The Morse Group's Hoffman said that for a dealership, there are two key advantages. First, customers have to return to the selling dealer to get the benefit. Second, customers are more likely to buy another car sooner if they know they can get out of their negative equity.
He said it's too soon to tell how many customers will take advantage of the program at trade-in because the retail group only started offering the program a few months ago. But he said new-car customers generally are receptive to the idea. "Everybody can relate to what it would be like to be upside down," he said.
Family First was not involved with the Hyundai Assurance Program.
Wanderon said when trade-in protection is sold separately, retail prices range from $600 or $700 to about $1,100, depending on coverage. He confirmed that, like other F&I products, dealer cost is roughly half that amount.
He said some dealerships sell trade-in protection separately. Others, like the Ron Tonkin Family of Dealerships in Portland, Ore., offer a base program, which covers up to $2,500, at no extra charge. Tonkin customers can buy an upgrade to a $5,000 limit, he said.
Hoffman said Ed Morse Automotive does it both ways. Some stores in the group sell trade-in protection separately, and some offer it as standard. He said those that sell it separately have a sales penetration rate of about 25 to 30 percent.
The Morse Group is No. 63 on Automotive News' list of the top 125 dealership groups with new-car retail sales of 9,297 in 2011; Tonkin is No. 96 with sales of 7,028.