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As Black Friday Approaches, Consumers Prepare to Increase Holiday Spending

Home & Retail Intelligence Report
November 2024
    
This holiday season, it seems Santa has delivered a financial paradox. As consumers prepare to be inundated with Black Friday, Cyber Monday and Green Tuesday sales and promotions, economic indicators are sending analysts conflicting signals. Inflation is down from last holiday season, but consumer prices remain stubbornly high. It begs the question:  what are consumers ready to spend on themselves and their loved ones this holiday?

According to recent JD Power data, bank customers in the United States are ready to open the purse strings to make the holidays merry and bright. Overall, 59% of customers say they are prepared to spend the same or more this holiday season than they did a year ago.

Still, that jolly news isn’t without its caveats. Most notably, customers are leaning on credit, such as cards, loans or Buy Now Pay Later plans, as much as they did last year. That reflects customers’ precarious overall financial health,¹ which is largely unchanged since 2023. Only33% of customers are considered financially healthy compared to 30% a year ago.

Holiday Spending Trends Up

Nearly 1 in 5 (19%) customers say they plan to spend more this holiday season than they did a year ago. That is up from 17% in 2023 and 13% in 2022. That number is highest among customers that are financially healthy and customers under the age of 40.

Customers’ willingness to spend may reflect enhanced financial preparedness. Overall, 31% of customers say that they budget for holiday spending with specific holiday savings, up from 27% a year ago. Another 41% say that they budget for general purchases. Only 28% say they do not budget, down from 31% a year ago. The rate of those who say they do not budget at all is highest among vulnerable customers, stressed customers and those 40 years old and older.

 

Customer Still Lean on Credit

While customers may rely on savings to help pay for holiday gifts, credit will play a major role in decking the halls. When asked how their use of credit has changed compared with a year ago, 19% say they are using more credit cards, loans or Buy Now Pay Later options. That rate is unchanged from each of the previous two shopping seasons, when inflation was far worse. In fact, the rate has remained relatively unchanged for all metrics (about the same credit usage, using less credit and unsure).

When asked if they plan to make a major purchase for their home (e.g., an appliance, furniture, etc.), customers are expressing a more conservative approach. Only 21% say they plan to make a major purchase during the holiday season, with the highest rate among those that have healthy finances and are under the age of 40.

Among customers that do plan to make these purchases, 40% say they are influenced by seasonal sales and discounts. That’s not surprising, as 76% of all customers say price is the biggest influence in their purchasing decision, with sales and promotions being the next largest driver (50%).

Interestingly, customers intend to shop across a variety of channels without one option dominating. In fact, just as many customers say they prefer in-store shopping to online shopping (47% for in-store vs. 48% for online). That is largely driven by customers’ interest in ease of returns and exchanges, extended store hours, in-store and drive-up pickup options.

 

Holiday Helpers

As analysts examine the data, a concerning trend emerges: many customers will be spending as if their finances have fully recovered, even if their overall financial health is unsteady.  This potentially risky behavior could lead consumers to surpass their budgetary limits and rely on already strained lines of credit, placing them in a vulnerable financial position.

For retailers, this spending trend could present a seasonal sales boost, but they should brace for the potential post-holiday spending slowdown once customers start getting the bills.

Find out More

This Home & Retail Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in October 2024. It was authored by Andrea Lau, home and retail practice lead at JD Power. Please contact us at the numbers below to connect with Ms. Lau or to learn more about the underlying research.

Media Contacts
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

 

¹JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

Clear Communication and Management of Expectations at Admission and Discharge Emerge as Key Drivers of Hospital Patient Satisfaction

Healthcare Intelligence Report
March 2024

 

In the post-pandemic world, hospital staffing has become a moving target. Costs have soared for many facilities, forcing them to stretch their resources to match fluctuating demand. Add in frequent provider turnover and employee burnout, and these conditions have left many hospitals across the United States struggling to meet demand. Hospital patients are noticing.

According to JD Power, hospital patients in the United States that had an overnight stay during the past six months are frustrated by limited access to doctors and long wait times for rooms. That is a sobering proposition for hospitals, particularly in the era of value-based care where patient satisfaction scores directly correlate with reimbursement.

Admission and Discharge Problems

The adage that it’s hard to overcome a bad first impression seems to hold true, and that is a foreboding trend for some hospitals. Almost half (49%) of patients say it took more than two hours to reach their room after arriving at the hospital, a disconcerting stat considering more than one-third (34%) of overall patient satisfaction is dependent upon the admission and discharge processes.

The aspects of admission and discharge that patients value most focus on the hospital providing information in writing about what symptoms or health problems to watch for after leaving the hospital, and how well that information prepares the patient for leaving the hospital. Hospitals that effectively provide post-discharge care notes that are accessible for all patients—available in different languages, easy to understand, and are reviewed prior to discharge—can improve their satisfaction scores and avoid some readmissions.

Nurses Drive High Care Scores

Hospital patients express a high level of satisfaction in their interactions with their care providers, but many are simply not able to interact with a doctor when needed. Only 36% of patients say they are always able to speak to a doctor when needed, down from 43% in 2011 when the study was last conducted.

While contact with doctors may prove elusive, patients are very satisfied in their dealing with nurses. More than three-fourths (83%) of patients say the nurse always described their care plan for the day and 80% say a nurse manager/leader checked in to see how their hospital experience was going. What’s more, 87% of patients say they were told in advance of when to expect tests and procedures, and 85% say scheduled tests and procedures were performed on time.

