Online Car Services Join Forces to Challenge Industry Leader

Online auto seller CarsDirect.com in Culver City said Monday it has formed an alliance with Autoweb.com Inc., another Internet car-shopping service, to link their Web sites and refer customers to each other.

Officials at both companies said the deal is aimed at broadening consumer appeal for both sites and combining the services they offer to compete with industry leader Autobytel.com Inc. in Irvine.

CarsDirect gains access to Autoweb’s site traffic, which is three times larger than its own. Autoweb, which currently refers customers to car dealers to conclude sales transactions, will be able to offer them all but delivery online, including no-haggle price quotes.

Autoweb, based in Santa Clara, had tested its own direct-selling service, but concluded it was faster and cheaper to pair up with CarsDirect, Autoweb Chief Executive Dean DeBiase said. “It gives us an instant world-class direct service, with no learning curve,” he said.

Executives at Autobytel, which added direct service in January, said they doubted the alliance would eat into their 50% market share.

As part of the deal, Autoweb will get $10 million of stock from CarsDirect, which is privately held. CarsDirect also will buy about 750,000 shares of Autoweb stock at a premium, paying about $8 million. Autoweb’s stock rose $1.63 Monday, closing at $8.19 a share on Nasdaq.