In talking to executives from within the industry, there is one trend that is growing – leasing. All agree that it is becoming a larger segment of automobile deals being done across the country. Many in the industry are predicting the trend will continue into 2014 (catch our January issue for a more in-depth look at this and other industry trends). This trend likely means that it is a good time for F&I departments across the country to either reexamine their lease customer offerings, or add them to their lineup.
This month, P&A went to many of the providers around the industry, and discovered an interesting fact – there just are not many options in the Excess Wear and Tear (EWT) product category. There are a few large providers that offer it, and they sell via agents, as well as private label agreements. We wanted to find out what sets each of them apart, and where they see this product category going – across the board, they are all very confident about the future of EWT products.
Technology, in particular, is one area they all agree will impact the success of lease products. The first impact is in the cars themselves – as more lease vehicles are outfitted with expensive technology, such as navigation and touch-screen infotainment systems, consumers will be responsible for paying for anything that is not in perfect working condition at lease turn-in. Many of the EWT programs now cover these items, and they all see EWT as being even more crucial for dealers and consumers alike in the future as the prevalence and cost to replace these systems only continues to increase.
The second impact of technology is in how the product itself is managed. Traditionally, many programs required consumers to pay the fees, and then submit a claim through their EWT provider to be reimbursed. Many providers are looking for ways to simplify that process, with options such as mobile apps for dealers that will allow them to verify coverage and apply it right at the time of turn-in, with no further action required by the consumer. This ease of use, they hope, will make it even more attractive across the board, and lead to greater adoption and product category growth.
EWT is not a new product category, but it is one that, in previous years, was pushed to the back of the F&I product line. With the consumer market moving again toward leasing as an attractive option, dealers, agents and providers should take another look at the category, and if it is not there already, consider adding it to their lineup for 2014. This look at the major players who offer it, and how they set themselves apart, should give every provider a great place to start.
Lease Product Roundup
Allstate Dealer Services (ADS)
Allstate Dealer Services (ADS) Tara Webb, National Sales Director & James Dean, Director Product Operations
How did you become involved in the Lease Return/Excess Wear & Tear category?
ADS launched the Excess Wear and Tear (EWT) program in July 2011, in response to the ADS Agent Advisory Council requesting a full suite of F&I products. Since the initial launch, the product was refreshed in July 2012, to simplify the offering to the consumer (i.e., one option for coverage that has a $0 deductible, coverage for tires, missing parts and electronics).
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American Auto Guardian Inc. (AAGI)
American Auto Guardian Inc. (AAGI) Kristen Gruber, VP, Product Development
How did you become involved in the Lease Return/Excess Wear & Tear category?
AAGI was the first TPA to introduce an Excess Wear & Tear (EWT) product back in 1997. We wanted a product designed for lease customers, and there wasn’t much to offer at the time. The product was a natural fit because most customers are familiar with the excess wear and tear provision in their lease agreement, and they understand their accountability for damages at lease end. Customer satisfaction at lease termination is key to brand loyalty and Excess Wear & Tear is a great way to improve CSI and increase retention.
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Safe-Guard Products International
Safe-Guard Products International Dave Duncan, President
How did you become involved in the Lease Return/Excess Wear & Tear category?
We recognize that products are sold three ways: cash, lease and finance. And there are different dynamics to leasing, such as shorter terms of ownership, and consumers who are looking for gas-and-go type options. We build products to help protect customers against cost of ownership, and for leases, that includes what happens at the end of the lease and what are they responsible for. It all started with asking ourselves, “What if we build a product that can protect consumers against excess wear and tear charges?”
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