 511130 Book Publishers; 516110 Internet Publishing and Broadcasting

Kelley Blue Book Company, Inc., publishes information on new and used vehicle pricing, automobile trade-in values, and car ratings and reviews. Although it still offers the traditional print Blue Book Official Guide, the company now provides all of its information online. The company's Internet site has been rated the number one automotive information site by Nielsen/NetRatings and the most visited auto site by J.D. Power and Associates eight years in a row.

ORIGINS

Kelley Blue Book Company, Inc., dates to 1918 when Les Kelley founded the Kelley Kar Company with three Model T Fords and $450. The son of an Arkansas preacher, Kelley began his career in the car business at age 17 in 1914 when he drove to California to strike out on his own. Although he had neither money nor a job, he had a facility for mechanics, which he put to use in overhauling and selling used cars, earning enough money to pay his way through college.

Following World War I, in 1918 Kelley went into the car business by leasing part of a lot from a Los Angeles car dealer and establishing the Kelley Kar Company with three cars for sale. His brother, Buster, joined Les in the business at age 13 as a lot boy, changing tires and washing cars. By age 18, Buster was running the repair shop with a dozen mechanics, while Les managed sales. The business prospered and the company moved to progressively larger sites.

In the early 1920s, Les began developing a list of used vehicles and the prices he wished to pay for them in order to build new inventory. He routinely distributed the list to other dealers and to bankers, and the automotive community began to trust his judgment as an accurate reflection of current values. When a customer asked a dealer the value of his car, the dealer often referred to Kelley's list. Soon, Les Kelley recognized that he had a unique business opportunity, and in 1926, he published the first Blue Book of Motor Values, which provided factory list prices and cash values for thousands of vehicles. Les Kelley named the publication "Blue Book" after the Blue Book Social Register, which listed prestigious people in the community.

At the same time, Les and Buster Kelley developed their used-car dealership into a profitable and innovative enterprise in the early 1920s. On a lark, Buster Kelley, who ran the body shop, agreed to paint one of the Ford automobiles pink. After putting it in the showroom, it sold immediately. Seeing another pink automobile sell quickly, Buster had all the cars in the body shop painted pink and watched as sales soared. Buster Kelley soon worked his way up to general manager of the dealership and publisher of the Blue Book.

The Kelley Kar Company also moved to larger quarters in Los Angeles, occupying nearly an entire city block. The repair/body shop alone employed more than 100, with the dealership operating solely as a used-car business. In the 1920s and 1930s, new-car dealerships did not sell used cars, allowing the Kelleys to buy trade-in vehicles, as well as purchase used cars directly from the public. Unlike many companies, the Kelley Kar Company survived the trying times of the Great Depression, sometimes buying the entire inventories of dealers who were going out of business. Because few Americans knew how to drive during the 1930s and 1940s, moreover, it was left to Buster to spend his Saturdays and Sundays teaching buyers how to operate the vehicles. Seeing another business opportunity, the Kelleys set up an insurance company and auto club, and sold the entire package with the used automobile.

PROSPERITY DURING WORLD WAR II AND BEYOND

With the shortage of cars during World War II, used-car prices soared, causing the federal government to impose price controls. In so doing, the government used the Blue Book as a guide for setting price ceilings for both wholesale and retail values. At the same time, the Kelley Kar Company continued to innovate, buying cars in the eastern United States and shipping as many as 1,000 a month to Los Angeles in freight cars. After the war, the company offered the "G.I. Credit Plan," which allowed customers to put no money down and take up to five years to pay. In addition, Les Kelley bought a small Ford franchise during the war and afterward turned it into both a used and new-car dealership. To bring people into their showroom, the company took out full-page newspaper ads and began running television commercials. The commercials, which ran as long as 15 minutes, featured Buster walking around the showroom and pointing out special deals and offering guarantees. The commercials proved so successful that many people from the entertainment business began buying their cars from Kelley. By the 1950s, the Kelley Kar Company had become both the largest Ford dealer and the largest used-car dealership in the world.

In the late 1950s, Les Kelley, now in his 60s, decided to cash out of the business and sell the dealership. By 1962, the other Kelleys also had left the dealership and sold the price guide to the Cook family of Los Angeles, who then hired the Kelleys to run the business. Buster operated as publisher and his son, Bob, was assistant publisher. Bob Kelley had started in the car business much like his father had, as a lot boy, pushing around a tank and putting air in tires. Following college, he joined the company as a buyer and then moved into sales. With the Kelleys now in the trade publishing business, the company moved to Long Beach and later to Orange County, California. Les Kelley continued to be involved in the company until his death in 1990 at age 93. The Kelleys sold the Blue Book to car dealers, financial institutions, and insurance companies associated with the automotive industry on a bimonthly basis. The book was used to determine everything from loan values to suggested retail prices. In a further refinement of the product, the Kelley Blue Book became the first to adjust for mileage when reporting used-car values.

COMPANY PERSPECTIVES

Since 1926, Kelley Blue Book, the trusted resource, has provided vehicle buyers and sellers with the new and used vehicle information they need to accomplish their goals with confidence. The company's top-rated Web site, kbb.com, provides the most up-to-date pricing and values, including the New Car Blue Book Value, which reveals what people actually are paying for new cars. The company also reports vehicle pricing and values via products and services, including software products and the famous Blue Book Official Guide. No other medium reaches more in-market vehicle shoppers than kbb.com; nearly one in every three American car buyers performs their research on kbb.com.

