7 Reasons and Doubts on Rolex cutting SS Professional/Sport watch production

[Rollei]

Three ADs in Vancouver, Canada are no longer allow people put their deposit and name onto the waiting list.

Last night on the weekend, I was having this discussion with a friend who works in luxury marketing sector and we have a debate of why is Rolex doing this on "Purpose". This situation is very different than the Leica M lens drought in 2010 because Leica at that time really can NOT meet the demand. However, after Leica moved into a bigger facility, they caught up with the production and everything went back to normal. The following are the conclusion of 10 reasons and doubts of why: What do you think?

Reason1. Rolex foresees that there is a Great Depression or stock market bubble coming and everyone will be selling their Rolex for cash. The pre-own market will be flooded with Rolex watches with bargain price and Rolex is trying to stop of what will be happening.

Doubt1. By looking back in the history, Rolex has been doing fine during the 2008 stock market bubble and the sport models always will always maintain its value in Asia no matter what the world economy really is.

Reason2. Rolex is creating a "desire" on the SS sport models.

Doubt2. Yes, in the short term, but I believe in the long run, people will get fed up and buy something else or not spending at all. It's like walking into your favorite grocery store and most of the shelves are empty. You eventually will move on to another grocery store.

Reason3. Rolex is trying to sell their Datejust or TT or precious metal like gold or platinum sport models.

Doubt3. Why on earth would Rolex spending so much time to create a SS Pepsi GMT if they really want people buying the gold or platinum sport models? It just doesn't make sense.

Reason4. Rolex is trying to hurt the grey market by cutting down the productions.

Doubt4. Grey will always be there no matter what the production is because if there is a "demand/buyer", there will always a "seller" to sell. After the watches sold to Mr. Joe, it is his right to do whatever he wants with the watches, period.

Reason5. Rolex has trouble manufacture with the new watch movement or re-tooling for the new movement and watch cases coming in the next few years down the road.

Doubt5. Rolex has been making watches with just over 100 years of experiences. They are a private held company and could easily stop the production of Datejust models and focus the wait list on the SS sport models 24/7 if that is what they want. It just doesn't make sense, again.

Reason6. There will be a price increase.

Doubt6. If there is a price increase, it will be NOW. Again, Rolex is a private-held company, they can increase the price without cutting down the production now, simple.

Reason7. People buying Rolex watches as an investment piece and Rolex doesn't want their watches turn into a "stock". A watch is meat to be enjoy and cherish on the wrist.

Doubt7. Yeah right, by cutting down the production? What they are doing now is to create more "flippers" or "investors" on the sale forums than before.

[tyler1980]

regardless of the credentials this is no different than TV doctors diagnosing patients based on what they heard not actually examining the patient themselves. Its not valid.

A luxury marketing person who has no inside knowledge personally has no clue either despite their profession. His guess is as good as ours.

At the end of the day, i think its demand driven. Rolex trying to increase it with scarcity and then the scarcity itself amplifying it even more. I have no idea if im right or not. Its fun to speculate though, i do admit.

[dannyp]

Originally Posted by tyler1980

regardless of the credentials this is no different than TV doctors diagnosing patients based on what they heard not actually examining the patient themselves. Its not valid.

A luxury marketing person who has no inside knowledge personally has no clue either despite their profession. His guess is as good as ours.

At the end of the day, i think its demand driven. Rolex trying to increase it with scarcity and then the scarcity itself amplifying it even more. I have no idea if im right or not. Its fun to speculate though, i do admit.

I think someone in luxury marketing, in general, would have some insights on this. However, what makes Rolex different, and is unlikely considered by most marketers, is that the entirety of Rolex's profits go to charity. Most luxury labels are concerned with cutting costs and slapping a logo on the cheapest crap customers will still buy to meet quarterly projections.

[Etschell]

this was well thought out.

there is no reason other than Rolex does what it wants. part of it has to do with patek and ap scaling back production. just think you cant get a nautilus for less than 50k or a long long wait. even the 5167 sells for 25k now.

similarly the 15400s used to sell at a discount and now not so much.

