TrueCar Inc., an online car pricing and lead provider to dealers, will spend $150 million to become Yahoo's exclusive partner for vehicle shoppers on Jan. 1.
Under the three-year deal, say two sources familiar with the matter, TrueCar will replace Internet shopping site Cars.com at Yahoo. Yahoo will guarantee TrueCar.com at least 10 million unique visitors per month, allowing it to drive more traffic to its growing roster of 5,600 affiliated dealers.
By comparison, online shopping site Edmunds.com registered nearly 7 million unique visitors in September, according to Compete.com, an online audience tracking service.
Cars.com President Mitch Golub said the car-shopping site decided to end its Yahoo Autos relationship after four years to shift the money it was spending there to its own Web site.
Cars.com was responsible for providing new and used vehicle listings, but didn't control other content on the site, Golub said.
"Our relationship with Yahoo Autos didn't make sense anymore given the value we received," he said.
Eventually, TrueCar wants to use the Yahoo agreement to expand into the lease, loan and trade-in business by offering a fee-based service to connect consumers with various dealership services, the sources said. TrueCar declined to comment. Attempts to obtain comment from Yahoo were not successful.
The TrueCar-Yahoo deal indicates the growing importance of Internet shopping and Internet leads. And it's a sign of the growing financial muscle of lead-generating companies.
TrueCar, Cars.com, AutoTrader.com and others are growing with acquisitions and are jockeying to control big Internet starting points for shoppers. Most car shoppers start their vehicle search on the Internet before visiting dealers.
The force behind TrueCar is Scott Painter, a 42-year-old serial entrepreneur who has started 37 companies over the past 23 years.
In August, TrueCar agreed to buy ALG, formerly known as Automotive Lease Guide, from DealerTrack Holdings Inc. in a deal valued at $83 million. ALG's forecasts of vehicles' future residual values are used by automakers and finance companies to set lease terms.
TrueCar, a rival of Internet lead providers such as AutoTrader and Edmunds.com, has a pay-per-sale model, collecting $299 from participating dealers every time a shopper who comes to them through the TrueCar site buys a new vehicle.
TrueCar expects to increase its dealer participation to 8,000 by the end of 2012, the sources said.