Food and Lack of Sleep Drag Down Satisfaction

Jokes about hospital food are as old as time, and it seems patients are still just as dissatisfied with it as ever. Patients expressed low satisfaction scores for the quality of their hospital’s food and beverage, the variety of menu choices and the timeliness of meals.

In addition to poor food choices, only 45% say the area around their room was always quiet at night. While sometimes tests and vital checks make that hard to avoid, hospital staff can boost this area by making sure conversations aren’t had in the halls and any unnecessary lights are turned off. On a positive note, 68% of patients say their room and bathroom were always kept clean.

Opportunities to Improve

As hospitals navigate an era of healthcare that rewards both patient outcomes and satisfaction, there are plenty of opportunities that will leave patients happier and healthier during and after their stays. Making patients feel like a partner in their care, by engaging them with easy-to-understand care notes or coordinating scheduled admission times in a way that reduces long waits, can help. Improving the ancillary services, like food and beverage, would also make a difference. Facilities that can do this, plus manage staff and ensure patients feel they have access to their caregivers, will see a meaningful boost in their overall patient satisfaction.

Find Out More

This Healthcare Intelligence Report is based on the JD Power 2023 U.S. Hospital Patient Satisfaction Study^SM that included responses from 2,885 hospital patients residing in the United States. To qualify, respondents had to have had an overnight stay at a hospital in the past six months. The study was fielded in October-November 2023. It was authored by Christopher Lis, managing director of global healthcare intelligence at JD Power. Please contact us at the numbers below to connect with Mr. Lis or to learn more about the underlying research.

 

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

Is Artificial Intelligence the Financial Industry’s Saving Grace? U.S. Banking Customers Unconvinced

Banking and Payments Intelligence Report
March 2024

Just as the inflation rate seems stuck at just above 3%, the financial situations of U.S. banking customers have similarly hit a plateau.

According to JD Power, the percentage of U.S. bank customers that are financially healthy[1] remains near the all-time low. While banks would love to use artificial intelligence (AI) to help customers out of this malaise, customers remain unconvinced that AI has a practical benefit to their financial health.

Stuck in Neutral

Customers’ financial health seems to have bottomed out. Nearly one-third (30%) of respondents are financially healthy, while 45% fall into the vulnerable category, virtually identical to levels we have seen during the past five months.

Customer sentiment regarding financial health status, stress levels and empowerment to improve one’s financial situation also remain virtually unchanged month-over-month. The effects of inflation are still being felt, but they are declining slowly. Lower grocery prices are the most recognized way customers are feeling relief from inflation, with prices for dining out, clothing/discretionary items and energy also falling.

 

Customers Not Sold on AI

While banks are investing time and resources to integrating AI into their offerings, customers are simply not convinced that AI is to be trusted. More than half (56%) say they only somewhat trust the quality of the output generated by their bank’s use of AI, with 32% saying they don’t trust it at all.

 

Part of that could be how banks’ utilization of AI is perceived by the customer. Bank customers either view their institution’s use of AI as less advanced than other industries’ solutions, or they simply don’t know. If banks are hopeful to incorporate AI into their solutions, they must understand that the measuring stick is not other banks, but how AI is used in other industries as well.

 

Falling Short of the Hype?

A central theme to AI marketing is often that it helps customers “focus on what matters most,” but banks have yet to prove AI solutions achieve that goal. Just 28% agree that the use of AI lets them focus on what matters most about their financial life. Nearly half (43%) said they do not know.

 

What’s more, customers do not believe AI is being used to personalize their service or experience. Nearly one-third (32%) said AI is not personalizing their experience at all, while 57% said only somewhat.

 

Proving the Concept

In a time of financial uncertainty, customers want tangible, personalized solutions from their banks. Broad, sweeping messages from institutions about how AI can help them simply don’t augur the type of trust that customers need.

For banks to truly integrate AI to a point where their customers feel comfortable, they need to go the extra mile by making the individual understand how they’ll personally benefit from it. A promise to keep them focused simply doesn’t win hearts and minds. To bridge this trust chasm, they need to show a true value tailored to each customer’s need. It’s a heavy lift, but if banks want to roll out AI in a way that will make meaningful progress, it’s the only way.

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in February 2024. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

[1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.

 

 

 

3 Ways AI Can Help Advisors Deliver Personalization Without Adding Complexity

Generative AI holds promise to revolutionize the wealth management industry, yet the extent of opportunities may be constrained by client and regulatory comfort levels.

Recently, Craig Martin, Executive Managing Director of Wealth and Lending Intelligence at JD Power, lead an insightful conversation with a panel of experts on AI opportunities for the wealth industry at the State of WealthTech conference, hosted by CFA Society New York. The panel included:

• Samuel Deane, President and CEO at Deane Wealth Management
• Yelena Melamed, Head of Product at Catchlight
• Charles Poliacof, Chief Revenue Officer at Module IQ’s

Together, they explored the intersection of AI and personalized financial services. With perspectives from direct client communications, market research and AI­ engineering, the group set out to answer a critical question: how can AI help advisors deliver personalization without adding complexity?

Reflecting on this discussion three key takeaways on how advisors can leverage AI.

 

1. Reimagining the Role of the Advisor

Technology and digital solutions have become increasingly critical to enabling advisor efficiency and empowering more proactive client engagement. The JD Power 2023 Financial Advisor Satisfaction Study uncovered that 28% of advisors feel that they do not have enough time to spend with clients and indicated that too much of their time is being spent on administrative and compliance tasks.

