TD Auto Finance has taken a page from Hyundai's playbook ― three years later.
TD Auto debuted a loan-protection program this week aimed at Canadian customers who lose their jobs during the first year of vehicle ownership.
The new program allows qualified consumers to sell back their car to TD, plus receive up to $7,500 to compensate for depreciation. It covers sudden job loss, but not bankruptcy, out-of-country job transfer, or several other major events that could prevent a customer from staying up-to-date on car payments. So far, about 3,500 GM, Chrysler, Mazda, and Kia auto dealers in Canada are taking part in the program, TD said in a statement.
While the concept is solid, the timing for this program seems a little off, considering that the job market in Canada is fairly strong. As of May, the unemployment rate in Canada was 7.3%, unchanged from the previous month. For the U.S., the unemployment rate was 8.2% in May.
Canadian auto sales, too, are on the rise; expected to return to their pre-recession levels this year and drive a profit of $1.5 billion, the highest level since 2002.
So did TD totally miss the boat on this program? Hyundai implemented a similar program in the U.S. back in 2009, the same year that the unemployment rate reached double digits. About 350 customers used the program to return cars they could no longer afford. But in the spring of 2011, Hyundai discontinued the program due to rising auto sales and a recovering economy.
As for TD, the bank claims it took more than two years to develop the program and this is merely a strategy to stand out in a competitive market.