Prices in anticipated 2023 recession ...

[doyall]

Originally Posted by Andy0331

... "Dumb people" who are over-leveraged in watches (or anything for that matter) will also want/need to start liquidating at some point, introducing more supply into the market, putting further pressure on prices. ...

à la:

Here's Why Crypto Investors Are Offloading Their Luxury Cars

By Adina Achim Published 2 hours ago

The bankruptcy of two cryptocurrency exchanges saw a sharp decline in the market, resulting in the sale of no longer affordable luxury sports cars.

https://www.hotcars.com/crypto-inves...g-luxury-cars/

[cts]

There will be no recession according to our fearless steadfast leader. Nothing at all to worry about. Keep spending as fast and as much as you can possibly afford, regardless of the price tag! We are in spectacular shape as a nation.

[S.Explorer]

The stall seems to be a last hurrah for Christmas, then I'd expect more price drops to come.

[2loaded]

Originally Posted by S.Explorer

The stall seems to be a last hurrah for Christmas, then I'd expect more price drops to come.

Exactly..buckle up for the ride folks!

[S7gpt]

after checking a few grey dealers, lucky if you could sell a brand new BLRO for anything more than 20% above retail. Suspect this will continue to drop in new year to the point its not worth it for flippers even for these watches - hope so anyway !

[WatchGuy1966]

Remember a whole industry of cupcake shops was born in the most recent recession of 2008.

[Swiftneck]

double posting..

[sigma089]

Rolex is in the market of producing new watches and they are pushing out 1M+ pieces across all lines a year. That's a lot of watches in today's environment.

They will make their ADs buy everything they produce, of course, but most will be complaining that they are unable to get rid of PM and other less desirable pieces, like they have for ages in the past. Even for Rolex and PP this is going to be a challenging environment. They will fare better than less desirable brands, but they will also experience considerable less demand from customers.

Rolex as a company has absolutely no interest in stabilizing the market at the ridiculous level of the past two years just so everyone who bought a Daytona at 50k or a GMT at 25k can continue feeling like they did the right thing. They do not care about the secondary market, simply because their goal is to sell the new pieces that they are constantly producing.

Imo the CPO program is there to make it easier for customers to upgrade to more expensive pieces at ADs via trade-ins. Primarily it's a great way of facilitating sales of PM models.

ADs also do not care if they make 20 percent on your trade-in piece at 25k or 10k when they sell it to another customer. The difference is peanuts for them, especially if they make you buy a new watch in the process. The big money is in new watches. They make around 40 percent on each sale at MSRP and they will have an easier time selling if a customer believes that they made a great deal trading-in another piece.

CPO prices won't be stabilizing above retail. They will become a way of steering existing customers from lower brands to more expensive ones through a more affordable pricing - like pre-owned cars at your Mercedes dealer.

[Skabadi]

Originally Posted by sigma089

Rolex is in the market of producing new watches and they are pushing out 1M+ pieces across all lines a year. That's a lot of watches in today's environment.

They will make their ADs buy everything they produce, of course, but most will be complaining that they are unable to get rid of PM and other less desirable pieces, like they have for ages in the past. Even for Rolex and PP this is going to be a challenging environment. They will fare better than less desirable brands, but they will also experience considerable less demand from customers.

Rolex as a company has absolutely no interest in stabilizing the market at the ridiculous level of the past two years just so everyone who bought a Daytona at 50k or a GMT at 25k can continue feeling like they did the right thing. They do not care about the secondary market, simply because their goal is to sell the new pieces that they are constantly producing.

Imo the CPO program is there to make it easier for customers to upgrade to more expensive pieces at ADs via trade-ins. Primarily it's a great way of facilitating sales of PM models.

ADs also do not care if they make 20 percent on your trade-in piece at 25k or 10k when they sell it to another customer. The difference is peanuts for them, especially if they make you buy a new watch in the process. The big money is in new watches. They make around 40 percent on each sale at MSRP and they will have an easier time selling if a customer believes that they made a great deal trading-in another piece.

CPO prices won't be stabilizing above retail. They will become a way of steering existing customers from lower brands to more expensive ones through a more affordable pricing - like pre-owned cars at your Mercedes dealer.

I don’t disagree with you except for the last paragraph. My point is there’s absolutely nothing stopping rolex cutting supply to their ADs but half tomorrow.