[Cru Jones]

That's all a bit too complicated and "conspiracy theory", IMHO.

There's a lot of demand and Rolex seems to be trying to meet it without raising prices (for now). Thanks, Rolex.

[Etschell]

Originally Posted by Cru Jones

That's all a bit too complicated and "conspiracy theory", IMHO.

There's a lot of demand and Rolex seems to be trying to meet it without raising prices (for now). Thanks, Rolex.

new gmt is 300 bucks more....

[Cru Jones]

Originally Posted by Etschell

new gmt is 300 bucks more....

Do you mean the new SS BLRO?

[tyler1980]

Originally Posted by Etschell

new gmt is 300 bucks more....

i would chalk that up to the bracelet. But with the bracelet and a new movement i don't think they are being unreasonable and pretty generous acutally.

[Etschell]

Originally Posted by tyler1980

i would chalk that up to the bracelet. But with the bracelet and a new movement i don't think they are being unreasonable and pretty generous acutally.

im saying they are increasing new models while keep old models flat.

[tyler1980]

Originally Posted by Etschell

im saying they are increasing new models while keep old models flat.

yeah that makes sense. AP does that and adjusts prices up/down on the new model. The existing one stays flat. I think this one has substantial differences so i wouldn't call it a price increase as its probably more expensive to make. But i see the point.

[lecorsaire]

Originally Posted by Etschell

new gmt is 300 bucks more....

This is partly because of the jubilee bracelet and the new movement. It always costs more since there are many more links involved. To me $300 is such a trivial sum that I don't consider it an increase. If we were talking about $1k then it would be a different story.

[brandrea]

Originally Posted by Cru Jones

That's all a bit too complicated and "conspiracy theory", IMHO.

There's a lot of demand and Rolex seems to be trying to meet it without raising prices (for now). Thanks, Rolex.

right there with you brother

[karmatp]

I have already purchased 2 watches since all this Rolex garbage started and couldn't be happier. I have moved onto different brands and don't long for any Rolex watches any more. Thanks Rolex for pushing me to enjoy other brands. It is nice to log into other brand forums and not hear investment silliness or waiting list complaints.

[Ticknaway]

Originally Posted by karmatp

I have already purchased 2 watches since all this Rolex garbage started and couldn't be happier. I have moved onto different brands and don't long for any Rolex watches any more. Thanks Rolex for pushing me to enjoy other brands. It is nice to log into other brand forums and not hear investment silliness or waiting list complaints.

Eventually a huge swath of Rolex buyers will be at the same point. There are so many beautiful watches out there!

[Rollei]

Originally Posted by Ticknaway

Eventually a huge swath of Rolex buyers will be at the same point. There are so many beautiful watches out there!

I agree some Rolex buyers may move on to another brands because there are so many beautiful watches with much better finishing and case design out there.

BUT AT WHAT COST?

Never mind complications watches, let's focus the basic three hands model from the top 7 brands; such as, Patek, VC, FP Journe, Moritz Grossmann, Lang and Heyne, A Lange & Sohne and Laurent Ferrier.

All of the above cost at least three times or more than a basic Rolex Oyster Perpetual watch. Well, some may argue that the top brands are made out of precious metals but even for the one who offered in stainless steel will likely to cost three times more. Most of them only have mediocre 30m waterproof case, but Rolex oyster case are all 100m waterproof with screw down crown.

I could go on if you also factoring the service cost and how long it takes to overhaul those "beautiful" watches. Good Luck!

[Etschell]

Originally Posted by brandrea

right there with you brother

this was the simple theory.

[AK797]

Originally Posted by Cru Jones

That's all a bit too complicated and "conspiracy theory", IMHO.

There's a lot of demand and Rolex seems to be trying to meet it without raising prices (for now). Thanks, Rolex.

Indeed, I would now quantify demand into genuine demand and flipper demand, and I think genuine demand has not changed all that much, which may be why Rolex does not want to raise prices or increase/reroute production, as this would be a pander to the flippers. They are just trying to make sure their genuine supply goes to genuine demand, as before. A very hard task in a raging capitalist market but Rolex are going to give it a helluva go.

