Toyota Financial Services this month is launching branded lease protection products, commonly called “excess wear and tear” policies.
Toyota and Lexus dealers asked the captive finance company to come up with its own lease protection product, said Jim Miller, national manager of product development.
“We did a survey and interviewed dealers. About 25 percent of the dealers offered excess-wear products from an independent provider,” Miller said.
But dealers and customers alike see more value in a product that bears the automaker’s name, he said.
According to Experian Automotive, lease penetration for Toyota Financial Services, including Toyota, Lexus and Scion brands, was about 31 percent of the captive’s new-vehicle volume in the fourth quarter of 2011. That was above average for the industry, which had lease penetration of about 23 percent in the fourth quarter, Experian said.
Miller said that in its first couple of weeks on the market, sales penetration for the new lease protection product was about 20 percent of lease customers.
Branding is a growing trend in F&I products, and not just for lease protection products.
Ford Credit already offers Ford Credit WearCare lease protection policies. Mercedes-Benz Financial Services and BMW Financial Services have rolled out various branded products. In 2011, Allstate Dealer Services phased out its in-house brand, CarMor, in favor of the better-known Allstate brand.
Toyota Financial Services already offers a few other branded products, including extended-service contracts; guaranteed asset protection, or GAP; and credit life insurance, Miller said.
The new lease protection products are called 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. Both are backed by Toyota Motor Insurance Services Inc.
The products aren’t available to dealers who get vehicles from Toyota’s two U.S. independent distributors, Southeast Toyota and Gulf States Toyota.
The Toyota-branded product covers up to $5,000 in total “excess wear and use,” including single “events” up to $1,000; the Lexus version, up to a total of $7,500, including single “events” up to $2,000 each. The plans can be purchased only at the beginning of a lease. Neither plan waives excess mileage charges.
Pricing was not disclosed.