Deployed in the right way, generative AI could be guided to take those administrative and compliance tasks off advisors’ plates, freeing their time to focus on creating deeper client relationships.

 

2. Enhancing Personalization  

Engaging clients with targeted messages that resonate with their unique situation is crucial for advisors to build trust, and AI can be leveraged to streamline  the process of creating and optimizing those communications to give space to create more personal connections.  

• Drafting Communications: AI can assist in composing personalized messages tailored to each client’s needs and preferences.
• Timing and Topic Identification: AI algorithms can determine the best times to communicate with clients and suggest relevant topics based on their interests and behavior.
• Advanced Analysis: Through rapid analysis of complex financial data, AI can facilitate scenario exploration and personalized financial planning.
• Task Automation: AI can automate routine administrative tasks, allowing advisors to focus more on building meaningful relationships with clients.
• Efficiency Boost: By leveraging AI, advisors can save time on manual processes, enhancing productivity and enabling them to dedicate more attention to personalized client interactions.

 

“The biggest impact a financial advisor has is often not in the giving of technical financial advice but in how that advice is received and acted upon by the client, said Craig Martin, Executive Managing Director, Global Head of Wealth & Lending Intelligence at JD Power. “This depends on the ability of both the technology and the advisor to truly personalize the relationship in a meaningful way.”

 

3. Demonstrating Value While Ensuring Trustworthiness

Generative AI and its potential impacts can’t be ignored. Advisors and firms of all sizes need to be clear about what their unique value proposition is to clients and what elements of the relationship can be ‘outsourced’ to technology.  In the JD Power Full-Service Investor study we see that when advisors clearly explain their firms digital capabilities and how clients can use them, 86% strongly agree that their Advisor’s recommendations are in their best interest and that drops to 51% if they aren’t totally clear on digital resources. Clearly communicating to clients where and how AI is and is not leveraged provides the transparency needed to maintain trust.

 

In essence, AI isn’t a magic bullet; it’s a powerful tool that, when wielded effectively, can transform the way financial advisors engage with their clients. While it’s easy to get lost in a sea of jargon and technicalities, Craig Martin clarifies that the biggest impact a financial advisor has is often not in the giving of technical financial advice but in how that advice is received and acted upon by the client. AI can enhance but not replace the relationship between the advisor and clients.

Ready to explore how JD Power’s wealth management experts can help you navigate the intersection of AI and personalized financial services? Contact us today to leverage our insights and industry-leading solutions for your advisory practice.

 

About the Author: Craig Martin, the Executive Managing Director of the Wealth and Lending Practice at JD Power, leads data analysis and thought leadership for Auto Finance, Consumer Lending, and Wealth Management industries, driving positive change and superior business outcomes. His insights, featured in numerous publications, address customer experience, satisfaction, and industry challenges.

Fixed Wireless Consistently Outperforms Fiberoptic and Cable Internet in Customer Satisfaction

Technology, Media & Telecom Intelligence Report
April 2024

 

Mobile carriers are flooding the airwaves with catchy commercials boasting about their ability to provide affordable, high-speed home internet. The advertising push aims to build awareness for Fixed Wireless Access (FWA).

FWA is an innovative new form of 5G or 4G LTE wireless technology that delivers high-speed internet by leveraging existing wireless networks run by Mobile Network Operators (MNOs). While FWA is unlikely to be as fast a connection as Fiber, it is fast enough to connect at a speed that handles most internet needs.

Advancements in 5G technology allow FWA to provide higher data rates, reduced latency, and improved reliability. 5G-based FWA has the potential to rival traditional wired connections, enabling gigabit speeds and unlocking new applications and services. According to the latest JD Power data, customers with FWA are embracing the new technology, as FWA is already besting fiberoptic service in terms of customer satisfaction.

Fixed Wireless Access Resonates with Consumers

In an analysis of customer experiences with FWA services, JD Power finds that the benefits extend across diverse residential landscapes. In fact, 5G FWA users have the highest satisfaction, regardless of their location. Fiber, while a strong contender, ranks second in customer satisfaction, underlining the robust performance of 5G FWA in meeting user expectations across various geographies.
 

With recent advancements in capabilities, Cable internet has successfully increased its speed capabilities, rivaling those of Fiber. When evaluating customer satisfaction, both Cable and Fiber internet prove to be on par with each other, matching the performance of 4G LTE FWA. However, both trail 5G FWA, as the satisfaction levels associated with 5G FWA surpass all other forms of internet by an impressive margin of more than 20 points (on a 1,000-point scale).

The Price Factor

While the performance and reliability of both fiber and 5G internet are high, the primary distinguishing factor between connection types is the cost of service.

While Fiber and 5G FWA exhibit comparable performance and reliability experience scores 5G FWA leads on cost-of-service by a margin of more than 60 points. As customers still wrestle with a high cost of consumer goods and inflation stubbornly hovers around 3%, cost will likely play a pivotal role in industry disruption, with all signs pointing toward more customers actively seeking out FWA.

The Next Frontier

FWA is broadening the scope for wireless carriers, allowing companies offering fiberoptic and mobile networks to expand into new territories. That means more choices for customers and, ultimately, a broader spectrum to search for the best price and experience.

The implications for companies like T-Mobile, which can offer this affordable alternative without cutting into other aspects of their businesses, or for a potential disrupter looking to make waves in the space, could be revolutionary. As FWA adoption grows, companies currently in the industry and curious onlookers will surely be taking notice.

