Category: United States

Surge in Digital Home Insurance Claims during COVID-19 Drives Faster Cycle Times and Improved Customer Satisfaction, JD Power Finds

2021-02-23

jillian.breska

Digital transformation became more than a buzzword for home insurers at the onset of the COVID-19 pandemic—it also became the key to faster claims settlement, payment and record high levels of customer satisfaction. The JD Power 2021 U.S. Property Claims Satisfaction Study,^SM released today, tracked customer experiences with home insurance claims both before and during the COVID-19 pandemic. The study finds that customer adoption of digital claims reporting, estimation and, most importantly, insurers’ use of photos/videos for estimation increased during 2020. Submission of fully digital claims reduced the average time to payment by up to 5.5 days and helped drive the highest overall satisfaction scores ever measured in the study’s 14-year history.

“Insurers have been touting digital first notice of loss, mobile apps and software for pre-claim home content inventory cataloging, but customer adoption stayed stubbornly low—until COVID-19 hit,” said Robert Lajdziak, senior consultant, insurance intelligence at JD Power. “Overall use of technology—particularly on behalf of the carriers—increased significantly during the past year, creating direct benefits such as faster claims and secondary benefits such as a more consistent claims process for all customers. The key now is addressing some of the lingering issues that create breaks in the digital claims process and continued improvement to convenience and adherence to best practices.”

Following are some key findings of the 2021 study:

• Increased use of digital claims tools drives faster payment, improved satisfaction: Overall customer satisfaction with homeowners insurance property claims is a record-high 883 (on a 1,000-point scale), as more customers than ever have adopted digital claims tools. On average, when homeowners engaged in fully digital claims processing, including estimation and first notice of loss (FNOL), the time to payment was reduced up to 5.5 days.
• Pre-claim inventory cataloging key to customer satisfaction: Use of mobile apps and insurer-provided software for inventory creation is up more than 33% since 2018. When inventory lists were created prior to a loss, customers received payment 3.4 days faster than when the inventory list was made after the loss. Likewise, overall satisfaction is 19 points higher among those customers with pre-loss inventories. Such tools appeal to younger customers and increase customer engagement—not dissimilar to gamification/tools/services provided by insurtechs.
• Uneven performance when digital claims process is broken: While overall customer satisfaction and time to payment are improved when claimants complete their entire claims process digitally, satisfaction scores fall when breaks in the digital chain occur. For example, satisfaction is significantly lower among claimants who unsuccessfully tried to utilize a fully digital reporting and estimation process compared with those who do not use digital channels at all. The process breaks when digital reverts to an offline experience and customers spend more time and energy to achieve the same outcome.
• Digital democratizing claims experience: Traditionally, bundlers and older customers have higher satisfaction scores and are more likely to experience key performance indicators (KPIs) throughout the claim experience than Gen Y/Z¹ or monoline customers. In 2020, claimants making their claim digitally had similar satisfaction scores and a more consistent customer experience in the number of KPIs that were achieved, regardless of whether the customer had multiple policies bundled with the insurer. Additionally, Gen Y/Z overall satisfaction is similar for both online and offline reporting while satisfaction among Boomers declines nearly 30 points with online reporting.

Study Ranking

MetLife ranks highest in property insurance claims experience, with a score of 904. Auto-Owners Insurance (900) ranks second and Chubb (896) ranks third.

The U.S. Property Claims Satisfaction Study measures satisfaction with the property claims experience among insurance customers who have filed a claim for damages by examining five factors (listed in order of importance): settlement; claim servicing; FNOL; estimation process; and repair process. The study is based on responses from 6,112 homeowners insurance customers who filed a claim within the previous nine months. It was fielded from April through November 2020.

For more information about the U.S. Property Claims Satisfaction Study, visit https://www.jdpower.com/business/resource/us-property-claims-satisfaction-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

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

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

¹JD Power defines generational groups as Pre-Boomers (born before 1946); Boomers (1946-1964); Gen X (1965-1976); Gen Y (1977-1994); and Gen Z (1995-2004). Millennials (1982-1994) are a subset of Gen Y.

 

Utilities Getting Formula Right for Basic Digital Tasks, but Miss on Complex Interactions, JD Power Finds

2021-02-23

jillian.breska

Utility websites continue to struggle when it comes to delivering a satisfying digital experience. According to the JD Power 2021 Utility Digital Experience Study,^SM released today, utility mobile apps and websites have shown they can deliver on basic tasks as the world transitions to digital-first customer engagement models, but more in-depth functions—such as research on energy-saving information or updating service—continue to present major challenges.

Now in its fourth year, the study assesses how customers interact with their utility website and mobile app as well as with the online social, email, chat and text functions offered by the 36 largest electric, natural gas and water utilities in the United States.

“The move toward large-scale digital transformation during the past year has been a blessing and a curse for utilities,” said Jon Sundberg, senior digital manager at JD Power. “While customers are far more receptive to mobile apps and websites from their service providers, their expectations are also much higher. Utilities are performing well when it comes to helping their customers handle basic functions, but when it comes to the more complex tasks that many customers now expect to execute online, many utilities are falling short.”