[eijiboy]

Originally Posted by Skabadi

I don’t disagree with you except for the last paragraph. My point is there’s absolutely nothing stopping rolex cutting supply to their ADs but half tomorrow.

Rolex will not cut supplies to their ad. Ads have a very expensive rent, employees, utilities to pay.

[Skabadi]

Originally Posted by eijiboy

Rolex will not cut supplies to their ad. Ads have a very expensive rent, employees, utilities to pay.

Why not, cut production, up msrp just like Patek. Will achieve the same thing covering ADs costs but now their products are even more exclusive

[Rickkk]

Originally Posted by Skabadi

Why not, cut production, up msrp just like Patek. Will achieve the same thing covering ADs costs but now their products are even more exclusive

Have you ever seen a patek?

[Andad]

You can check out the 2023 Rolex prices on David SW’s thread.

Then rewrite this thread?


As for the cost to manufacture a Rolex being 10% of retail.…….pure conjecture Skabadi.

Unless you can back this up with facts?

And then you suggest that there is nothing to stop Rolex cutting supply to AD’s by half?

[Skabadi]

Originally Posted by Andad

You can check out the 2023 Rolex prices on David SW’s thread.

Then rewrite this thread?


As for the cost to manufacture a Rolex being 10% of retail.…….pure conjecture Skabadi.

Unless you can back this up with facts?

And then you suggest that there is nothing to stop Rolex cutting supply to AD’s by half?

please read my messages carefully before making accusations. I was replying to another person with pretty much what you are saying. Nobody knows what it costs for rolex to make a rolex because rolex don’t publish their financials.

Example of cutting production by half was hypothetical as I have mentioned earlier. My point was rolex can control supply and up msrp anytime

[Swiftneck]

Originally Posted by Andad

As for the cost to manufacture a Rolex being 10% of retail.…….pure conjecture Skabadi.

Unless you can back this up with facts?

Everything in this thread is pure conjecture .. Which was also the reason i did write properly.

Maybe i should have written around 10% instead of less though, which would have been more acurate.

It was just in regard to say that cutting production to 50% was not realistic as the cost for Rolex to do so would be very big.

[GGGMT]

A hilarious thread! 10% production cost of retail. Cutting supply to ADs. Martians coming in from Uranus to steal all rolex watches on earth. The best!! Keep em coming wise people!


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[Swiftneck]

Originally Posted by GGGMT

A hilarious thread! 10% production cost of retail. Cutting supply to ADs. Martians coming in from Uranus to steal all rolex watches on earth. The best!! Keep em coming wise people!

Great that you enjoy

I don´t think that 10% production cost on SS watches, and other luxury items is unrealistic though.

I wasn´t talking about Rolex´s total cost pr. watch, only about the pure production cost in regard to cutting production to half tomorrow(materials and production salary).

Lots of their cost would be the same with half the production. Development, marketing, management, administration, etc. Some cost will fall but not 1/1 with the sales number. sale cost, warehouse, maschinery, delivery etc.

The calculation could be like this

Production
Production cost non fixed (materials and salary) 10% - 1.000
Production cost fixed (Mascinery, property etc.) 10% - 1.000

Sale and distibution
Development, marketing, other sales cost
administration, management, warehouse/stock cost 20% - 2.000

Rolex margin 20% - 2.000

AD margin 40% - 4.000

Msrp 100% -10.000

I don´t think that´s a totally unrealistic calculation. Other watch brands do sell watches of similar quality at half the price or less than Rolex. I can´t see how that should be possible if they had a cost just for materials and production salary on +20%

I do run a sale/production company with a calculation close to the above. Not in the watch industri unfurtune :-)

But if you can educate me, I would love to listen and learn.


Enjoy the Christmas..

[mwc5k]

Originally Posted by Swiftneck

Great that you enjoy

I don´t think that 10% production cost on SS watches, and other luxury items is unrealistic though.

I wasn´t talking about Rolex´s total cost pr. watch, only about the pure production cost in regard to cutting production to half tomorrow(materials and production salary).

Lots of their cost would be the same with half the production. Development, marketing, management, administration, etc. Some cost will fall but not 1/1 with the sales number. sale cost, warehouse, maschinery, delivery etc.