Find out More

This Technology, Media & Telecom Intelligence Report is based on data from the 2023 U.S. Residential Internet Service Provider Satisfaction Study, which includes responses from 23,623 customers that currently have internet service with a provider and was fielded from October 2022 through August 2023. It was authored by Carl Lepper, senior director of the technology, media and telecommunications intelligence practice at JD Power. Please contact us at the numbers below to connect with Mr. Lepper or to learn more about the underlying research.

 

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

How Serious is Climate Change and What Can Be Done to Address It? For U.S. Electric Utility Customers, Answer Depends on Where They Live

Utilities Intelligence Report
September 2023

Most electric utility customers in the United States acknowledge that climate change is a real phenomenon, but few believe there is much that can be done about it, according to new JD Power research into consumer awareness, support, and engagement with utility sustainability efforts. Beneath the nationwide average, however, variation exists on a state-by-state basis. 

As part of its ongoing research into customer sentiment and perceptions of electric utility sustainability initiatives in its annual Sustainability Index, JD Power tracks the key drivers that determine whether a customer believes their utility is a leader in addressing climate change. Among them, the study evaluates consumer perceptions on the severity of climate change and beliefs on what can be done to address the issue. This report takes a deep dive into those issues to identify the states where electric utility customers are most and least concerned about climate change, along with their respective levels of confidence in fixing it.

State-by-State Views on Seriousness of Climate Change

JD Power measures customer views on climate change at the state level by asking them to rank the overall seriousness of the issue on a scale of zero to four, with zero being, “There is no climate change,” and four being, “Climate change is very serious.” The analysis captures data from 48 states and the District of Columbia. Utilities in Alaska and Rhode Island did not qualify for the study. 

The national consensus is 2.54, which translates to a 52.7% majority of customers who say they believe climate change a “very serious” or “serious” threat. Utility customers in Washington, D.C., have the greatest sense of urgency about climate change, with an average score of 3.11—the only region evaluated in the study to score higher than 3. It is followed by Vermont (2.91), Washington (2.80), Hawaii (2.79), and California (2.77). 

At the other end of the spectrum, electric utility customers are least concerned about climate change in Wyoming, which posted an average score of 2.11. North Dakota (2.20), South Dakota (2.25), Mississippi (2.26) and Alabama (2.28) follow closely.

Is There a Solution?

When it comes to finding a solution for climate change, electric utility customers are growing increasingly pessimistic. Nationally, the number of customers who say they believe a lot can be done to reduce climate change has declined steadily to 37.3% this year from 40.3% in 2020. JD Power measures customer sentiment on the prospect of addressing climate change by asking how much can be done. Respondents answer on a scale of “a lot,” “some,” “very little” or “nothing.”

The data paints a particularly skeptical picture. In all areas examined, a majority believes “nothing,” “very little” or “some” can be accomplished to deal with the issue. The overall average for those choosing anything but “a lot” per state is 63.5%. In fact, most states are above 60%.

Vermont is the most optimistic state with only 53.4% of respondents believing little can be done, followed by Washington, D.C. (56.1%), Oregon (58.0%), California (58.6%), and New Hampshire (59.0%). 

Wyoming is the most pessimistic state, with 77.7% of respondents saying they feel little can be done, followed by South Dakota (71.2%), Louisiana (69.8%), West Virginia (69.3%) and Kansas (67.8%).

Moving Forward

Regardless of location, most consumers consider climate change a real issue. At the same time, there’s work to be done for increasing awareness of its severity and achieving greater buy-in about utilities ability to do something about it. Today, 82% of electric utility customers are served by a utility with a stated carbon-reduction target^[1]. However, utilities, local governments, and non-governmental organizations need to make more of an investment into customer education and customer participation in energy reduction programs and other initiatives designed to reduce carbon emissions and improve utility sustainability.  Right now, just 19% of electric utility customers are even aware of those efforts, according to our research.

If they are going to become part of the solution, electric utilities need to improve customer engagement and better incentivize participation in sustainability initiatives.

While there’s a great deal of work to be done, some utilities are providing an excellent roadmap for others. AEP Energy and the Southern Company provide reports on their sustainability efforts. Portland General Electric offers a range of clean energy pricing options for both residential and business customers and has a high adoption rate. Both Southern California Edison and DTE Energy offer consumers a wide range of rebate programs. Sacramento Municipal Utility District (SMUD) and Arizona Public Service (APS) have achieved high adoption rates for their time of day/time of use programs. Charlotte, N.C.-based Duke Energy provides a comprehensive set of energy use and analysis products and services. There are others making strides as well but they are only a starting point. 

The issue of climate change is complex and there is no magic communications solution. In some cases, utilities may need to double down on their existing efforts. In other cases, some trial and error may be required to find out what works. Picking up the slack will require more time, determination, and resources than most utilities are currently devoting to their efforts around sustainability and to engaging with their customers about their clean energy goals and plans.

Find Out More

This Utilities Intelligence Report is based on responses from 70,486 utility customers nationwide that were fielded from June 2022 through May 2023. It was authored by Andrew Heath, Ph.D., managing director of utilities intelligence at JD Power. Please contact us at the numbers below to connect with Dr. Heath or to learn more about the underlying research.