Following are some of the key findings of the 2021 study:

• Utilities struggle to deliver on complex digital functions: Utilities perform well when it comes to supporting basic customer engagement functions digitally, such as making payments, easy log-in processes and reviewing account information. However, customer satisfaction decreases considerably when poor processes to complete more complex tasks such as viewing consumption history, researching energy-saving information and updating service are provided.
• Half of customers can’t find the information they need: Nearly half (48%) of utility customers say they were unable to find the information they were looking for on their utility’s website or app. This resulted in them turning to online chat, the phone, social media, text messages or email to resolve their issue.
• Wide gap in digital experience performance: While the overall customer satisfaction score in this year’s study shows an upward trend of 3 points (on a 1,000-point scale), the performance of individual utilities shows a stark dichotomy, with 13 of the 36 utilities evaluated logging double-digit improvements in overall satisfaction while six utilities show double-digit declines.

The 2021 Utility Digital Experience Study is based on evaluations from 8,508 customers of the 36 largest electric, natural gas and water utilities in the United States. To be included in the study, utilities must serve 1,250,000 or more customers. The study was fielded from November 2020 through January 2021.

For more information about the JD Power Utility Digital Experience Study, visit https://www.jdpower.com/business/resource/utility-digital-experience-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

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

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-inf

 

Battleground for Electric Vehicle Purchase Consideration is Wide Open, JD Power Finds

2021-02-23

jillian.breska

With some encouragement, undecided battery electric vehicle (BEV) shoppers can become likely purchase considerers, which is good news for automakers expanding their EV product lineup, according to the inaugural JD Power U.S. Electric Vehicle Consideration (EVC) Study,^SM released today. Currently, more than half (59%) of new-vehicle shoppers fall into the “somewhat likely” or “somewhat unlikely” categories when it comes to considering a BEV for their next purchase or lease—a significant window of opportunity for future EV sales.

“Right now, the projected BEV supply outweighs consumer interest. And for every new-vehicle shopper seriously considering BEVs, there’s another at the opposite end of the spectrum,” said Stewart Stropp, senior director, automotive retail at JD Power. “To avoid a potential ongoing inventory surplus, it behooves manufacturers and retailers to identify why shoppers in the middle ground aren’t completely sold on the technology, and how to get them over the hump into the ‘very likely’ consideration camp.”

The study finds that firsthand experience with BEVs plays an important role in purchase consideration. Among respondents who say they have owned or leased a BEV in the past, 46% are “very likely” to consider another, while only 6% say they are “very unlikely” to consider purchasing another BEV as their next vehicle. This is similar to findings in the JD Power 2021 U.S. Electric Vehicle Experience (EVX) Ownership Study^SM in which, even among dissatisfied owners (overall satisfaction scores below 600 on a 1,000-point scale), 65% say they “definitely will” consider an EV for their next purchase.

The EVC Study also finds the “very likely” ratio among respondents who have simply ridden in a BEV is nearly three times that of those who have never been in one (20% vs. 7%, respectively). Half of respondents have never been in a BEV, highlighting a critical need for automakers and retailers to create opportunities for consumers to familiarize themselves with these vehicles. “Anything stakeholders can do to get more people into electric vehicles, whether it’s experiential events, take-home test drives or other proactive efforts, will help break down the preconceptions people have about BEVs and drive higher consideration,” Stropp said.

Following are key findings of the 2021 study:

• Vehicle use outweighs range anxiety: Among heavy-use drivers, the prospect of eliminating gasoline expense seems to neutralize range anxiety. “Very likely” consideration is more than three times higher among those who take more than 10 road trips per year compared with those who don’t take any (34% vs. 10%, respectively). The ratio is similar among those who commute more than an hour (35%) compared with those who have no commute (9%).
• Consideration by current vehicle segment: The “very likely” ratio among current owners of premium brands (36%) is more than twice that of mass market brand owners (15%). The study also finds consideration by current vehicle brand ranges widely from 46% to 96% in the premium segment and 36% to 60% in the mass market segment.
• Information begets consideration: Nearly one-third (30%) of non-considerers cite a lack of information as a reason for their lack of consideration. To consider BEVs, shoppers need to be better informed about them and the ownership proposition they offer.
• Time frame for non-considerers to become considerers: Four in 10 (41%) non-considerers say they will consider a plug-in hybrid electric vehicle (PHEV) or hybrid electric vehicle (HEV) in the next two to four years while 27% say they will consider a BEV in the same time frame.
• Tesla tops luxury brands considered: More than one-fourth (27%) of shoppers who are considering a BEV select a Tesla model as their top choice, citing performance as the main driver. However, among these respondents, reasons they might consider another brand include better performance; better purchase price; and better features, functionality, technology or capacity. It’s worth noting that only 4% of respondents among whom Tesla is the top choice say they are only considering a Tesla. “One could argue this indicates that, while Tesla’s appeal is clearly formidable, it’s not absolute and could be displaced by a worthy alternative,” Stropp said.

The U.S. Electric Vehicle Consideration (EVC) Study is a new industry benchmark for gauging EV shopper consideration. Survey respondents for the inaugural study included 9,030 U.S. new-vehicle intenders in market to purchase or lease within 12 months. The survey was fielded December 2020-January 2021.

