For Swiss watch brands, and luxury watch investors across the board, new data shows prices are continuing to fall on the secondary market.
This is especially good news for buyers of Rolex watches, which are notorious for extreme supply shortages and long waiting lists.
Morgan Stanley reported in a recent client note that its WatchCharts General Market Index, which tracks 60 luxury Swiss watches from 10 brands sold on the pre-owned market, fell for the ninth consecutive quarter in the second quarter ended June 30.
Prices have continued to fall since the pandemic peaked in the first quarter of 2022. Current prices in the second quarter were down 2.1% quarter-on-quarter compared to the first quarter, and down 1.2% year-on-year.
“The secondary market decline was broad-based, with few brands posting positive performance in the second quarter,” Morgan Stanley analysts wrote in a report.
Morgan Stanley expects downward pressure on prices to continue through the year.
Looking at year-over-year changes in the second-hand market, only five brands saw their prices increase, with Montblanc (+2.4%) and Hamilton (+2.2%) among the lucky few. Luxury brands such as A. Lange & Söhne (-5.3%), Breitling (-5.9%), Omega (-6.8%), Rolex (-7.2%) and Audemars Piguet (-12.5%) were the worst performers.
Pre-owned prices are not only an indication of the value of a particular watch, but can also influence the prices paid in the primary market, where Authorized Dealers (ADs) sell new watches.
Perhaps the most interesting trend to emerge from this report is that Rolex, the one brand seemingly immune to pricing and sales pressures, is starting to feel the pressure.
Is it cheap enough yet? Rolex Submariner Watches (Rolex) (Rolex)
Rolex “scalpers” — dealers who buy new watches to resell in other markets where they can command higher prices — appear to be facing headwinds, which Morgan Stanley believes is leading to an increase in the supply of new Rolex watches to consumers at the primary, or AD, level.
Morgan Stanley looked at two factors in determining whether speculation in Rolex watches was waning: the size of the “gray market” – watches currently in production being offered in new condition on the secondary market – and the waiting time for a particular Rolex watch in AD.
The analysis found that the number of Rolex watches on the grey market is declining. The bank attributes the decline in grey market supply to rising retail prices for Rolex watches and falling purchase prices for grey market watches, reducing profits from reselling the watches.
Next, Morgan Stanley and WatchChart looked at wait times for popular Rolex models. Because wait time data is limited and difficult to compile, WatchChart calculated wait times using data from the Rolex community on the subreddit.
The story continues
The analysis, which excluded Rolex Daytona Chronographs due to the small sample size, found that wait times for certain Rolex sports watches have improved: “The analysis found that the Submariner, GMT-Master II, and Explorer collections have all shown improved wait times so far this year compared to 2023. Additionally, wait times for the GMT-Master II and Explorer appear to be trending downward since 2022,” the report states. You can see wait times for these models in the graph above.
That means less grey market supply on the pre-owned market and shorter wait times for popular Rolex sports watches means less watch speculation, which may be good news for the pre-owned market, but it also means that demand from Rolex fans in general may actually be declining after years of buyers being turned away due to a lack of supply.
“Typically, [Rolex] “Primary supply is declining and primary demand is waning as a result of both reduced speculative buying and reduced organic demand,” Charles Tian, founder and CEO of WatchCharts, told Yahoo Finance.
This means there are more AD-level Rolex watches available to the average consumer, and for Rolex fans who aren’t scalpers, a 2024 Rolex Submariner may finally be available in the near future.
Pras Subramanian is a Yahoo Finance reporter covering the auto industry. twitter And on Instagram too.
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