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected] 

 

[1] SEPA Utility Carbon-Reduction Tracker™. Smart Electric Power Alliance (SEPA). Retrieved July 21, 2023, from https://sepapower.org/utility-transformation-challenge/utility-carbon-reduction-tracker/ 

Are Mass Market Buyers Being Priced Out of EVs?

E-Vision Intelligence Report
September 2023

Are Mass Market Buyers Being Priced Out of EVs?  

Key Findings

• Premium EVs Far More Affordable than Mass Market EVs, on Relative Basis: The extra cost that premium automobile buyers are paying to own an electric vehicle (EV) vs. a comparable internal combustion engine (ICE) vehicle is significantly lower than that paid by mass market buyers. For example, in the compact SUV segment—the highest volume vehicle segment in America—the average five-year total cost of ownership of a premium EV is just $287 higher than a comparable ICE vehicle. Mass market EVs in that compact SUV segment cost $9,259 (18.0%) more than their ICE counterparts across five years of ownership.
• Ford Mustang Mach-E Nearly $3,000 More Expensive to Lease than Mercedes-Benz EQB: At the individual model level, this affordability gap between luxury and mass market EVs is most pronounced when comparing the Mercedes-Benz EQB with the Ford Mustang Mach-E. The total cost of a three-year lease for the EQB is not only lower than that of a comparable ICE vehicle in the luxury compact SUV segment, it is $2,899 lower than that of the Mach-E, which is a mass market vehicle. 
• New Mass Market Entrants Coming in at High End of Price Curve: On average, new vehicles in the compact SUV segment are priced anywhere from $10,000-$20,000 higher than comparable ICE vehicles. One exception to this trend is the new Chevrolet Equinox EV, which is projected to be introduced toward the lower end of the price curve, putting it in line with comparable ICE compact SUVs.

Executive Summary

Automobile affordability is not linear. It’s a relative concept that needs to be evaluated in context by getting inside the mind of the consumer and weighing the complex mix of variables swirling around their brains when they’re considering a new vehicle. While a Bentley Bentayga may feel like a bargain at $200,000+ when cross-shopped with a $350,000 Rolls Royce Cullinan, the average Toyota Camry shopper might not be so quick to call either one of them affordable.

That same logic holds true in the EV market. Although many EV forecasts and analyses of relative affordability tended to lump all EVs into the same bucket when there were not that many models to compare, the rapidly growing markets for luxury and mass market EVs are shaping up to be incredibly different places with distinct consumer profiles. As those markets continue to grow, some stark differences are starting to emerge when it comes to relative affordability. Surprisingly, that dynamic is playing out in favor of the premium brand buyer where the affordability gap between EVs and comparable ICE vehicles is negligible. In the mass market segment, however, EVs come with a hefty premium over their ICE counterparts.

This E-Vision Intelligence Report dives into key data points trending in each monthly EV Index update, along with other data points gathered from JD Power studies and pulse surveys, to spotlight emerging trends and important shifts in EV consumer sentiment.

EV Tax on the Mainstream Buyer

EVs now account for 8.4% of the retail new-vehicle purchase and lease market, which represents considerable growth during the past few years, but before that market share can reach a meaningful tipping point, manufacturers will need to tap into the mass market segment. Currently, the lion’s share of EV sales (76%) is occurring in the luxury market. One big reason for that: relative affordability.

According to JD Power data that tracks five-year total cost of ownership in the compact SUV segment—again, the highest volume retail sales segment in the United States—the average premium brand buyer is paying just 0.4% more for an EV than a comparable ICE vehicle. By contrast, the average mass market brand buyer is paying 18.0% more to own an EV. 

Specifically, the average five-year total cost of ownership in the premium compact EV SUV segment is $71,707. That’s just $287 higher than the average for ICE vehicles in the same segment. By contrast, the average five-year total cost of ownership in the mass market compact EV SUV segment is $60,736. That’s $9,259 more than the average for comparable ICE vehicles.

Won’t You Buy Me a Mercedes-Benz?

Digging deeper into specific model-level comparisons, the gap between mass market and premium EV affordability becomes even more detached from conventional wisdom. For example, the most affordable EV relative to its comparable ICE models in the compact premium SUV segment is the Mercedes-Benz EQB, which has an average five-year cost of ownership of $72,107. If one were to buy a comparable ICE vehicle, it would cost $71,420 across the same period, a difference of $687. By contrast, the Ford Mustang Mach-E, which is the least affordable EV in the mass market compact SUV segment, has a five-year total cost of ownership of $67,719. The average five-year total cost of ownership in its ICE competitive set is $51,477, a difference of $16,242.

Leasing costs distort the traditional luxury/mass market relationship even further. Looking at the average total cost of ownership on a three-year lease for the Mercedes-Benz EQB vs. the Ford Mustang Mach-E in July, the EQB ends up being $2,899 cheaper overall than the Mustang Mach-E. In August, however, Ford started passing through the full federal tax credit of $7,500 to Mustang Mach-E lessees, which will bring three-year lease costs back down to just below the EQB.  

Equinox Might Buck the Trend 

The compact SUV segment is clearly a priority for manufacturers and there continues to be a great deal of new activity in the space, with several new models being introduced. On average, mass market EVs are priced around $16,000 more than comparable ICE vehicles. 

One notable exception to that trend is the Chevrolet Equinox EV, which is reported to be coming to market this fall with an estimated starting price of $40,000, followed by a base-trim offering in the spring at $30,000. This would put the Equinox squarely in the center of the cost curve for ICE vehicles in the compact SUV segment, potentially starting a movement towards parity in the mass market.