For more information about the U.S. Electric Vehicle Consideration (EVC) Study, visit https://www.jdpower.com/business/automotive/electric-vehicle-consideration-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
Shane Smith; East Coast; 424-903-3665; [email protected]

About JD Power and Advertising/Promotional Rules: http://www.jdpower.com/business/about-us/press-release-info 
 

 

Auto Sales Strong in February Despite Adverse Weather and Lean Inventory Levels

2021-02-25

jillian.breska

The Retail Sales Forecast
New-vehicle retail sales for the month of February are expected to show growth from February 2020, according to a joint forecast from JD Power and LMC Automotive. Retail sales for new vehicles are projected to reach 975,600 units, a 3.3% increase compared with February 2020 when adjusted for selling days. February 2021 contains two fewer selling days and one fewer selling weekend than February 2020. Comparing the same sales volume without adjusting for the number of selling days translates to a year-over-year decrease of 4.6%. February 2020 was a once-in-a-generation sales calendar month which benefitted from being a leap year and having five weekends.

The Total Sales Forecast
Total new-vehicle sales for the month of February, including retail and non-retail transactions, are projected to reach 1,206,700 units, a 3.7% decrease from February 2020 when adjusted for selling days. Reporting the same numbers without controlling for the number of selling days translates to a decrease of 11.1% from February 2020. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.0 million units, down 0.9 million units from 2020.

The Takeaways
Thomas King, president of the data and analytics division at JD Power:
“Despite challenges posed by inclement weather in most of the country, retail sales demand continues to be strong with the industry posting a second consecutive month of year-over-year gains. Typically, weather related sales disruptions are made up in the weeks following, so most of the sales lost at the beginning of February will be made up at the end of February and trail into early March.

“While the ongoing strength of the sales rate is impressive, the transaction prices and profitability of those sales is nothing short of remarkable.

“The combination of strong retail sales, higher transaction prices and smaller discounts means that February 2021 likely will be one of the most profitable Februarys ever for both retailers and manufacturers.

“As February results will show, while inventories are lean, there is still enough inventory to maintain positive sales growth in the near term. However, the lingering risk to the current retail sales pace for the balance of the year is supply chain disruption.

“Lean inventories mean that vehicles are selling quickly once they arrive at dealerships—and they are selling with lower discounts. The average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to 53 days, down 18 days from last year.”

—–

The average manufacturer incentive is on pace to be $3,562 per vehicle, a decrease of $614 from a year ago. Expressed as a percentage of the average vehicle MSRP, incentives for February 2021 are 8.2%, down two percentage points from a year ago, and the seventh consecutive month below 10%. For context, incentive spending per unit is 28% lower than when it peaked at $4,953 per unit in April 2020. Retailers also continue to offer smaller discounts on new-vehicle sales. Total grosses per unit, inclusive of finance and insurance income, are on pace to reach $2,237, an increase of $896 from a year ago. Grosses have been above $2,000 for six of the last seven months.

—–

Average transaction prices are expected reach another monthly high, rising 9.8% to $37,524, the highest ever for the month of February and nearly at the record set in December 2020. For context, average transaction prices are 22% higher in February 2021 than they were in February 2016 at $30,746.

Disciplined incentives and dealer discounting, along with the shift towards more expensive trucks and SUVs, remain the key drivers of higher prices. SUVs and trucks are on pace to account for a combined 78% of retail sales compared with 74% a year ago.

Low interest rates and higher trade-in values also are supporting higher transaction prices. The average interest rate for loans in February is expected to fall 121 basis points from a year ago to 4.3%. During the same period, the average monthly finance payment is up only $20 to $602. Concurrently, the average trade-in value has risen to $4,987, an increase of $866 (21.0%) from a year ago. Loan terms are relatively stable with the average term increasing less than one month—to 70 months—compared with a year ago.

Looking forward, March marks the start of two key markers for the industry sales cadence. First, March is when manufacturers typically launch major sales events. This year, the discounts offered during these events are likely to be tempered relative to historical levels due to lower–and better-balanced—inventory levels. Second, March 2020 was when pandemic-related shutdowns began to disrupt vehicle sales, making year-over-year comparisons less relevant.

Overall, the retail sales outlook for 2021 remains extremely positive. Strong sales volumes, coupled with record transaction prices and profitability, are expected to continue. 

—–

Sales & SAAR Comparison

U.S. New Vehicle	February 20211	January 2021	February 2020
Retail Sales	975,600 units (+3.3% higher than February 2020)2	896,396 units	1,022,693 units
Total Sales	1,206,700 units (-3.7% lower than February 2020)2	1,092,997 units	1,357,575 units
Retail SAAR	13.3 million units	14.2 million units	13.0 million units
Total SAAR	16.0 million units	16.6 million units	16.8 million units

¹ Figures cited for February 2021 are forecasted based on the first 17 selling days of the month.
² February 2021 has 24 selling days, two fewer days than February 2020.

The Details

• The average new-vehicle retail transaction price in February is expected to reach a monthly record $37,524. The previous high for any month, $37,966, was set in December 2020.
• Average incentive spending per unit in February is expected to reach $3,562, down from $4,176 in February 2020. Spending as a percentage of the average MSRP is expected to reach 8.2%, down two percentage points from a year ago.
• Average incentive spending per unit on trucks and SUVs combined is expected to be down $749 to $3,551, while the average spending on cars is expected to be down $233 to $3,585.
• Consumers are on pace to spend $36.6 billion on new vehicles, up $2 billion from February 2020 and the highest ever for the month of February.
• Truck/SUVs are on pace to account for 78.5% of new-vehicle retail sales.
• Fleet sales are expected to total 231,100 units, down 25% from February 2020 on a selling day adjusted basis. Fleet volume is expected to account for 19% of total light-vehicle sales, down from 25% a year ago.

Observations on Residual Values
Eric Lyman, vice president, ALG:
“The positive metrics in new-vehicle sales also bode well for sustained strength in residual values. There is a cyclical relationship between high trade-in values and equity, low incentives, declining used-vehicle supply and strong residual values. With all these metrics tracking well in early 2021, there is no indication that the used market valuation gains experienced in 2020 will be given back any time soon. One data point that still has yet to rebound is lease penetration which, given the strong residual value outlook, should see some recovery during the next year as lenders get more comfortable with the stability in the long-term used-vehicle forecast.”

Global Outlook for February 2021
Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive:
“Global light-vehicle sales started the year up 1.6% from January 2020. However, the selling rate fell to a lackluster 82 million units, down from the average of 91 million units in the fourth quarter of 2020. The month was mixed across the world, with China seeing growth of 26% from a year ago, but there were Chinese New Year distortions. Significant lockdown measures in key markets across Western Europe had a negative effect on sales in January, pushing sales down 23% from January 2020. Japan, South Korea and India all exhibited some strength in the new year, while the United States also started the year with a strong selling rate. The global selling rate in February is expected to remain under 85 million units as uncertainty remains high.

“Despite the short-term pressure on volume from the global semiconductor shortage and the continuation of pandemic-related downside risk in the near term, we have increased the outlook for global light vehicle sales slightly to 87 million units, up from 86 million a month ago. The shape of the 2021 recovery continues to hinge on the vaccine rollout and effectiveness, the industry’s ability to move past the chip shortage and lower inventory levels. We do not currently expect any material effect or additional risk to the 2021 forecast from production disruptions, but there will be near-term distortions into the second quarter.”

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
Emmie Littlejohn, LMC Automotive; Troy, Mich.; 248-817-2100; [email protected]

About JD Power and Advertising/Promotional Rules www.jdpower.com/business/about-us/press-release-info

About LMC Automotive www.lmc-auto.com

 

 

Pandemic Challenges: Auto Dealer Service Departments Make Best of Tough Situation, JD Power Finds

2021-03-10

jillian.breska

Stay-at-home orders were enacted across the United States through much of 2020 and consequently many vehicle owners drove fewer miles, which extended the interval between service visits. However, dealer service visits are only down 6% from the previous year and overall satisfaction increases to 847 (on a 1,000-point scale) from 837 a year ago, according to the JD Power 2021 Customer Service Index (CSI) Study,^SM released today. Overall satisfaction also increases for a sixth consecutive year.

“When one- to three-year-old vehicles required service in 2020, dealers captured an even greater share of service visits, which is the highest level in at least five years,” said Chris Sutton, vice president of automotive retail at JD Power. “Dealerships made the most out of a disruptively bad situation.

“Completing work right the first time, as well as focusing on customers’ needs, play significant roles in satisfaction—and dealers are nailing these key performance indicators nearly 100% of the time. By continuing to provide an exceptional service experience, dealers have an opportunity to seize an even greater share of the market. It’s notable, too, that while service was less frequent in 2020, customers responded very well to convenience services such as vehicle pick-up and drop-off at their home.”

The study measures satisfaction with service at a franchised dealer or independent service facility for maintenance or repair work among owners and lessees of one- to three-year-old vehicles. It also provides a numerical index ranking of the highest-performing automotive brands sold in the United States, which is based on the combined scores of five different measures that comprise the vehicle owner service experience. These measures are (in order of importance) service quality (29%); service facility (19%); service initiation (18%); service advisor (18%); and vehicle pick-up (16%).

Following are key findings of the 2021 study:

• Remote or online payment options boost satisfaction: While service customers didn’t frequently use contactless payment options—only 6% of premium and 1% of mass market owners say they used these methods—pick-up satisfaction is highest among those who used these options. Satisfaction scores improve 44 points among premium customers who pay remotely or online compared with handling payment via a cashier. Among mass market customers, satisfaction improves 69 points. “This is an example of a process some dealers may have put into place as a safety measure during the pandemic, but which they may want to keep in place, as customers find they like it more,” Sutton said.
• Using express service increases satisfaction: Satisfaction among customers who did not use express service for maintenance is flat compared with a year ago. However, satisfaction among those who did use express service has increased 10 points during the pandemic.
• Battery-electric vehicle owners less satisfied with service: According to the JD Power 2021 Electric Vehicle Experience (EVX) Ownership Study,^SM only 54% of battery electric vehicle (BEV) owners indicate they had taken their vehicle in for service in the past 12 months. However, the 2021 CSI Study finds that when they do visit a dealer for service, their overall service satisfaction is 69 points lower than the average customer and 76 points lower for service quality. “BEV owners present a unique challenge for dealers,” Sutton said. “Not only are their vehicles more difficult to service than traditional internal combustion engine vehicles, but also the lower frequency of visits means dealers have fewer chances to make a positive impression on these customers.”
• BEV owners less satisfied with maintenance than repairs: On average, there’s nearly twice as much maintenance work being done during dealer service visits than repair work. However, the maintenance-to-repair ratio for BEV owners is nearly an even split. While more complex service repair work usually results in lower customer satisfaction than does maintenance work, the opposite is true for BEV owners. A large reason for this is that BEV owners are 2.5 times more likely to not experience their service completed right the first time. “BEVs are in their early stages and dealers seem to be experiencing growing pains with servicing these vehicles,” Sutton said. “Automakers may want to invest in more dealer service training. Otherwise, they run the risk of losing return customers.”

Study Rankings

Porsche ranks highest in satisfaction with dealer service among premium brands with a score of 899. Lexus (895) ranks second, followed by Infiniti (887), Cadillac (883) and Lincoln (872).

MINI ranks highest in satisfaction with dealer service among mass market brands, with a score of 864. Buick (859) ranks second, followed by Mitsubishi (857), GMC (856) and Kia (855).

The 2021 U.S. Customer Service Index Study is based on responses from 62,519 verified registered owners and lessees of 2018 to 2020 model-year vehicles. JD Power goes to great lengths to ensure that survey respondents are true owners of the brand they are representing. The study was fielded from July through December 2020.

For more information about the U.S. Customer Service Index (CSI) Study, visit https://www.jdpower.com/business/automotive/us-customer-service-index-csi-study.

About JD Power
JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
Shane Smith; East Coast; 424-903-3665; [email protected]

About JD Power and Advertising/Promotional Rules www.jdpower.com/business/about-us/press-release-info

 

Effects of Pandemic Bring Tire Industry to Slow Roll, JD Power Finds

2021-03-17

jillian.breska

Although overall tire satisfaction is at an all-time high, the effects of the COVID-19 pandemic have taken their toll on the tire industry. Vehicle owners have reduced the amount of driving and delayed visits for maintenance or tire replacement, according to the JD Power 2021 U.S. Original Equipment Tire Customer Satisfaction Study,^SM released today.

The annual study measures tire owner satisfaction in four key areas (in order of importance): tire wear; tire ride; tire traction/handling; and tire appearance. Rankings are included among four vehicle segments: luxury; passenger car; performance sport; and truck/utility.

“The events of the past year have forced many consumers to change their routines, from delaying medical care to reducing their regular vehicle maintenance,” said Brent Gruber, senior director of automotive quality at JD Power. “Just as it is important to stay on top of personal health during the pandemic, it is also important that vehicle owners keep up with necessary automotive care, including tires.”

Study findings show that 13% fewer miles were driven during the past year and tire rotations and pressure checks saw similar rates of decline. Also, owners delayed replacing their original equipment tires with the study indicating a 23% decline in replacement rates.

“While less driving may have helped reduce tire wear and increased the time to replacement, many owners also put off much needed maintenance or tire replacement,” Gruber said. “This is similar to a trend seen among electric vehicle owners in which lower maintenance needs are keeping people away from service facilities. This is a concern for tire manufacturers and retailers alike. Tire manufacturers can help boost sales and get people back to service facilities by implementing better visual wear indicators and increasing tire safety communications.”

Study Rankings

Michelin ranks highest in the luxury segment with an overall satisfaction score of 782 (on a 1,000-point scale), followed by Pirelli with a score of 760. The segment average is 750.

Michelin ranks highest in the passenger car segment with a score of 752. Goodyear ranks second with a score of 739 and Kumho ranks third with a score of 736. The segment average is 721.

Michelin ranks highest in the performance sport segment with a score of 789, followed by Goodyear with a score of 761. The segment average is 731.

Michelin ranks highest in the truck/utility segment with a score of 771. Bridgestone ranks second (737) and Hankook ranks third (712). The segment average is 711.

The 2021 U.S. Original Equipment Tire Customer Satisfaction Study is based on responses from 26,131 owners of 2018 and 2019 model-year vehicles and was fielded from October through December 2020.

For more information about the U.S. Original Equipment Tire Customer Satisfaction Study visit https://www.jdpower.com/business/resource/us-original-equipment-tire-customer-satisfaction-study.

About JD Power
JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

Media Relations Contacts
Geno Effler, JD Power; Costa Mesa, Calif.; 714-621-6224; [email protected]
Shane Smith; East Coast; 424-903-3665; [email protected]

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

 

Despite Lean Inventory, Auto Industry Breaks Multiple Records In First Quarter Thanks to Strong Retail Demand

2021-03-26

jillian.breska

The Retail Sales Forecast
New-vehicle retail sales for the month of March are expected to show growth over March 2020 and March 2019, according to a joint forecast from JD Power and LMC Automotive. Retail sales for new vehicles are projected to reach 1,288,100 units, a 70.7% increase compared with March 2020, and an 9.2% increase compared with March 2019, when adjusted for selling days. March 2021 contains one more selling day than March 2020 and one fewer selling day—and one fewer selling weekend—than March 2019. Comparing the same sales volume without adjusting for the number of selling days translates to a year-over-year increase of 77.5% from 2020 and an increase of 5.1% from 2019.

New-vehicle retail sales in Q1 2021 are projected to reach 3,160,500 units, a 20.5% increase from Q1 2020 and a 4.7% increase from Q1 2019.

The Total Sales Forecast
Total new-vehicle sales for the month of March, including retail and non-retail transactions, are projected to reach 1,468,300 units, a 43.6% increase from March 2020 and a 5.0% decrease from March 2019 when adjusted for selling days. Reporting the same numbers without controlling for the number of selling days translates to an increase of 49.4% from March 2020 and a decrease of 8.6% from March 2019. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.4 million units, up 5.2 million units from 2020 and down 0.9 million units from 2019.

New-vehicle total sales in Q1 2021 are projected to reach 3,744,900 units, an 8.0% increase from Q1 2020 and a 6.1% decrease from Q1 2019 due to the decline of less-profitable non-retail/fleet sales.

The Takeaways
Thomas King, president of the data and analytics division at JD Power:
Regarding Q1 2021
“The very strong demand for new vehicles among U.S. households seen in January and February is continuing in March, meaning that multiple performance records will be broken for the first quarter. On a volume basis, Q1 retail sales of 3.16 million units will be the second highest ever, and records will be established for average transaction price, total consumer spending on new vehicles and retailer profitability.

“The strong Q1 sales performance is despite lean inventories and ongoing disruption to vehicle production. At an aggregate industry level, Q1 inventories have been sufficient to meet consumer demand and delivered the opportunity for manufacturers and retailers to sell those vehicles with smaller discounts. Manufacturers who are experiencing supply chain challenges are prioritizing production of their most profitable and desirable products, minimizing the net effect. There is no question that sales of specific models in specific geographies are being disrupted by low inventories, but consumers are nevertheless demonstrating their willingness to buy despite having fewer vehicles to choose from in retailer inventory.”

The average price of a new vehicle is on pace to reach $37,314 in Q1—the highest ever for the first quarter—nearly $3,000 higher than 2020 and more than $4,000 higher than 2019.

The combination of strong retail volumes and higher prices means that consumer expenditures on new vehicles is expected to reach a Q1 record of $177.9 billion, up 31% from 2020 and up 18% from 2019.

Retailer profits from new-vehicle sales will reach record levels on both a per unit and total basis. Q1 profit per unit will reach $2.225, up $786 from 2020 and up $835 from 2019, while total profits will reach $7.0 billion, up $3.3 billion from 2020 and up $2.8 billion from 2019.

Manufacturer profits from retail sales will also likely set a record for Q1 due to the combination of strong retail sales, higher average prices and reduced incentives. Q1 incentive spending per unit expressed as a percentage of average vehicle MSRP is trending towards 8.2%, down from 10.4% in Q1 2020 and down from 9.8% in Q1 2019.

“While the slow recovery of fleet sales, coupled with production disruption due to supply chain issues will be a headwind to overall profitability for some manufacturers, the aggregate industry profit performance will be extremely strong.”

Regarding March 2021
“For the month of March, the sales pace started off strong partially due to deferred sales from weather events in February. Despite disparate inventory challenges, the retail sales pace continues to be strong with the industry on track to reach nearly 1.3 million retail units, posting a third consecutive month of year-over-year gains and also showing sales gains relative to pre-pandemic 2019. While March’s sales rate is impressive, the transaction prices and profitability of sales is extraordinary. The combination of strong retail sales, higher transaction prices and smaller discounts means that March will likely be the second most profitable month on record as consumers trend towards spending a total of $48.0 billion on retail vehicle purchases—an amount only eclipsed by the $51.5 billion spent just four months ago in December 2020.”

Retailers continue to turn inventory quickly as the average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to 53 days, down 20 days from last year.

For March, the average manufacturer incentive per vehicle is on pace to be $3,527, a decrease of $888 from a year ago. Expressed as a percentage of the average vehicle MSRP, incentives for March 2021 are trending towards 8.2%, down three percentage points from a year ago, and the eighth consecutive month below 10%. Total retailer profits per unit, inclusive of grosses and finance & insurance income, are on pace to reach $2,283, an increase of $863 from a year ago. Grosses have been above $2,000 for seven of the last eight months.

Average transaction prices are expected reach another monthly high, rising 7.5% to $37,286—the highest ever for the month of March and nearly at the record set in December 2020. For context, average transaction prices are 20% higher in March 2021 than they were in March 2016 at $31,043.

“Strong consumer demand, tight new- and used-vehicle supply along with disciplined incentives and dealer discounting, low interest rates, high used vehicle values, higher trade-in values, in addition to the continued shift towards more expensive trucks and SUVs, are the key drivers of higher prices.”

SUVs and trucks are on pace to account for a combined 77% of retail sales, the highest mix on record for the month of March, compared with 73% a year ago.

The average interest rate for loans in March is expected to fall 92 basis points to 4.2 % from a year ago. The average monthly finance payment is up only $5 to $595. Concurrently, the average trade-in value has risen to $5,713, an increase of $2,664 (87.4%) from a year ago. Loan terms slightly contracted with the average term falling two months—to 69 months—compared with a year ago.

Looking to April, manufacturers have already started to adjust their component and production mix to minimize the effect from supply chain disruptions. While some vehicle shoppers are likely to experience greater challenges finding their desired vehicle in some geographies in the coming weeks and months, overall inventory levels remain sufficient to maintain a strong and extremely profitable industry sales pace.

Overall, the retail sales outlook for 2021 remains positive. Healthy sales volumes coupled with strong transaction prices and profitability are expected to persist as the industry demonstrates great resilience despite the residual challenges of the pandemic.

Sales & SAAR Comparison

U.S. New Vehicle	March 20211	February 2021	March 2019
Retail Sales	1,288,100 units (+70.7% higher than March of 2020; +9.2% higher than March 2019)2	976,041 units	1,225,187 units
Total Sales	1,468,300 units (+43.6% higher than March 2020; -5.0% lower than March 2019)2	1,183,651 units	1,605,752 units
Retail SAAR	14.5 million units	13.3 million units	13.3 million units
Total SAAR	16.4 million units	15.7 million units	17.3 million units

¹ Figures cited for March 2021 are forecasted based on the first 17 selling days of the month.
² March 2021 has 26 selling days, one more day than March 2020 and one fewer day than March 2019.

The Details

• The average new-vehicle retail transaction price in March is expected to reach a monthly record $37,286. The previous high for any month, $37,966, was set in December 2020.
• Average incentive spending per unit in March is expected to reach $3,527, down from $4,415 in March 2020 and down from $3,789 in March of 2019. Spending as a percentage of the average MSRP is expected to reach 8.2%, down 2.5 percentage points from March 2020 and down 1.4 percentage points from March 2019.
• Average incentive spending per unit on trucks and SUVs combined in March is expected to be $3,481, down $1,119 from a year ago and down $341 from 2019, while the average spending on cars is expected to be $3,668, down $220 form a year ago and down $43 from 2019.
• Consumers are on pace to spend $48.0 billion on new vehicles, the highest ever for the month of March, and up $22.9 billion from March 2020 and up $7.4 billion from March 2019.
• Truck/SUVs are on pace to account for 77.1% of new-vehicle retail sales in March.
• Fleet sales are expected to total 180,200 units in March, down 33% from March 2020 and down 51% from March 2019 on a selling day adjusted basis. Fleet volume is expected to account for 12% of total light-vehicle sales, down from 26% a year ago.

Observations on New Vehicle Residual Values
Eric Lyman, vice president, ALG:
“While supply chain issues continue to be problematic for the automotive industry, residual values stand to benefit from the reduction in used supply, lower incentives and higher new-vehicle transaction prices. Accordingly, ALG’s residual value forecast for the March/April publication stands at 54.0% of original MSRP for 2021 model year vehicles returning to the used market in 2024. The March/April 2021 forecast represents the strongest on record. Low finance rates led to a surge in auto loans for 2020, however, with residual values reaching historic levels, manufacturers and consumers will have the option to return to leasing to maintain sales momentum when supply levels return.”

Observations on the Used Vehicle Market
Jonathan Banks, vice president, Valuations Services:
“The used vehicle market continues to heat up as we transition into the spring market. Through the first three weeks of March, wholesale prices increased 2.5% to 3% per week, and are now 5% higher than their previous all-time high recorded back in August 2020. Entering 2021, we expected used prices to remain near record levels bolstered by tight wholesale auction sales, lean new-vehicle incentives and the expectation that employment would improve throughout the year. But new market pressures from the ongoing semiconductor, seating foam and plastic supply chain issues have helped strengthen wholesale prices even more than expected. Auction sales in March are running about 25% to 30% below 2020 levels, causing dealers to compete like never before for a finite number of used vehicles.”

Global Sales Outlook for March 2021
Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive:
“Through the first two months of the year, global light-vehicle sales are performing well overall. Volume is up 7% from the same period a year ago and the selling rate held at an average of 82 million units, up from 70 million in 2020. As we now compare sales to those at the beginning of the pandemic, a wide variation across the markets is evident. China surged 73% higher in the first two months of 2021 from 2020, while North America and Europe were down 14% and 19%, respectively. Globally, the selling rate in March is expected to nudge slightly higher to 84 million units thanks to more robust sales in China, Europe, India and the United States, compared with March 2020.

“Assembly plant stoppages related to semiconductor and petrochemical shortages, weather and even plant fires have plagued the start of the year. This puts additional pressure on the industry’s recovery. Our 2021 forecast for global light-vehicle sales stands at 87 million units, an increase of 12% from 2020 and unchanged from a month ago. The auto industry has already had to deal with many unusual disturbances in the first quarter and, while there’s still a risk of further negative effects, we’re optimistic that 2021 will stay on track.”