The calculation could be like this

Production
Production cost non fixed (materials and salary) 10% - 1.000
Production cost fixed (Mascinery, property etc.) 10% - 1.000

Sale and distibution
Development, marketing, other sales cost
administration, management, warehouse/stock cost 20% - 2.000

Rolex margin 20% - 2.000

AD margin 40% - 4.000

Msrp 100% -10.000

I don´t think that´s a totally unrealistic calculation. Other watch brands do sell watches of similar quality at half the price or less than Rolex. I can´t see how that should be possible if they had a cost just for materials and production salary on +20%

I do run a sale/production company with a calculation close to the above. Not in the watch industri unfurtune :-)

But if you can educate me, I would love to listen and learn.


Enjoy the Christmas..

I would have guessed lower than 10%.

[Swiftneck]

Originally Posted by mwc5k

I would have guessed lower than 10%.

I don't disagree in regards to SS watches, and I did write less than 10% in the first place. But PM pieces will be higher, so i guess an average around 10% is a fair bet..

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[BrunoMalik]

Originally Posted by Swiftneck

I don't disagree in regards to SS watches, and I did write less than 10% in the first place. But PM pieces will be higher, so i guess an average around 10% is a fair bet..

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Gents, pls don’t speculate on Rolex costs when you have absolutely no idea about the topic.

The gold weight alone in a PM Rolex is 8-10k which accounts for 20-25% of its cost. Add to it the cost of other raw materials, machining and the very very expensive Swiss labour and i would be shocked if its under 40%. Not to mention all the overhead, sports sponsorships etc. Federer is not cheap.

Even for steel Rolexes I would be shocked if the total cost is under 30% of retail.

I am the shareholder in one of the well know independents so i have a decent understanding of margins. Our steel sports watch costs 8k to make. Its sold to retailers for 12k which sell it to the end client for 20k. The company keeps 4k/20k which is 20% margin. Add to that tax and depreciation and it gets very thin.

Rolex has much bigger economies of scale but don’t think for a second they have anything above a 35% net margin.


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[DentalFloss]

Actually Rolex is not increasing prices because of costs but to prevent price differences between countries. :/

Do not worry about big brands, their margins are big enough and their war chests are full.

Margin and cash flow is a future real subject for independent small watchmakers. Especially if their sudden "new inflow" of customer will disappear.

[321Forever]

I do not have any direct knowledge of Rolex operating practices or watchmaking or manufacturing or economics or Switzerland. But I know I am right in saying that 2023 will be different than 2022. For starters it’s one unit higher. Then we have the reality that Rolex does not have an online store like Grand Seiko or IWC. Nor does the Deep Sea have a display back. Finally, they do not respond to us fans by offering up a Rolex Club model.

Sad!

[GGGMT]

Originally Posted by jakemeister

I do not have any direct knowledge of Rolex operating practices or watchmaking or manufacturing or economics or Switzerland. But I know I am right in saying that 2023 will be different than 2022. For starters it’s one unit higher. Then we have the reality that Rolex does not have an online store like Grand Seiko or IWC. Nor does the Deep Sea have a display back. Finally, they do not respond to us fans by offering up a Rolex Club model.

Sad!

Rolex will never have that stuff. It’s just not the deal. Seems like Panerai is your brand. Has some of that stuff.




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[321Forever]

Originally Posted by GGGMT

Rolex will never have that stuff. It’s just not the deal. Seems like Panerai is your brand. Has some of that stuff.




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California dial, sweet! -Already got 118.

I was joking about that stuff I wrote. Don’t know how to run a watch factory for real tho. It’s pretty funny to imagine the Rolex Club annual watch like Grand Seiko offering 200 with the “Lugano Pink” dial.

[Apples24]

China opening its borders is good news.

[psm11]

Originally Posted by Apples24

China opening its borders is good news.

Good news for what? Is this another China opening is going to drive prices back up post? Doubt that is going to happen. Prices are going to continue to slide downward. Nothing is moving (despite price cut after price cut).

[Vince_76]

Originally Posted by Apples24

China opening its borders is good news.

This does nothing. Lol

[GGGMT]

Originally Posted by Apples24

China opening its borders is good news.

Awesome!!

Wait, whoa, why is this good?


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[911AP]

Originally Posted by GGGMT

Awesome!!

Wait, whoa, why is this good?


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They are the ones who bought most of the watches at 2-5x retail.

[GGGMT]

Originally Posted by 911AP

They are the ones who bought most of the watches at 2-5x retail.

And so, once again, my question stands: why is it good it China is opening up? Won’t that just drive demand, and prices, up? I was kind of looking forward and excited for more moderate pricing.


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