Story Highlight
– Rolex and Audemars Piguet flippers exited market amid price slump.
– Average profit for Rolex watches fell to 6.7%.
– Patek Philippe offers best returns, especially on Aquanaut.
– Secondary market sales now account for nearly half of transactions.
– Market health appears fragile, with 2026 predicted as challenging.
Full Story
**Market Insights: The Future of Luxury Watch Brands in 2024**
The luxury watch market is facing significant challenges as speculative investors depart and traditional buyers reassess their purchases. Since the price downturn that began in 2022, those who treated luxury timepieces, such as Rolex and Audemars Piguet, with the same indifferent choice as cryptocurrency have largely vanished from the marketplace.
Previously, the post-pandemic surge saw moderately affluent individuals seeking advice on coveted models like the Rolex Submariner and Audemars Piguet Royal Oak. However, this enthusiasm appears to have dwindled, leaving a stagnation in customer engagement.
The dramatic entry and exit of these market segments contributed to a notable peak in secondary prices during spring 2022 followed by a steep decline. Recently, there are only a few watch collections available from authorised retailers that still yield a profit when resold.
Data from WatchCharts, in a report by Morgan Stanley, indicates that certain models still retain investment value. A second-hand Rolex Sea-Dweller, for example, can yield a profit of around 54%, while the Daytona, GMT Master, and Oyster Perpetual show potential returns of 32.5%, 28.4%, and 26.9%, respectively. Yet, the wider Rolex catalogue reflects a sobering picture, with an average potential profit of merely 6.7% as of January. Some models, such as the DateJust, hover just above break-even, while others like the Day-Date and Yacht-Master are seeing substantial losses.
In the case of Audemars Piguet, only the Royal Oak collection seems to hold its profitability, averaging returns of 24.9%. However, models like the Offshore and CODE 11.59 face significant depreciation when resold shortly after purchase.
Patek Philippe stands out with the most favourable returns overall, averaging 10.7% across all collections—a rise from the previous year. Limited production of around 70,000 watches annually and the necessity of prior purchases to establish a purchasing relationship complicate access to sought-after models like the Aquanaut, which can bring as much as 80.3% returns.
Despite potential profits, the luxury watch market is entering what can be termed a period of heightened scrutiny and price sensitivity, especially in the context of transparency around pricing. The symbiotic relationship between primary and secondary markets poses additional risks, particularly as consumer hype fades.
Recent observations from New York’s Diamond District demonstrate falling prices for high-demand watches. The price of a Rolex Daytona with a “Tiffany blue” dial dropped from $130,000 to $98,000 from January to December last year, and a similar trend is evident across various models, which could indicate a cautious consumer sentiment.
As prices stabilise and begin to show slow recovery across the Rolex line, the landscape resembles the market conditions prevalent prior to the pandemic. Luxury watches have become more expensive owing to multiple price hikes, with buyers often relying on credible sources and dealers to make informed purchases.
Affluent consumers, including devoted collectors, still stimulate market activity. However, the intertwining of buying and selling habits means that resale values significantly influence their decision-making. Drivers for purchases often correlate with significant life events, indicating motivations beyond mere investment.
An analysis reveals that secondary market sales now constitute about half of total sales, a substantial increase from less than 20% in 2019. Proponents of the market may point to a growing number of wealthy individuals as an optimistic sign, although the outlook remains cautiously pessimistic given recent export figures indicating stagnation.
The luxury watch industry appears to be grappling with an oversupply, as a slow down in new watch exports poses risks to market health and longevity. With many pre-owned watches available at significantly reduced prices, brands face the challenge of balancing inventory and sustaining retail interest, particularly for high-end models.
In this evolving landscape, brands must adapt—producing compelling watches and implementing dynamic marketing strategies. Retailers are encouraged to refine their selections, focusing on unique customer experiences while managing costs effectively to protect profit margins.
As we move forward, the competition will remain fierce, and survival will depend on innovation and the willingness to evolve, even for renowned brands like Rolex, Patek Philippe, and Audemars Piguet.
