3 aftermarket areas that should rise

Jim Henry is a special correspondent for Automotive News

Three aftermarket product areas should see a boost this year based on market trends:

1. Wear-and-tear policies. The comeback in leasing should encourage the sale of protection policies that cover lease customers from lease-end charges. Toyota Financial Services confirmed recently it expects to launch Toyota-branded wear-and-tear policies in early 2012.

2. Extended-service contracts for older cars. Many customers are keeping their cars longer. At the same time, there's a relative shortage of newer used cars, reflecting the drop in new-car sales in 2008 and 2009. Service plan vendor American Auto Guardian Inc. expects F&I products for higher-mileage used cars to be hot in 2012, says Jeff Teuscher, vice president of sales.

3. Products that bring customers back for service. The downside of the comeback in new-car sales is that new-car margins will probably come under increasing pressure. That makes service absorption -- the degree to which the service and parts department can pay a dealership's fixed costs -- more important than ever.

Lithia Motors Inc., the nation's ninth-largest dealership group, says one of its goals for 2012 is to increase sales penetration of its Lifetime Oil and Filter product. The idea is to keep customers coming back to the dealership for service. Penetration was 36 percent in the third-quarter of 2011, up from 34 percent from a year earlier, the company said.

All in all, the market for F&I looks rosier for 2012.

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