[c41006]

Originally Posted by AK797

Indeed, I would now quantify demand into genuine demand and flipper demand, and I think genuine demand has not changed all that much, which may be why Rolex does not want to raise prices or increase/reroute production, as this would be a pander to the flippers. They are just trying to make sure their genuine supply goes to genuine demand, as before. A very hard task in a raging capitalist market but Rolex are going to give it a helluva go.

I bet flipper demand has gotten insane. I’m sure the phones at ADs are ringing off the hook with average joes looking to make a quick grand or two flipping an LV or BLNR. I imagine it’s really frustrating for the ADs.

[lecorsaire]

I don't think they care much about a bear market. Rolex buyers tend to be in a financial positions that make weathering the storm relatively painless so to speak. If you have to flip watches because of a bad market, then you probably shouldn't be spending money on luxury items.

I seriously think they just want to increase cachet for the brand but without increasing the prices. They know they can't price a DJ41 at the level of a Royal Oak. It would be suicide. It was seen and still is seen as a mass produced watch. Perhaps this move can get rid of that view if they maintain the current supply levels.

[a_watch]

This was an intresting read. Thank you. It's hard to know what is the reason. My guess is that they want to sell more of their precious metal watches. Even tho they released new SS models such as deytona or the new gmt. They are rare and they go close to the two tone versions in second hand market. But again, it's hard to know the real reason.

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[lecorsaire]

Originally Posted by a_watch

This was an intresting read. Thank you. It's hard to know what is the reason. My guess is that they want to sell more of their precious metal watches. Even tho they released new SS models such as deytona or the new gmt. They are rare and they go close to the two tone versions in second hand market. But again, it's hard to know the real reason.

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The fact is that their sports models are highly desirable, especially the PM versions. The steel versions are very attractive at roughly a third to a fourth of the price of a gold version. Steel is also very in vogue right now overall regardless of price. They've seen the overwhelming success of the steel Daytonas and I think that perhaps they want to replicate this kind of crazy demand for their other steel pieces. The only way to accomplish this is to create an artificial excess demand.If they keep this up then the redesigned Submariner whenever it is released will be as sought after as the current DaytonaC.

[jonnyz1245]

Originally Posted by lecorsaire

The fact is that their sports models are highly desirable, especially the PM versions. .

Seriously? Every AD I have ever talked to said the Smurf and BLRO sit in their cases for a year or more before they are able to sell just the one. I know an AD that had a wg pepsi in his case for 3 years and its still sitting in his window at over 3 years old. White gold daytonas are also historically very slow movers. YG subs too.

Every time I am in NYC or Boston, one can have their pick of pm sport models. In Vegas this past weekend, they had a wg smurf, a wg pepsi, a TT Sub, and a couple gold Daytonas and that was IT for professional models in the case. No SS at all.

[dannyp]

Originally Posted by a_watch

This was an intresting read. Thank you. It's hard to know what is the reason. My guess is that they want to sell more of their precious metal watches. Even tho they released new SS models such as deytona or the new gmt. They are rare and they go close to the two tone versions in second hand market. But again, it's hard to know the real reason.

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I would imagine that Rolex's goal here is to sell more PM models. Assuming production of movements is at/near capacity, the decision becomes what cases to house them in. Even if Rolex could fabricate more cases, they are useless without movements to put in them so decisions must be made.

At the end of the day, assuming equal production time for a SS vs. PM case/bracelet, Rolex must decide how to allocate that time and watch movement, and it makes sense to allocate them to the most expensive thing that someone will actually buy.

Here's something else that might come into play, with a company as large and sophisticated as Rolex: Even though Rolex has developed its own alloys, the cases and bracelets are constructed from commodities and those whose businesses rely on commodities often buy futures in them years in advance based on pricing predictions. Perhaps Rolex made a bet on one commodity over another and that is now playing out?

[lucevan le stelle]

OK, but can you cut to the chase? Conclusions please, so they can be provided comments, which I would think is the intent of the post(?). Otherwise seems like a Hamlet style soliloquy applied to watches.

