Archive for September 4th, 2009

Shocker: Car dealers “fully price” during C4C landrush …

September 4, 2009

From the WSJ:

The federal “cash for clunkers” program pushed auto sales to their highest levels in over a year. But.analysts say the boost is likely temporary and some anticipate falloff.

Auto sales for August were between 13 and million on a  seasonally adjusted annual rate .

For comparison, auto sales regularly hit 16 million a month before the recession, they have since dipped, hitting a low in February of 9.1 million.

Even within August, the numbers point to a pullback. On a weekly basis, dealers sold cars at an annualized rate of over 19 million in the first week of the clunkers program, followed by weeks of car sales at rates of 12 million.

In the final week of August, after the program ended, sales slumped to eight million.

And, according to Edmunds.com, the clunkers program caused “unintended consequences”, including higher car prices and lower levels of supply.

Dealers raised their prices on Toyota Corollas, for example, by approximately $445 while the clunkers program was in effect. Many dealers were charging sticker prices (or more) for hybrids.

WSJ, Next for Auto Sector, Post-Clunker Hangover, Sept 1, 2009 
http://online.wsj.com/article/SB125175596718373969.html

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TakeAway: There’s a big difference between unintentional and un-anticipatable – neither the pull-up of sales nor the jacked up prices should surprise anybody.

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Posted in Autos - Travel | Leave a Comment »

Blue Nile starts chasing women …

September 4, 2009

Ken’s Take: I watched with interest as my sons and their friends shopped for engagement rings online – all from Blue Nile.  Struck me – an old-schooler — as a risky online purchase.  But, they had great experiences – nice rocks (I think), secure delivery, and fast turnaround for resizing.  Blue Nile seemed to be gaining some traction twenty-something guys, and an acceptable brand image with the ladies.

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WSJ, Blue Nile Gets Makeover to Please Ladies,  Sept. 2, 2009

Blue Nile – an online jeweler founded in 1999 and IPO’d in 2004 — sold $295 million in jewelry last year, in a recession ravaged jewelry industry.   While data on the diamond industry is incomplete, Blue Nile estimates  its market share is roughly 4.5% to 5.5%.  

Retooling to combat slowing grow, the company is unveiling a major overhaul of its Web site to broaden its appeal, especially to women.  The changes are intended to make the experience more akin to window shopping.

But, it faces the tricky task of trying to make improvements without losing core customers.

The vast majority of those who buy rings and necklaces from Blue Nile are men, drawn to the extra information, control and discounts — they get by shopping online instead of at a high-pressure jewelry counter.

Yet most Blue Nile purchases are given to women, whom the retailer would like to have a more premium view of its brand.

Blue Nile also rebuilt a system for shoppers to create custom engagement rings — its largest business — based on criteria they can adjust with sliding scales while watching an image of the product evolve on the screen.

Shopping is now largely contained within a single page, to cut down on the confusion and tedium of clicking back and forth.

Blue Nile says that it has taken on a redesign now because of the market’s relative weakness, which has made competitors less likely to expand.

Full article:
http://online.wsj.com/article/SB125176820957074661.html

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Posted in Mktg - Positioning | Leave a Comment »

About your FDIC insured bank accounts …

September 4, 2009

Another lesson that federal guarantees aren’t free:

WSJ, The Coming Deposit Insurance Bailout, Sept. 1, 2009

The Federal Deposit Insurance Corp. reported late last week that the fund that insures some $4.5 trillion in U.S. bank deposits fell to $10.4 billion at the end of June, as the list of failing banks continues to grow. The fund was $45.2 billion a year ago.

The FDIC has since had to buttress the fund with a $5.6 billion special levy on top of the regular fees that banks already pay for the federal guarantee. Everyone now assumes the FDIC will hit banks with yet another special insurance fee in anticipation of even more bank losses.

Earlier this year they quietly asked Congress to provide up to $500 billion in Treasury loans to repay depositors.

84 banks have already failed this year, and … the FDIC said it had 416 banks on its problem list at the end of June, up from 305 only three months earlier. The total assets of banks on the problem list was nearly $300 billion, and more of these assets are turning bad faster than banks can put aside reserves to account for them.

FDIC Chairman Sheila Bair continues to say that deposits will be covered up to the $250,000 per account insurance limit , and of course she’s right. But we wish she’d force Congress—and the American public—to face up to the reality of what deposit insurance costs. Amid the panic last year, Congress raised the deposit limit from $100,000 to $250,000.

The $250,000 limit was supposed to expire at the end of 2009, but in May Congress extended it through 2013, and no one who understands politics thinks it will return to $100,000. The rising bank losses mean that the FDIC’s ratio of funds to deposits is down to 0.22%, far below its obligation under the insurance statute to keep it between 1.15% and 1.50%.

Full article:
http://online.wsj.com/article/SB10001424052970204731804574385072164619640.html 

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Posted in Banks - Credit Cards | Leave a Comment »