Methodology

This JD Power E-Vision Intelligence Report is based on data and insights from the JD Power EV Index and the JD Power EV Retail Share Forecast. The JD Power EV Index is an analytics tool to benchmark the growing EV market in the United States. It tracks millions of data points aggregated into six categories—interest, availability, adoption, affordability, infrastructure and experience—to evaluate the progress to parity of EVs with ICE vehicles in the U.S. Each month, the JD Power electric vehicle practice will analyze these data points, and others to spotlight emerging trends and important shifts in consumer sentiment that are helping to define the fast-moving EV marketplace. 

Find out More

This report was authored by Elizabeth Krear, vice president, electric vehicle practice; Brent Gruber, executive director, electric vehicle practice; Stewart Stropp, executive director, electric vehicle practice; and Kristen Richter, senior manager, electric vehicle practice. The JD Power E-Vision initiative is a company-wide program focused on maximizing JD Power industry-leading EV data, analytics, insights and solutions. Please contact us at the numbers below to connect with the authors or to learn more about the underlying research.

 

Media Contacts

Shane Smith; East Coast; 424-903-3665; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

Even as Economic Hope Increases, American Bank Customers Remain Worried about Rising Cost of Living

Banking and Payments Intelligence Report
September 2023

 

Even as Economic Hope Increases, American Bank Customers Remain Worried about Rising Cost of Living

As the summer begins to wane and banking customers in the United States start to look toward the final quarter of 2023, some are taking heart in the burgeoning signs of economic improvement. 

According to the latest JD Power data, financial health scores  have remained stable for months, and customers say they have been given hope by lowering inflation, wage increases, and a robust job market.

Still, some customers remain discouraged. One in five said they do not see any signs of hope, and many are still concerned that the rising cost of living and an inflated housing market will force them to accumulate more debt and, in some cases, delay retirement.

The New Baseline

There has been no significant change in overall financial health. Nearly one-third (32%) of respondents are financially healthy, while 44% are vulnerable.

 

 [1] JD Power measures the financial health of any consumer as a metric combining their spending/savings ratio, creditworthiness, and safety net items like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.Customer sentiment regarding their financial health status, stress levels, and empowerment to improve their financial situation are mostly unchanged since the beginning of the summer as well.

 

Hopes and Fears

While overall sentiment remains unchanged, customers expressed an array of concerns that they have about the economy. The most common worry (21%) is the rising cost of living, not including housing or healthcare. That was consistent across all segments. 

Not having enough money to retire (9%), the rising cost of renting a place to live (9%), incurring more debt (6%) and not being able to reduce existing debt (6%) are also prevalent fears.  
 

 

Customers didn’t express total gloom and doom, though. Nearly one-fifth (17%) said they are heartened by lowering inflation, while 8% said wages have increased in their respective field of work and 7% said there are a high number of job openings.

Somewhat troubling is the 25% of customers for whom none of the options provided offered any hope. The most financially unhealthy—and customers over age 40—were the most likely to express hopelessness.

Money on the Move

As customers contend with these mixed sets of emotions, some continue to move deposits from their primary bank accounts. Deposit movement proportions are staying constant month over month, however the percentage of deposits moved changes with greater frequency. 

 

Interestingly, these deposits are not necessarily being moved to high yield accounts (HYAs). While awareness of HYAs is increasing over time, there are fewer accounts of this type being opened. What’s more, fewer customers are moving from one HYA to another to chase rates, and fewer are saving automatically into their HYAs. As banks try to discern where the deposits are going, these trends illustrate a need for banks to reach out to their customers to increase engagement and, ultimately, keep more deposits in-house.

Personalizing the Path

This month’s data is a mixed bag of optimism and malaise, and the variance underscores the importance of personalized solutions. The economic landscape in the U.S. is currently akin to a Rorschach test: customers are interpreting hope and fear through their own individual lens. As a result, banks must be proactive in tailoring not only their outreach, but their tools and assistance to each individual customer.

The benefit of this personal engagement is that customers’ future actions become more predictable, with banks being able to better anticipate the next need of their customer before they go looking at another institution. Banks can’t simply rely on broad swaths to improve their customer satisfaction. While the economy is in a holding pattern, they’ll need to be proactive about helping customers read the tea leaves and take the next steps.  

Find out More

This Banking and Payments Intelligence Report is based on responses from 4,000 retail bank customers nationwide and was fielded in August 2023. It was authored by Jennifer White, senior director of banking and payments intelligence at JD Power. Please contact us at the numbers below to connect with Ms. White or to learn more about the underlying research.

Media Contacts
Brian Jaklitsch; East Coast; 631-584-2200; [email protected]
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

Reasonable Repayment Terms Drive BNPL Usage

Banking and Payments Intelligence Report
October 2023

Reasonable Repayment Terms Drive BNPL Usage

It’s been several years since financial services upstarts reimagined buy now pay later (BNPL) as a point-of-sale (POS) payment method. Since then, this once-obscure way of transacting has been placed front and center at the checkout by merchants worldwide, and 28% of U.S. consumers now say they’ve used it at least once in the previous 90 days. 

But who, exactly, are these BNPL customers and why are they choosing this form of payment over countless other options? While many reports have suggested that BNPL has been most attractive to financially vulnerable consumers who are already overextended on their credit cards, the real BNPL customer profile is decidedly more nuanced. In fact, according to findings from the JD Power 2023 POS Choice Satisfaction Study, BNPL is attracting consumers from across the financial health spectrum, and most consumers are drawn to it for the same primary reason—they like the repayment terms.

