In 1918, a young man named Les Kelley parked three Model T Fords in an open lot, put $450 in the till and started the Kelley Kar Company. It was to become the largest dealership in the world and, along the way, spawn a need for placing values on used and even new cars, known as Blue Book® values. Here is the story of how it all happened.
1914 was an interesting year. A 19-year-old named Babe Ruth pitched his first game in the majors as a Baltimore Oriole. And Les Kelley, the son of a preacher from Arkansas, made his way to California at the age of 17.
Les had no money and no job, but he owned an old car. It was in fine shape because he had a knack for mechanics and had overhauled it himself. All of his friends admired his car and frequently tried to buy it. After much persuasion he finally did sell it to one of them. With the money he received from this deal Les bought another old Ford. After giving this car a thorough overhauling, he traded it off, taking in two used cars and a little money on the deal. He reconditioned these cars and sold them. With the money he bought other used automobiles and found himself making enough money to pay his way through college.
1918 was an interesting year. Babe Ruth was now a pitcher for the Boston Red Sox, as they defeated the Chicago Cubs in the World Series. World War I ended on the 11th hour of the 11th day of the 11th month. And like many young men at the end of the war, Les Kelley sought to establish himself in the business world. He leased part of a lot from another car dealer in Los Angeles and started the Kelley Kar Company with three cars for sale. His brother, Buster, at age 13, joined Les as a lot boy, changing tires and washing cars. By the age of 18 Buster ran the repair shop with a dozen mechanics, and Les managed sales. Les and Buster did so well that they had to move to progressively larger sites.
In the early 1920s, to help acquire new inventory, Les Kelley distributed to other dealers and to banks a list of automobiles he wished to buy and the prices he was willing to pay for them. The automotive community began to trust his judgment so much as an accurate reflection of current values, they started to request the list for their own use. When someone asked a dealer what his used car might be worth, the dealer usually took a look at Mr. Kelley's list, conveniently tucked under his desk blotter. It didn't take long for Les Kelley to realize that he could provide an ongoing service to dealers and bankers alike.
1926 was an interesting year for individual achievement. A 19-year-old American named Gertrude Ederle swam the English Channel. "Our Trudy" was the first woman to conquer the Channel, and her time was almost two hours faster than the men's record. Babe Ruth led the Yankees into the World Series (although he made the final out in game seven, when he was caught stealing). Edsel Ford had risen to President of Ford Motor Company, soon to announce the Model A.
And in Los Angeles, Les Kelley decided to expand the list of automobile values he had been producing since 1918 and published the first Blue Book of Motor Car Values . He showed factory list price and cash value on thousands of vehicles, from Cadillacs to Duesenbergs, from Pierce-Arrows to Hupmobiles. A 1926 Packard sedan limousine with balloon tires might fetch as much as $3,825. But a 1921 Nash touring car, even with a clock, was only worth $50. Les named the publication Blue Book after the Social Register, because it meant that you would find valuable information inside. (Emily Post had also just published her first book of etiquette, which was to later be named Etiquette: The Blue Book of Social Usage ). And Les Kelley was to make Kelley Blue Book synonymous with the authoritative source for car values. To this day, across the country, people ask the question, "What's the Blue Book value of my car?" At the dealership Les was selling "Selected Blue Seal Automobiles," so he carried the blue and gold ribbon medallion onto the cover of the Blue Book, where it remains today.
Kelley Kar Company was always known for innovative approaches to selling cars. In the early 1920s all automobiles were painted black (the joke went that Henry Ford would say you could buy any color Model T you wanted, as long as it was black). The truth is the only reason that all cars were black was because black paint dried faster. Back then it took about a month to paint a car, because every coat on every part had to be air dried. Due to its unique chemical make-up, black paint dried faster than other colors. As it was, Ford had to devote about 20 acres of covered storage just for cars waiting to dry. One day, when Buster Kelley (shown here) was managing the body shop, an employee was about to repaint a car. He suggested they repaint it pink! Buster questioned the logic of this at first, but the painter agreed to repaint it black again for free if it didn't sell. So they painted it pink, put it in the showroom, and it sold immediately. So they painted another one pink, and it sold. Finally they painted every car in the body shop pink! Sales soared. (Incidentally, DuPont came up with a lacquer that, in any color, dried in two hours instead of a month, and the industry changed overnight).
