i remember in the older version of the game there was one attached to the frame/unibody of the vehicle that was the same as the hitch color. I never got them to connect but i never really tried either
In real life, it's where the tow hitch is. You remove a little cover and it exposes a hole, in the spare tire area, there's a bolt with an eye, thread that in, and then hook the tow chain/strap there and pull the car out of a ditch without breaking the axle. In the game, it's a hitch point, for things like "giant chain" if you install the Torsions Mod.