Repayment is Top of Mind

Both credit cards and BNPL allow consumers to make purchases they may not be able to pay for immediately. However, differences in consumer perceptions about repayment terms help explain why BNPL is attaining prominence at the checkout. One-third (33%) of consumers indicate a primary driver for using BNPL is “repayment terms are reasonable,” more than any other factor and significantly more than the 6% of consumers who say it’s a primary reason they use credit cards.

Having reasonable repayment terms may also explain the second most common reason consumers use BNPL: budgeting/avoiding overspending and debt. One-fourth (25%) of consumers indicate they use BNPL because it is helpful for budgeting, while only 8% say the same about credit cards.

As one JD Power survey respondent wrote, “[My BNPL plan] is easy to use. There are no complicated terms. It does exactly what it says it will. It’s split into four payments…and that’s that. No tricks, gimmicks, or little details lurking.”

BNPL Isn’t Just for Those Who Are Financially at Risk

Industry watchers have been rightfully concerned about the potential for BNPL to make it easy for consumers to add to their already bloated debt loads. Fifty-five percent (55%) of U.S. consumers are currently at risk of being unable to cover their basic financial needs according to the August JD Power U.S. Polaris Pulse report. Rising costs and increasing debt burdens are affecting people’s ability to pay, and proliferating BNPL loans could worsen matters.

Unsurprisingly, these at-risk consumers are more likely to use BNPL than others. According to the JD Power data, 32% of consumers at risk of being unable to cover their basic financial needs used BNPL in the previous 90 days; this is higher than the 28% usage rate among the total population.

However, these consumers are not alone in using BNPL at the POS. Nearly one-fourth (23%) of consumers who can cover their basic financial needs also use BNPL. Like their at-risk peers, they are drawn to the repayment terms and budgeting benefits, but also BNPL’s low cost of use. They appear to use BNPL to purchase out of preference rather than necessity, an observation likely attributable to many at-risk consumers as well, given the relatively low loss rates on BNPL loans industry wide.

Financially Healthy Customers are Happiest with BNPL

Compared with their at-risk peers, financially healthy consumers also have higher overall satisfaction with BNPL brands and are more likely to be repeat users.

In the JD Power 2023 BNPL Satisfaction Study, administered simultaneously with the POS Choice Study, financially healthy consumers had an overall satisfaction score of 704 (on a 1,000-point scale) with BNPL brands. At-risk consumers, on the other hand, averaged 577.

Financially healthy consumers are also more likely to use BNPL again. More than half (61%) indicated they’d used BNPL more than once in the previous 90 days. This was 5 percentage points higher than the percentage of at-risk consumers who had used it more than once.

While the study results reveal that overall satisfaction scores and reuse rates vary significantly between BNPL brands, financially healthy consumers are happier and more likely to reuse on average. These findings indicate that BNPL has even more room to grow if lenders make targeted improvements and further accentuate dimensions of their offerings that consumers are more satisfied with.

Where Lenders Can Help

Despite using BNPL for its reasonable repayment terms, consumers want lenders to do more. They indicate that the reasonableness of terms is more important than other dimensions of the overall BNPL experience. Yet, consumers have lower satisfaction with those terms than with less important dimensions, such as the security of their account information.

BNPL lenders should do more to explain and administer their repayment terms clearly and without any surprises, particularly for consumers who are financially at risk. The study also reveals that some BNPL lenders have more work to do than others as satisfaction with the lowest-rated brands was significantly lower than the highest-rated brands.

And, not to be forgotten, other dimensions of the BNPL experience also matter to consumers. Differences between lenders vary significantly across these dimensions as well, indicating targeted opportunities exist for each lender to make improvements that drive even more satisfaction, loyalty and demand for BNPL.

Find out More

This Banking and Payments Intelligence Report is based on responses from the JD Power 2023 POS Choice Satisfaction Study and the JD Power 2023 BNPL Satisfaction Study, which included 45,768 and 4,004 responses, respectively. It is authored by Miles Tullo, Managing Director of Banking and Payments. Please contact us at the numbers below to connect with Mr. Tullo or to learn more about the underlying research.

 

Media Contacts

Brian Jaklitsch; East Coast; 631-584-2200; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]

EV Incentives to Wield Heavy Hand in Q4 2023 and Q1 2024 Sales Volumes

E-Vision Intelligence Report
October 2023

EV Incentives to Wield Heavy Hand in Q4 2023 and Q1 2024 Sales Volumes

Key Findings

• 7,500 Reasons to Wait Until January to Buy an EV: Starting in January 2024 buyers eligible for the $7,500 Clean Vehicle Credit will be able to transfer those funds to the dealer for use as a down payment at the point of sale. This is a significant departure from the current implementation of the credit, whereby eligible buyers do not receive the credit until they receive their tax returns. Whether this new treatment of the credit will cause active EV shoppers to wait until January or buy in the fourth quarter will hinge largely on how well dealers and original equipment manufacturers (OEMs) handle end-of-year incentives and customer education.
• EV Sales on Pace to Hit Three Million by Year End, Four Million by End of Q3 2024: The long-term trend in EV market share has grown significantly from 2.6% of all new-vehicle sales in February 2020 to 9% in September 2023, putting total EV sales volume on pace to reach the three-million-unit milestone by December of this year. At this pace, JD Power projects EV sales to top four million units by the end of Q3 2024.
•  New Calculus of Cross-Shopping Emerges in Compact SUV Market: Despite overall improvements in EV affordability, a stark discrepancy still exists between EV and internal combustion engine (ICE) vehicle pricing in the compact SUV segment, which is the highest volume retail sales segment in the United States. The dislocation has introduced a new cross-shopping phenomenon for the 67% of prospective EV buyers who are also considering non-EVs, whereby for the same price as a mass market EV, they could purchase a luxury ICE vehicle of the same size.

