My sister has one of those on her truck due to getting into financial trouble in the past. I can see how a dealer would like it, since it looks like less hassle than having to repo the car if payments stops.
Just one of the prices people pay when the abuse credit and get themselves into trouble as my sister did. I think it may be limited to younger payers and the like, since my mother went through similar financial issues due to medical issues with her husband and does not have such on her car. Nor did an older friend with her previous car loan.
I heard about this somewhere else, maybe it was slashdot.
Indeed, there's no plan to put these devices on every car sold with a loan. They're reserved for the people with the worst money handling skills, bad credit, bankruptcies, etc... So while your mother and the older friend may of had some financial difficulties, their financies were probably not sufficiently in the toilet. Either that or they just paid the higher interest rate...
The dealer can save money, thus offer a car at a lower interest rate(or even at all) because the dealer doesn't have to worry about the car disappearing too much. The system disables the car if it doesn't get the unlock code, plus it contains a GPS tracker and 'call home' type system(probably cellular).
When the lien is fulfilled and lifted, they remove it from the car.