And in some states there are legal reasons why dealers should sell key-replacement coverage as a part of other plans and be careful how they present it to customers.
KeyCare, a five-year, unlimited coverage program offered by the EasyCare unit of Atlanta's Automobile Protection Corp., retails for $299. The program will replace keys multiple times and includes roadside assistance, alternative transportation, towing and as much as $200 to cover replacement of other keys, such as house keys. It will even send a locksmith to a consumer's house.
Between 350 and 400 dealerships offer the key program, says Larry Dorfman, CEO of Automobile Protection.
Among them is the Jeff Schmitt Auto Group near Dayton, Ohio, which has offered it for about a year and a half. Penetration averages 40 percent, says Steve VanGorder, general manager of the six-store group.
Each of his finance managers decides how to sell it, but VanGorder says those who bundle it have the best results. KeyCare with dent-and-ding coverage, the most popular package, offers about a 20 percent cost savings vs. buying the products separately, he says.
The dealership group pays $50 to $150 for a key program, depending on the number of years it covers, and typically charges customers about a 100 percent markup.
Morris Nissan of Charleston, S.C., sells the Safekey program from Safe-Guard Products International of Atlanta. The program generates the most interest from owners of Murano, Altima and Maxima smart-key vehicles, says Mike Smith, the dealership's finance director. The dealership offers Safekey as a stand-alone product for five years for $240, which includes key replacement and reprogramming. The dealership's cost is $98.
More than half of the 300 to 400 dealerships offering Safekey sell it as a bundled option and customers generally buy it bundled, says Kitty Haas, vice president of marketing for Safe-Guard. She says it's usually grouped with tire-and-wheel, dent-and-ding and windshield protection.
Dealer markup and profitability on key-replacement products can be similar to those for GAP and tire-and-wheel products, Haas says. She declined to be more specific, but that implies markups of 50 to 100 percent.