The company also soon began producing a variety of both new and used new vehicle information publications. Kelley Blue Book began reporting new-car pricing when it published the nation's first New Car Price Manual in 1966. Kelley also developed recreational vehicle (RV) guides that placed values on items such as travel trailers, campers, all-terrain vehicles (ATVs), and snowmobiles. The company, moreover, produced guides for motorcycles and manufactured housing. When improvements in quality enabled cars to be on the road an average of nine years, Kelley Blue Book added the Older Car Guide, covering car values for up to 14 years, instead of the seven years provided by the original Blue Book. The company also introduced the Early Model Guide, providing values dating to 1946.

In 1978, Bob Kelley's son, Mike, joined the company. By 1981 he had become general manager and had helped Kelley Blue Book to develop systems for dealers to get trade-in values online. In 1992, the company created desktop software for dealers to print Blue Book window stickers, listing used-car mileage, equipment, and suggested retail value compared with the dealer's asking price. The innovation boosted consumer confidence, offsetting used-car dealers' heavy-handed promotional tactics, characterized by handmade signs and window paint pushing special "low mileage" or "fully loaded" deals. Use of the Blue Book window stickers soon became an industrywide standard practice in selling cars.

In 1993, the company published a consumer edition of the Blue Book, which quickly became the nation's number-one selling automotive book and made the USA Today bestseller lists. The consumer book featured 15 years of used-car values on more than 10,000 models of cars, trucks, and vans, and was sold in bookstores, auto supply stores, and other venues across the country. The company moved its well-established Blue Book brand name into the Internet age in 1995, creating its own website, www.kbb.com. In the three years prior to its appearance on the Internet, Kelley Blue Book distributed its new- and used-car values to subscribers via the Bloomberg Wire Service. After a six-month experiment in which visitors were charged $3.95 for new-car price reports, Kelley dropped its fees and added 21 years of used Blue Book values in 1996. The launch of www.kbb.com fostered the company's greatest period of growth, enabling it to reach millions of consumers.

CONTINUING INNOVATION AND EXPANDING INTERNET PRESENCE IN THE EARLY 21ST CENTURY

In 2000, Bob and Mike Kelley retired from the company. Kelley Blue Book, however, continued to develop new ways to connect consumers and the auto industry. With the aim of offering new information for car buyers, the company sought to provide data on what other consumers were actually paying for new cars. As a result, Kelley gathered and examined transaction prices from thousands of dealers across the United States, and in 2002, introduced its web site visitors to the Blue Book value for new cars. In that same year, the company selected Esurance Inc., a leading Internet-exclusive provider of personal insurance, as a premier insurance partner on Kelley Blue Book's web site. The partnership enabled visitors to kbb.com to consult Esurance's suite of auto insurance services, offering not only quotes online but also instant auto coverage. Kelley Blue Book also enhanced its Internet car-buying experience by allowing people to take advantage of new buy-direct services from CarsDirect.com and Greenlight.com, which provided referral services and links to more than 9,000 dealer web sites.

In 2001, the company introduced online Decision Guides and New Car Configurator as part of its suite of web-based tools to help better inform car-buying consumers. The Decision Guides were designed to help people narrow the field of models by price, body style, and manufacturer, while the New Car Configurator enabled consumers to build a specific, made-to-order car. Together with kbb.com's numerous links to financial institutions, insurance providers, and automotive manufacturers, the new tools established the company's web site as a one-stop automotive resource for both consumers and dealers. By October 2002, after nearly seven years in operation, Kelley Blue Book's kbb.com served its one-billionth pricing report for automotive consumers. The company also signed agreements with Yahoo's Hispanic Internet sites to bring its automotive information to the U.S. Spanish-speaking community. In November 2003, Kelley Blue Book signed a multi-year deal to join its car pricing information with cars. com's inventory of more than nine million used vehicles annually to provide consumers and dealers a comprehensive resource for pricing, buying, and listing used cars. The venture promised to reach more automotive consumers and dealers than any other web site available.

KEY DATES

1918:: Les Kelley establishes the Kelley Kar Company.
1926:: The first Blue Book is published.
1962:: The Kelleys leave the car dealership to focus on publishing the Blue Book.
1966:: Kelley Blue Book expands its offerings of new value guides for consumers.
1993:: The company publishes a consumer edition of the Blue Book, which becomes a bestseller.
1995:: The company enters the Internet age.
2004:: Kelley Blue Book acquires CDMdata and CDM Dealer Services.

In 2004, Kelley Blue Book further bolstered its Internet and market presence by acquiring the Minneapolis-based dealer services and solutions companies CDMdata and CDM Dealer Services. The agreements promised to bring Kelley Blue Book the most sophisticated online and offline vehicle marketing products and services. The acquisition of CDMdata enabled auto dealers to upload pictures of vehicles along with detailed descriptions for shoppers to see on the web site. In 2006, J.D. Power and Associates announced that Kelley Blue Book operated the most visited automotive web site among new- and used-car shoppers for the eighth consecutive year. Consumers had generated more than 1.5 billion pricing reports on the web site since its inception in 1995. In addition, the site was consulted by top financial institutions, government agencies, vehicle manufacturers, and car dealers across the country. Kelley Blue Book also had developed many other thriving business segments on its web site, including marketing research, syndication partnerships, and dealer and auto manufacturing advertising. With its dominant position on the Internet and its record of innovation, Kelley Blue Book promised to remain a leading provider of automobile information for consumers and dealers alike.

Bruce P. Montgomery