Background: I'm a new Omega fanboy and have been admiring my co-workers vintage Pepsi. When I enquired about the cost/availability of one at my local AD I was nearly laughed out of the store.

So I went home and starting research Rolex and the SS "shortage" issue on the rolex forum but I still don't understand the rolex craze. I think they are beautiful watches, have amazing functionality, history, and style. However, EVEN if only paying retail for a submariner, why would I pay $7.5k when I could get a seamaster for $4k? Not to mention the insane grey market prices on the submariner and GMT's!

People keep mentioning a Rolex bubble, but it seems like that is non-sense. Even the 1 million produced by Rolex will not adequately supply the demand in China, with it's exponentially growing middle class.

I guess my question is, why are people buying into the hype and paying double/triple retail for these SS watches!? When you get into the $15-20k price range it seems like there are much better watches you could spend that money on!

Please educate me!

 

China market is slowing

Rolex is constraining production and at some point will need to stop as it will start to have the inverse effect and drop demand. There are some good threads already here on this.

 

Yes, there are already a lot of good threads on this topic, but I don't think there is a strong consensus about what the future will bring.

Regarding what people will pay, you can call it "hype" if you want, but watch pricing in general isn't firmly rooted in any particular logic. Rolex holds a unique position with respect to prestige and widespread brand recognition, and people want to own them.

 

What is the evidence for that? Rolex is a private company and doesn't publicize how many watches they produce. Further, they started with random serial numbers around 2010, which makes it impossible to use serials to estimate production numbers. And why would Rolex limit production of certain models? I've read all the theories on that subject. Some are more plausible than others; none are remotely provable.

 

You can get a good sense of production numbers by looking up chronometer certifications which do get published by the certifying agency. Average annual production is consistently in the neighborhood of 800k-1million watches (IIRC).

To answer the OP's question: In my opinion- FOMO.

 

The fact that I can walk into a 1,500+ sq foot Rolex Boutique and they only have DJ’s and Cellini’s and some random solid gold pieces. 5 years ago they had subs and other SS models always in stock.

There is no way demand is higher now then back then. They claim they get 2 subs a week and I wager that it is one of the highest volume shops in their network. I’m pretty sure they are Rolex owned. South Coast Plaza in Costa Mesa CA. Next to Omega, across from Paneri, VC, JLC, and IWC. The same mall has a GO, Brietling and Patek store. Not to mention Mount Blanc, Tiffany’s, and Cartier.

 

I don’t think Rolex are constraining production. More they are the best are advertising and marketing. Everyone with an instagram acct wants their watches. That alone makes them hard to come by and they play on that. There are lots of people with a lot of money who want their watches.

Are they better - objectively no. Are they more desirable. Even for an old git like me, I’d say yes.

I won’t pay the premium, but I have in the past and they are worth every penny if that is what you want. An omega or a tag won’t scratch the itch.

 

Isn't "random serial number' a contradiction in terms? Why would they go random?

 

Without claiming to know anything about Rolex's business, as a former bean counter I can say the term "constraining production" is an amorphous term. Does it mean not adding a shift or not investing in more plant? If they are at or near full capacity of their existing plant and staff they are not constraining production even if they don't expand.

Some of you might remember the "Cabbage Patch" doll phenomenon of 30 years ago. There was huge demand, re-sellers were getting way more than retail. Coleco invested on increasing production facilities for dolls at a time their cash flow was short due to video game investments. The bubble burst and Coleco suffered bankruptcy. Of course iconic brands like Rolex shouldn't be as volatile as a toy but the same principle applies.

IMHO Rolex knows their business. They are doing something right. Being organized as a not for profit can't be too bad either.

 

No idea - don't follow Rolux - but why do that? They spend millions and millions in advertising - maybe they are getting tax breaks or other incentives from somewhere - their shareholders I am sure only want to see stock growth

 

There are no share holders...it's a private company in a family trust.

 

Actually, Rolex is a private non-profit. No shareholders, no corporate income taxes.

 

@Dan S Oh! Well, that does change the perspective quite a bit.

 

I was just at the Rolex Boutique, