Posts by Frida Chehlaoui - Beirut

Car-scrapping programs: A creative, but uncertain, solution

frida_scrap_carsIn January, the day after the German government discussed a measure to pay people €2,500 ($3,250) toward a new vehicle if they scrap a car at least nine years old, some 270,000 people called the relevant federal hotline. And that was before the measure had passed.

New car sales rose a whopping 40 percent last month—an improvement over February’s 21.5 percent gain—and the government has extended funding for the program until May, but hopes to let it run through the year if funds can be secured.

Not everyone is scrap happy. While small, cheap cars roll out of dealerships at a record rate, big car sales are tanking, and Mercedes, Porsche, BMW and Audi are struggling. Some economists see it as a short-term, shortsighted solution, and while the program has been officially labeled as “environmental,” angry environmentalists say it has nothing to do with ecology.

Similar programs in Italy and France have reversed falling auto sales, however. The Dutch government is implementing a scrapping program, and U.S. legislators have introduced a bill that would pay buyers of American vehicles up to $5,000 to trade in their older car.

Even though these are government initiatives, there is a lesson here for all brands: strategic imagination (uncertain creative solutions even) seem to be our safest bet in these times when most of what we’ve worked hard to understand needs to be unlearned and market dynamics are following rules we are discovering along the way.

Lebanese buck the trend as confidence spikes

downtown-beirutAt a time when consumer confidence around the world is dropping to often historic lows, media reports are calling the Lebanese banking system “immune to the financial crisis,” and recent research by Bayt.com shows that consumer confidence leaped 25.5 index points in the second half of 2008. Why the upswing? According to the BBC, “There is a tradition of conservative regulation at the Central Bank in Lebanon, which kept the banks safe.” As a result, banks couldn’t take on too much, at least 30 percent of their assets had to be in cash, they weren’t allowed to speculate with packages of bundled debt, and weaker banks were forced to merge with bigger ones.

The Lebanese are famous for their resilience: They overcome turmoil and instability by holding onto whatever they can find. And today, it seems they have reason to trust in a better tomorrow.

Strength and reliability in tough times

strengthreliabTomorrow is too murky for reliable forecasts, let alone for a credible promise. Letting go of the aspirational messages and “better tomorrows” so dear to the financial services category, FFA Private Bank in Lebanon is capitalizing on one undeniable asset: its past promises. An outdoor ad for the bank reads: “We said we’d be strong in the toughest times. Promise kept.” Lebanon hasn’t been hit by the financial crisis as severely as some countries in the Middle East; it is in those markets that the FFA regional campaign is the most on-point, saying exactly what the consumer needs to hear.