Media Relations Contacts
Geno Effler, JD Power; West Coast; 714-621-6224; [email protected]
Emmie Littlejohn, LMC Automotive; Troy, Mich.; 248-817-2100; [email protected]

About JD Power and Advertising/Promotional Rules www.jdpower.com/business/about-us/press-release-info
About LMC Automotive www.lmc-auto.com

 

Speed in Policy Execution Most Critical Driver of Satisfaction among Life Insurance Shoppers, JD Power Finds

2020-11-07

jillian.breska

The percentage of Americans who own life insurance continues to decline, largely driven by eroding interest among mass market consumers under the age of 45. As alternative forms of wealth creation become more accessible, the perceived need for life insurance is waning. According to the JD Power 2020 U.S. Life Insurance New Business Study,^SM released today, the most common reasons consumers avoid purchasing life insurance is the perception that it’s not necessary, too expensive or too complicated to purchase. The study finds these perceptions are easily overcome when carriers, advisors or sales agents execute simple best practices with prospects throughout the process.

“Shopping for a life insurance policy can be a long and complicated undertaking for many consumers,” said Robert M. Lajdziak, senior consultant of insurance intelligence at JD Power. “We know the products are generally perceived as complex, many consumers feel they either do not need life insurance, have enough coverage through work or, in some cases, have enough assets to meet their long-term goals and provide for dependents in the event of premature death. However, misaligned perceptions of cost, product complexity and the application process leave many mass market and mass affluent households uninsured or underinsured.”

When carriers and/or sales agents overcome these objections by setting expectations for the process, ensuring prospects understand costs and coverage, and keeping them up to date on the status of their application, more consumers are completing the process and purchasing a policy.

Following are some key findings of the 2020 study:

• Life insurance sold, not bought: Only 44% of consumers shopping for individual life insurance sought out applications for multiple brands. This means most consumers only shop one brand, adding to the industry adage: life insurance is sold, not bought.
• Cash is king but multiple factors drive purchase motivations: More than three-fourths (76%) of consumers who purchased an individual life insurance policy said the insurer they chose offered them the lowest price. Comparatively, among consumers who abandoned the purchase process, only 61% said the carrier was offering the lowest price.
• Increasing likelihood of closing a prospect: In terms of new business, the individual life insurance industry has a 24% close rate; however, the overall yield rate of new business is only 0.3%. Simple best practices in the sales process such as explaining the entire application process, keeping customers up to date on the status of their application, and ensuring they understand the costs and coverage significantly increase the likelihood of a prospect purchasing a policy.
• Medical exams are not necessarily a deal breaker: Shoppers that purchase a policy are 54% more likely to say medical underwriting (e.g., fluids required/medical exam) was part of the application process, compared with shoppers who received a quote but did not purchase the policy.

The 2020 U.S. Life Insurance New Business Study measures the experiences of shoppers of the largest life insurance companies in the United States. The study measures overall customer satisfaction based on the application process. Shoppers can convey their experiences in the application and quote processes with up to five brands—although only one brand is required.

The study is based on responses from 3,918 consumers who shopped for individual life insurance in the past 12 months. It was fielded from June through August 2020.

For more information about the U.S. Life Insurance New Business Study, visit https://www.jdpower.com/business/insurance/us-life-insurance-new-business-study.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

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

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

 

Plan Cost and Reimbursement Satisfaction Drive Overall Vision Plan Satisfaction Down, JD Power Finds

2020-11-10

jillian.breska

Overall customer satisfaction among vision plan members has decreased in 2020, driven by a decrease in reimbursement and plan cost. According to the JD Power 2020 U.S. Vision Plan Satisfaction Report,SM released today, overall satisfaction is 760 (on a 1,000-point scale), down five points from 765 in 2019.

Study Rankings

Aetna Vision ranks highest in customer satisfaction with vision plan insurers with a score of 794. National Guardian (790) ranks second and UHC/Optum (773) ranks third.

The 2020 U.S. Vision Plan Satisfaction Report is based on responses from more than 1,300 vision plan members. The study was fielded in September 2020. The report, now in its seventh year, measures customer satisfaction with vision plan providers based on five factors (in order of importance): coverage; cost; communications; customer service; and reimbursement.

For more information on the U.S. Vision Plan Satisfaction Report visit https://www.jdpower.com/business/healthcare/us-vision-plan-satisfaction-report.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

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

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

 

Dental Plan Satisfaction Slightly Decreases, JD Power Finds

2020-11-10

jillian.breska

Customer satisfaction with dental plans slightly decreased in 2020, driven by decreases in customer service and reimbursement experience, according to the JD Power 2020 U.S. Dental Plan Satisfaction ReportSM, released today. Overall satisfaction decreases to 771 (on a 1,000-point scale) from 772 in 2019.

Study Rankings

DentaQuest (801) ranks highest with a score of 801. Aetna Dental ranks second (791) and HumanaDental ranks third (774).

The 2020 U.S. Dental Plan Satisfaction Report is based on responses from more than 1,100 dental plan members. The report was fielded in September 2020. The report, now in its seventh year, measures customer satisfaction with dental plan providers based on five factors (in order of importance): coverage; cost; communications; customer service; and reimbursement. While most dental care providers included in the study typically provide insurance coverage through the customers’ employer, DentaQuest largely provides government plans.

For more information about the Dental Plan Satisfaction Report, visit https://www.jdpower.com/business/healthcare/us-dental-plan-satisfaction-report.

JD Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world’s leading businesses across major industries rely on JD Power to guide their customer-facing strategies.

JD Power is headquartered in Troy, Mich., and has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The JD Power auto shopping tool can be found at JDPower.com.

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

About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info