News that Rolex increased prices by up to 7% in the UK yesterday should come as no surprise to anybody.
Inflation across the world is soaring, affecting everything from energy prices to wages and material costs.
Plus the UK pound is tanking against the Swiss franc, driving up import prices; and against the US dollar, creating a pricing differential between key markets so it is cheaper to buy in this country compared to the United States or any other country with its currency pegged to or tracking the dollar, which includes oil-rich Middle Eastern states.
If the UK government were to bring back the instant VAT rebates non-EU shoppers used to get, we might have had a flood of high-spending tourists over the summer snapping up bargains because of the pound’s weakness.
Take note Liz Truss as you search for policies to stimulate growth.
But that is not the topic of today’s column.
Instead I have been crunching some numbers on the narrowing gap between Rolex prices at authorised dealers and those on the secondary market.
I have already reported extensively on sharply falling prices on the secondary market since Q1 for Rolex’s most popular steel tool watches, along with those from AP and Patek Philippe.
That trend is continuing, with data from Subdial, a pre-owned watch specialist, showing Rolex prices dropping by 2.8% in the last 30 days, which means the difference between the retail price and the market price has been narrowing.
In the case of the GMT Master II Ref. 126710BLRO (steel watch with Pepsi dial), the delta has closed from around £14,000 in March of this year to £8,734 today.
My view, based on anecdotal evidence, is that the Subial prices are on the high side, so the delta is probably narrower, but the trend is enlightening.
The steel Pepsi GMT is red hot with very long waiting lists (or expression of interest lists, as Watches of Switzerland recently rebranded them).
Slightly easier to buy is a Rolex Submariner with Date, Ref. 126610LN, and here the difference between retail and secondary market price has almost disappeared.
The secondary market price, according to Subdial, is down to £10,743 today, while the authorised dealer price is up to £8,450, a difference of just £2,293. If the Subdial price is on the high side, the gap could vanish.
The same is happening with Patek Philippe prices, which increased retail prices by around 5% in the UK and European Union on September 1, a spokesperson confirmed to WATCHPRO today.
This took the retail price of a steel Patek Philippe Aquanaut, Ref. 5167A-002, from £17,760 to £18,580.
Over on the secondary market, the price has almost halved since April from £84,253 to £49,933, according to Subdial.
That has reduced the delta from £67,000 to £31,000.
If you were actually looking to sell any of the watches we have looked at here, you would be offered at least 20% less as a trade-in or a sale to pre-owned specialists like Watchfinder or Watchmaster.
These price falls are a welcome sign that sanity is returning to the secondary market, and the flood of flippers and speculators that have been bullying sales staff in authorised dealers might as well find something better to do with their time.
It is a nice feeling for a watch enthusiast if the Rolex or Patek Philippe watch they buy holds its value, or even increases gently over time, but the recent shortages and speculation have created a more unpleasant atmosphere around these brands and their retailers.
A rebalancing is long overdue, and I hope the market finds a happy equilibrium that rewards watch lovers over speculators.
