Zag Sets Sights on Competing in Online Auto Marketplace

By Jennifer Reed, Online Editor
June 20, 2006

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SANTA MONICA, Calif. (June 20, 2006) -- Zag, an automotive company that runs www.zag.com, announced it has acquired Automotive Invitational Services, an auto-buying program operator that serves more than six million members, or 12 clubs, of the American Automobile Association. To date, Zag's platform has been deployed by Capital One Auto Finance through its DriveOne program, and Zag recently purchased Autoland, a credit union auto-buying service.

Along with the recent acquisitions, Zag said it selected Kelley Blue Book to provide new car pricing and configuration data for the platform.

Through the platform, Zag said it will provide AAA members with a "better" car-buying experience -- one that permits the consumer to complete most of the transaction online. Company executives said they also tried to simplify the offline research and buying process by providing call center and broker services for consumers who prefer offline transactions.

"We are delighted to be joining a revolutionary new company with powerful technology and a fresh take on car buying," explained Shelly Goldman, founder and chief executive officer of AIS. "Zag's approach will help us deliver to AAA members a private-label auto-buying program that enables them to spec the car they want, price it online and pinpoint that car in inventory, and that's just the beginning."

Scott Painter, founder and CEO of Zag, said, "For consumers, there are fewer brands in the automotive space more respected than AAA. AIS understands the trust that consumers place in membership organizations and the higher expectations they have for personalized service. As it drives sales, this acquisition will further our goal of helping affinity groups like AAA provide tailored, online destinations to their members so they can help their numbers to save time and money."

Zag said its acquisition of AIS is part of a long-term strategy to grow the number of affinity buying groups and member organizations that it services, such as AAA, consumer rewards programs, large employers and trade unions. According to Jupiter Research, 30 percent of new-car buyers make their purchases through affinity groups, credit unions or employers and 82 percent start their search online.

As for Kelley Blue Book, its data will be incorporated into Zag's platform, noted company executives.

"Kelley Blue Book is one of the most trusted and recognized names in car buying, and we're delighted to integrate its New Car Blue Book value directly into the purchasing process," said Painter. "Kelley Blue Book's data will help us provide buyers with transparent, upfront pricing, which is exactly what consumers want."

In addition to Kelley Blue Book data, Zag said it will also license and offer its customers specification data and expert editorial reviews from the company.

"Consumers want to know they are getting a good deal on a new car, and with Zag's partner, dealers using our New Car Blue Book value as a no-haggle price, it's practically ensured," said Leo Drew, executive vice president of customer sales and strategy for Kelley Blue Book. "Zag's incorporation of our data into its new technology and buying platform improves the car-buying process for players on all sides of the transaction."

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