Buy, Sell or Trade Your Luxury Watch? Market Forecast

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When The Truth About Watches first hit the net, the luxury watch market was going nuts. Unless you were closerthanthis with an authorized dealer, you couldn’t buy a new, coveted watch at retail. Pre-owned prices skyrocketed. The online luxury watch market wasn’t everything – it was the only thing. Tempus fugit . . .

The luxury watch market has returned to 2019’s mix of retail and online. No surprise there. When it comes to high-end goods – watches, jewelry, handbags, clothes – buyers trust people more than websites. Look-and-feel is also a thing. As is shoppertainment.

But don’t get to thinking you can simply walk into a watch store and buy an iconic timepiece or watch-of-the-moment. Demand for the gotta-haves still outstrips supply by a large margin.

The hottest end of the market for expensive and hard to find watches, including artisan independents and steel sports watches from Rolex, Audemars Piguet and Patek Philippe, is still motoring along.

Rob Corder, usa.watchpro.com

For “motoring along” read “remain unavailable at retail” (except for insiders). The good news? Prices for pre-owned “grail watches” are nose diving.

So supply is catching up with demand, right? It ain’t necessarily so. To quote ancient cartographers, here be dragons.

Swiss watch exports for the first nine months of this year fell by 12.3% for China and by 10.4% for Hong Kong. Exports to the United States grew by 28.5% over the same period.

Chinese easing of zero-covid policies could spark a windfall for luxury watchmakers

If the Chinese market recovers and the U.S. market stays stable, the status will remain quo. Primo luxury watches will “motor along” out of reach of retail shoppers. At best. At worst, we’re looking at a return to the bad old days. That depends on the economy.

At the moment, luxury goods sales are strong like bull. According to the latest Bain & Company Study, the global luxury goods market will grow 21 percent in 2022, to 1.46 trillion dollars. The study predicts sales will continue to expand into 2023 – until 2030.

I’m highly skeptical of any study that predicts consumer trends eight years into the future. The more important bit: the demographic.

While inflation takes its toll on the middle and upper middle class, demand remains robust at the very top of the luxury market. The highest-priced timepieces are where the action is. And will be.

Short of a global economic collapse, the demand for the “best” luxury watches isn’t cratering. Quite the opposite, apparently. The question becomes one of supply. Will luxury watch makers expand production to meet the current and/or increased demand?

Rolex has automated production; they’re the in-demand luxury watch brand most able to increase supply. And increase they will. Rolex is building a $1 billion factory in Bulle, Switzerland. The watchmaker is characteristically silent on the details, except to say it won’t be on-stream for five years. So no relief in the short term. If the market expands as Bain predicts, none in the long term either.

Privately-owned Patek Philippe is the Ferrari of luxury watch brands. They share the same “limit production and treat your customers like sh*t” philosophy that’s brought them both fabulous riches. Like the Italian automaker, Patek’s busy increasing average order value rather than volume (Patek Philippe: Because You Suck and We Hate You).

Audemars Piguet is also family owned. They operate under the same self-imposed production limits as Patek.

Vacheron Constantin is the big name publicly-owned luxury watchmaker. The Richemont Group would love to grow the brand – VC only makes 20k timepieces a year (half of AP’s output). Unfortunately (for Richemont), Vacheron doesn’t have a grail watch or enjoy the same level of pent-up demand as Patek or AP.

Grand Seiko SBGW263 – $97k

The top end of the luxury watch market – Rolex, Patek, AP, Vacheron, Cartier, IWC, A. Lange & Söhne, Blancpain, Jaeger-LeCoultre, etc. – is safe from the inflationary downturn. The next level down, not so much.

To capitalize on the luxury watch boom, OMEGA, Grand Seiko, Breitling, TAG Heuer, Bell & Ross, etc. increased production and introduced dozens of new models. Post-Pandemic the upper middle class upon which they staked their fortunes is getting hammered by inflation.

OMEGA Speedmaster Chime – $450k

To appeal to the life-sustaining upper echelon market, the mass market watchmakers have added more exclusive and expensive pieces to their collection. Yes but . . .

These watchmakers are addicted to volume. They can no more shut off the taps on their lower end watches than a cocaine addict can walk away from Bolivian marching powder. Their high-end timepieces will never have the cachet of watches by The Holy Trinity. Depreciation will be fierce.

Taking all that into account, here’s my recommendation for luxury watch buyers, sellers, collectors and traders.

If you’re looking to sell a gotta-have steel Rolex, Patek, AP, Vacheron or similar, unless you need the money, hang fire. Prices for pre-owned grail watches will never rocket to the moon like they did during the Pandemic, but they will recover some of the lost ground. Absent a global meltdown, they’ll eventually plateau and begin a more sensible but steady rise. Think long term.

If you’re looking to buy a gotta-have pre-owned luxury watch, wait ’til after Christmas and go ahead. Prices will continue to go down as cash-strapped owners seek cash, but that curve is flattening. Watch watchcharts.com for the bottom of the market.

If you can buy a top-tier luxury watch at retail, do it! They’re still worth more pre-owned than new. If you’re hankering after a mid-tier timepiece, cool your jets and keep an eye out for discounts [on new pieces] at chrono24.com and similar.

If you’re looking to trade your watch, pay attention to the total cost. Dealers like to offer “good” money for the trade-in and then rape customers on the price of the new watch. Same as it ever was.

We’ll keep monitoring the situation on your behalf. Meanwhile, heed the words of Jean-Jacques Rousseau: “Patience is bitter, but its fruit is sweet.”

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