Both the dealership and the publication continued to flourish. Buster Kelley eventually worked his way up to General Manager of the dealership and Publisher of the Blue Book. Kelley Kar Company had moved to the corner of Figueroa Street and Pico in Los Angeles and took up nearly an entire block. The repair/body shop at another location on Pico employed more than a hundred people. For many years the dealership operated solely as a used car operation, which was to become the largest in the world. In those days new car dealerships didn't sell used cars, so the Kelleys bought vehicles that new car dealers were taking in trade, as well as directly from the public.
Sometimes the line of cars waiting to be appraised would wind around the block all day. During the Depression there were times when they bought the entire inventory of dealers who went out of business.
The 1930s and '40s were a different world from the car business today. Often, as a part of the sale, Buster had to spend Saturday or Sunday teaching the buyers (sometimes both husband and wife) how to drive! The Kelleys opened their own insurance company and auto club and sold the whole package with the automobile.
World War II brought with it a shortage of cars. Used car prices got so high the government decided to put a ceiling on prices and used the Blue Book as the ceiling for both wholesale and retail values. Subscribing to the book became a must for dealers. At the dealership the Kelleys continued to innovate. They bought cars in the East and shipped as many as 1,000 a month to Los Angeles in freight cars. A person about to be drafted could sell his car to Kelley Kar Company and then continue to drive it right up until he left for the war. When the war was over, Kelley offered the "G.I. Credit Plan," which included no money down and up to five years to pay.
Buster's son, Bob, started in the business much like his father had, as a lot boy. He pushed a tank around and put 32 pounds of air in every tire (and made 50¢ a day). After college he joined the company full time as a buyer and then in sales. Les Kelley bought a small Ford franchise during the war and afterward the Kelley Kar Company operated as both a used and new car dealership. Full-page newspaper ads invited crowds into the Kelley showroom. And Buster became perhaps the nation's first dealer to use a new medium-television!
Commercials ran as long as 15 minutes, where Buster would walk around the showroom pointing out specials that offered a guarantee: return the car within 30 days and you could trade it for any other car at the same or higher price. Plenty of show-business people bought cars from Kelley. The picture above shows Randolph Scott taking delivery of his new Ford from Les Kelley. More success followed. By the 1950s they had become the largest Ford dealer in addition to being the largest used car dealership in the world.
By the late 1950s Les Kelley, then in his sixties, decided to cash in on some of that success. He made a decision to sell the dealerships rather than move them again (this time would have meant a move from downtown L.A., the current site of the Staples Center). By 1962 the Kelleys were completely out of the car business and devoting full time to the Blue Book , with Buster as Publisher and Bob (shown here) as Assistant Publisher. The company moved to Long Beach and later to Orange County. Les continued to be active in the business until his death in 1990, at the age of 93.
For the next 30 years the Blue Book was to thrive as a "trade" publication, meaning it was only sold to businesses involved in the automotive industry, such as car dealers, financial institutions and insurance companies. These customers used the bimonthly book to determine everything from loan values to suggested retail prices. Kelley Blue Book continued to innovate, becoming the first publication to show the effect of high or low mileage on a car's value.
As a natural evolution, the company began publishing other value guides. A New Car Price Manual was added in 1966, and the company became the industry's leading provider of pricing services. Auto dealers sometimes carried recreational vehicles or took them as trade-ins, so they needed information on these too. Kelley Blue Book developed RV guides that place values on everything from travel trailers to campers to ATVs to snowmobiles. A separate Motorcycle Guide was published, and a Manufactured Housing Guide.
As the quality of cars improved, people began to drive them longer. The average age of a vehicle on the road today has been estimated to be about nine years. The Blue Book covered seven years, so it made sense to produce a sister publication, the Older Car Guide , that provided values another 14 years back. Then came the Early Model Guide , which today provides values all the way back to 1946!
