The used-vehicle side of a dealer's business is rapidly catching up to new-vehicle in the extent of F&I products offered.

With pre-owned units registering increasing shares of dealers' volume, and often yielding far greater profits than new models, F&I providers are responding to the demand for "equal" or "near-equal" coverage on the product side.

Subprime provider Credit Acceptance Corp. (CAC) introduced used-vehicle leasing after a pilot program.

Chairman and CEO Donald A. Foss says the trial run showed it to be a viable "alternative for nonprime consumers with limited access to traditional sources of consumer credit."

The advent of used-unit leasing, once frowned upon by most F&I producers as a highest-risk way of financing returnable older vehicles, opens the door to the new phenomenon of end-of-lease wear-and-tear contracts and extended service policies.

Among major providers, Ford Credit and JM&A have pioneered wear-and-tear policies that pay damage incurred at the end of leases on vehicles being returned to lessors.

The policies sooth a sore point for many dealers who've faced customer retention problems if those damage amounts assessed to customers are too substantial.

Another new product being rolled out to used-vehicle purchasers is personal auto insurance. It's catching on across the country as Ford Credit, megadealer Sonic Automotive and BMW Financial Services offer tie- ins at the dealership level with major insurers.

In the rollout of Ford Credit's personal insurance initiative with the Hartford Financial Services Group, Ford and Lincoln Mercury dealers have found that used-vehicle buyers are somewhat more receptive to a sales presentation by the F&I manager on the collision and property damage policy.

"It's opened a new wave of potential business for us," says Jeanne Davis of Mullinax Ford South, Margate, FL, the state where Ford piloted personal auto insurance before going nationwide with it as a Hartford partner.

She adds, "The buyer of an off-lease or program vehicle is interested in the insurance package and likes the fact that for the first time, dealers offer it as well as service contracts and credit insurance."

Used-vehicle leasing is gaining momentum as an offshoot of the popularity of new-unit leasing.

At GMAC's 11th annual F&I conference May 13-17 in Scottsdale, AZ, several attendees from GM dealerships say they may raise the subjects of end-of-lease coverage, personal auto insurance and used-car leasing.

The business manager of a 15-store megadealer with GM, Ford and DaimlerChrysler franchises in the Southwest says he liked the idea of having an agent of a major insurance company in an office at his Ford dealership.

He explains, "It adds a value to the transaction and ties him closer to us down the road.

"It's a key part of the process we hadn't considered before. The others should do it or we'll be selling Hartford coverage to their customers."

GMAC has frowned on wear-and-tear insurance as being unnecessary because of the company's extensive "gap" protection on leases, pointing out also that it offered personal vehicle insurance in the 1980s but found it too cumbersome and unprofitable.

DaimlerChrysler surveyed dealers attending the 2000 NADA convention in Orlando, FL, on whether they would like a personal insurance program. The automaker reportedly is now discussing the matter with several major insurers.

Sonic Automotive began a pilot program on personal insurance at its 14 Texas dealerships. Sonic platform chief Rene Isip reports sales of about 100 policies in March at Lute Riley Honda, Richardson, TX, "half to new-car and half to used-car buyers."

"It's a great idea with lots of sales promise," says Mr. Isip. "Nationwide Insurance is our partner and we're looking for it to be a big permanent addition to the F&I lineup."

In Columbus, OH, where Nationwide is headquartered, Sonic dealer Hatfield Hyundai-Isuzu-Subaru opened a Nationwide agent's office in mid-April. It's amid four other dealerships - the others handling Toyota, Volkswagen-Kia and Lincoln Mercury.

BMW Financial Services has started a personal insurance program with Chubb, whose agents also are working with dealer F&I personnel.

"In line with our new BMW Bank credit card and direct vehicle loans," says Robert E. Devine, U.S. market managing director for BMWFS, "the personal auto coverage adds to our customer experience and makes the BMW dealer a base for their automotive needs."

Used-vehicle leasing, says CAC founder Foss, is unique in that the Southfield, MI-based company purchases the leases outright, thus freeing dealers from future collections on contracts.

"As we expand our leasing business to new markets and dealers," says Mr. Foss, "leasing could become a more significant part of the company's overall operations."