[Fleetlord]

Originally Posted by lucevan le stelle

OK, but can you cut to the chase? Conclusions please, so they can be provided comments, which I would think is the intent of the post(?). Otherwise seems like a Hamlet style soliloquy applied to watches.

I'll try to be more blunt.

In one fell swoop, Rolex is:

1) Protecting the Brand. The pricing on grey market watches prior to the limitation in distribution was too low. It was ridiculous and out of hand. Stickered watches were all over the place. It diminished the brand.

2) Going upmarket.. The Rolex brand is already very strong... Stronger than $8,500 submariners.
Non WIS who buy the most Rolex' by far think that Rolex cost more than that, so they settle for SS sports because they are thrilled with how "cheap" they are instead of TT and PM. People will spend more to obtain Rolex if they have limited lower price options. This has been proven already.

This is what Luxury Brands do. It's for the best.

[c41006]

Originally Posted by Fleetlord

I'll try to be more blunt.

In one fell swoop, Rolex is:

1) Protecting the Brand. The pricing on grey market watches prior to the limitation in distribution was too low. It was ridiculous and out of hand. Stickered watches were all over the place. It diminished the brand.

2) Going upmarket.. The Rolex brand is already very strong... Stronger than $8,500 submariners.
Non WIS who buy the most Rolex' by far think that Rolex cost more than that, so they settle for SS sports because they are thrilled with how "cheap" they are instead of TT and PM. People will spend more to obtain Rolex if they have limited lower price options. This has been proven already.

This is what Luxury Brands do. It's for the best.

So are you saying that Rolex watches are cheaper than most people think they are? Also I think the majority of people prefer SS or PM over TT. Maybe I’m wrong but I can’t imagine too many people walk in to look for a SS piece and walk out with a PM. The difference is almost $20k.

[Fleetlord]

Originally Posted by c41006

So are you saying that Rolex watches are cheaper than most people think they are? Also I think the majority of people prefer SS or PM over TT. Maybe I’m wrong but I can’t imagine too many people walk in to look for a SS piece and walk out with a PM. The difference is almost $20k.

Yes. There are plenty of people with little knowledge about watches and a lotta money. Just go on YouTube and watch all these people buying luxury goods including Rolex, that have money and no idea what they are buying.

There are more ways than ever to have disposable income to drop on PM Rolex.
Rolex knows this and instead of being stunned by it, they are acting on it.

These people will spend whatever it takes. Rolex is just guiding them to where it's best for Rolex.

[c41006]

Originally Posted by Fleetlord

Yes. There are plenty of people with little knowledge about watches and a lotta money. Just go on YouTube and watch all these people buying luxury goods including Rolex, that have money and no idea what they are buying.

There are more ways than ever to have disposable income to drop on PM Rolex.
Rolex knows this and instead of being stunned by it, they are acting on it.

These people will spend whatever it takes. Rolex is just guiding them to where it's best for Rolex.

It makes sense. They are targeting the impulse buyer with lots of disposable income. Meanwhile the people who can’t afford or don’t want to spend the money on a PM piece can still get a SS piece they just have to be more patient.

[Bigblu10]

Originally Posted by c41006

So are you saying that Rolex watches are cheaper than most people think they are? Also I think the majority of people prefer SS or PM over TT. Maybe I’m wrong but I can’t imagine too many people walk in to look for a SS piece and walk out with a PM. The difference is almost $20k.

They don't, plain and simple. Someone who walks into an AD looking to spend 8-9K for a stainless Sub is not going to drop 30K for a yellow or white gold Sub just because there are no stainless Subs in the display case or in the vault. PM watch buyers are a much smaller niche.

[c41006]

Originally Posted by Bigblu10

They don't, plain and simple. Someone who walks into an AD looking to spend 8-9K for a stainless Sub is not going to drop 30K for a yellow or white gold Sub just because there are no stainless Subs in the display case or in the vault. PM watch buyers are a much smaller niche.

Yeah I don’t think they do either but I think Fleetlords point was that an uninformed buyer with a bunch of cash walking in to buy a Rolex just because it’s a Rolex might drop that kind of money if there aren’t any cheaper options. (Assuming they don’t want a SS DJ)