1978 was an interesting year. The New York Yankees beat the Los Angeles Dodgers in the World Series (but without Babe Ruth). In Britain, the first test tube baby was born. And the Kelley family tradition reached a third generation when Bob's son, Mike, joined the company. Mike's background in computer science made him a natural to usher in the computer age for vehicle values. In essence, ever since Les Kelley's first newsletter, the company has really been in the information business. The delivery method of that information keeps evolving, from a letter to books to PC-based software to the Internet! Mike Kelley became General Manager in 1981 and helped develop systems for dealers to get trade-in values online. That led to PC software for new and used car pricing.
For many years there was no advertised price label on the new cars offered for sale at dealerships. Then, in 1958, Senator Monroney introduced a bill that required a window sticker on every new car disclosing its features and the manufacturers suggested retail price (MSRP). When it became a law, it led to increased customer confidence and a surge in auto sales. That sticker today is still called the Monroney label.
But as late as the 1990s car dealers still promoted used cars on the lot with hand-made signs and window paint touting "low mileage!" or "fully loaded!" It was time for Kelley Blue Book to innovate again. They created desktop software for dealers to use to print the Blue Book window sticker, listing the mileage, equipment, etc, on the used car, along with its Blue Book Suggested Retail Value compared to the dealer's asking price. Once again the result was increased customer confidence. Since 1992, every year several million used cars are sold by displaying the Blue Book label.
In 1993 Kelley Blue Book made its initial venture into the consumer marketplace by publishing a Consumer Edition of the Blue Book . It quickly became the nation's number-one-selling automotive book, often making the USA Today best-seller list. It features 15 years of used car values on more than 10,000 models of cars, trucks and vans and is available in bookstores, auto supply stores and other locations.
1995 was an interesting year, filled with surprising events - the Oklahoma City bombings, the O.J. Simpson trial verdict and the Dow Jones hitting record highs, once at 4,000, then 5,000.
Quietly though, something called the World Wide Web was introducing regular people to a medium called the Internet. It was innovation time again, and Kelley Blue Book saw a further opportunity to facilitate transactions between consumers and retailers. The company created a Web site, kbb.com, running on a single PC and offering first, new car prices in 1995 and then its famous used car values in 1996. Early in 1996, 20,000 people a month found their way to the site, largely by word-of-mouth. That number has grown a bit since then and now exceeds seven million visitors a month coming to kbb.com and millions more viewing Blue Book information on numerous portals and other automotive sites, including those of auto manufacturers and car dealers.
When kbb.com was launched in 1995, it charged consumers $3.95 for a pricing report. Almost immediately Kelley Blue Book received email from some customers arguing that information on the Internet should be free. Rather than disagree with its own customers, the company pulled the plug on charging after just three weeks and began the switch to a business run like radio and television, supported by advertising and partners. The pricing reports have been free to consumers ever since.
In 2000, Bob and Mike Kelley retired from the company, but the entrepreneurial spirit lives on with today's company leaders. Even though Kelley Blue Book exited the insurance, auto club and warranty businesses decades ago, the company leaders were always interested in new ways to help connect consumers and the auto industry. While the Kelley Blue Book brand has remained focused on providing the trusted information needed in the buying and selling of vehicles, the breadth of what information is necessary has grown considerably. At one time, new car buyers used just MSRP as a reference point and later, the invoice price. But studies showed that there was a desire to know actual transaction prices for new cars. Kelley Blue Book went to work gathering and analyzing transactions from thousands of dealers across the United States, and in 2002, introduced kbb.com visitors to the Fair Purchase Price for new cars - what are smart buyers are really paying for them.
The scope of the Internet today is hard to imagine. It is estimated that there are more than 600 billion Web pages (more than 100 pages for every person on the planet). But getting new information onto Web sites in an organized way can still prove challenging. It was time for Kelley Blue Book to innovate yet again. The opportunity came in 2004, when Kelley Blue Book acquired a start-up company called CDM Data. With their products and services, auto dealers can quickly take pictures of vehicles, add detailed descriptions and get them uploaded to the Web for car shoppers to see.
In the 10 years since kbb.com was launched the Internet has become not only an integral part of everyday life, but has also fueled the biggest growth in Kelley Blue Book's history.As a result of the unprecedented growth, by 2005 the company had outgrown its headquarters and moved again to a new building in Irvine, marking its 26th year in the O.C.