Toyota Financial Services is preparing to launch “excess wear and tear” policies this month. These are actually branded lease protection products. Jim Miller, the national manager of product development, said that Toyota and Lexus dealers have requested the captive finance company to create its own lease protection product.
Miller said that a survey was conducted and they interviewed dealers. He found out that around 25% of the dealers offered excess-wear products from an independent provider.
However, both dealers and customers see more value in a product that has the automaker’s name. Experian Automotive said that the lease penetration for Toyota Financial Services (which cover the Toyota, Lexus and Scion brands) was about 31% of the captive’s new-vehicle volume in the fourth quarter of 2011.
Experian said that this is above average for the industry, which had a 23% lease penetration in the fourth quarter. During the first two weeks on the market, Miller said that sales penetration for the new lease protection product was about 20% of lease customers.
Branding is fast becoming a trend in F&I products and not only for lease protection products. Ford Credit WearCare lease protection policies are already being offered by Ford Credit.
A variety of branded products have been released by Mercedes-Benz Financial Services and BMW Financial Services. Allstate Dealer Services phased out its in-house brand, CarMor, in 2011 in favor of the more popular Allstate brand.
Miller said that Toyota Financial Services already offers a few other branded products, such as extended-service contracts; guaranteed asset protection, or GAP; and credit life insurance.
The new lease protection products are named TFS Excess Wear & Use Protection Plan, for Toyota and Scion dealers, and LFS (for Lexus Financial Services) Excess Wear & Use Protection Plan for the Lexus brand. Toyota Motor Insurance Services Inc. is covering them both. [source: Autonews]