Executive Summary

“What do I have to do to put you in a new EV today?” That’s a question more automobile dealers will be asking in the fourth quarter of 2023 as a complex mix of growing consumer interest, new vehicle incentives and a dislocation of conventional pricing dynamics has new-vehicle shoppers scratching their heads and looking for guidance. 

According to JD Power, with total EV market share now hitting the 9% mark and total EV sales on track to hit three million by the end of this year, the stage is set for rapid-fire growth. Exactly when those sales will happen—and which OEMs and dealers will be the biggest beneficiaries of the transformation—will come down to strategic use of incentives and a concerted effort to educate consumers on the intricacies of EV pricing. 

This E-Vision Intelligence Report dives into key data points trending in each monthly EV Index update, along with other data points gathered from JD Power studies and pulse surveys, to spotlight emerging trends and important shifts in EV consumer sentiment.

Incentives Loom Large

A big change to the Clean Vehicle Credit is coming in January 2024. The U.S. Department of Treasury introduced a new rule this month that will make it possible for eligible consumers to transfer the $7,500 tax credit to the dealer for use as a down payment at the point of sale. While the criteria for qualifying for the credit is still fairly complicated, and requires knowing things about the location where the vehicle was assembled and details on the sourcing of critical minerals used in the construction of vehicle batteries that most mainstream consumers do not know, the execution of the credit itself will become much easier. Prior to 2024, eligible buyers would not receive the credit until they receive their tax returns. 

The chart below illustrates the differences in real-world dollar terms in how the 2023 application of the Clean Vehicle Credit differs from the 2024 application of the credit using a Volkswagen ID.4 as an example. In 2023, a buyer would pay $139 more per month for a loan and, depending upon whether they purchased the vehicle prior to receiving their tax returns for the year, they could end up paying upwards of $828 more in interest during the life of their auto loan than buyers who wait for January 2024 to purchase the same vehicle. 

All of these details introduce a level of consumer education that dealers and OEMs have never had to contend with before. In addition to the new filing and administrative details dealership finance and insurance (F&I) departments will face when applying the credit to a downpayment in 2024, the dealership will also need to make sure customers understand how these incentives will affect their bottom-line costs. Whether this new structure will cause active shoppers to hold off on new purchases until January, or whether they will purchase now may come down to what kinds of additional incentives dealers and OEMs offer in the holiday sales push in the final two months of the year and how well they explain the details to prospective buyers.

EV Sales Reaching Critical Mass

Regardless of whether the new incentive structures will spur sales before or after the New Year, it is clear that momentum is building in total EV sales volume. According to the JD Power EV Index, it took five and a half years (66 months) for total EV retail sales to hit one million sales. From there, it took only 18 months to reach two million. Based on the latest JD Power forecast, retail EV sales will hit three million during the 12-month period ending in December of this year and four million by end of Q3 2024.

More for Your Money?

One complicating factor that could be a drag on near-term EV sales, however, is the pricing imbalance that currently exists between EVs and ICE vehicles in the booming compact SUV segment. Currently, the bulk of mass market compact EV SUV sales are pricing at around $52,000. That compares with just $34,000 for comparable mass market ICE SUVs. Meanwhile, ICE vehicles in the compact premium SUV segment are trading at around $53,000, vs. EVs in the compact premium SUV segment selling for $60,000 or more. 

This has created a dislocation where price-sensitive shoppers in the compact SUV market could likely be cross-shopping a mass market EV against a premium ICE vehicle. Based on the latest JD Power 2023 U.S. Electric Vehicle Consideration (EVC) Study, 67% of new-vehicle shoppers who are currently considering an EV are also considering non-EVs. Until the pricing differential between mass market and luxury EV and ICE vehicles is more balanced, many of these buyers may be swayed to choose ICE. 

 

Methodology

This JD Power E-Vision Intelligence Report is based on data and insights from the JD Power EV Index, the JD Power EV Retail Share Forecast and the JD Power U.S. Electric Vehicle Consideration (EVC) Study. The JD Power EV Index is an analytics tool to benchmark the growing EV market in the United States. It tracks millions of data points aggregated into six categories—interest, availability, adoption, affordability, infrastructure and experience—to evaluate the progress to parity of EVs with ICE vehicles in the U.S. Each month, the JD Power electric vehicle practice will analyze these data points, and others to spotlight emerging trends and important shifts in consumer sentiment that are helping to define the fast-moving EV marketplace. 

Find out More

This report was authored by Elizabeth Krear, vice president, electric vehicle practice; Brent Gruber, executive director, electric vehicle practice; Stewart Stropp, executive director, electric vehicle practice; and Kristen Richter, senior manager, electric vehicle practice. The JD Power E-Vision initiative is a company-wide program focused on maximizing JD Power industry-leading EV data, analytics, insights and solutions. Please contact us at the numbers below to connect with the authors or to learn more about the underlying research.

 

Media Contacts

Shane Smith; East Coast; 424-903-3665; [email protected]

Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]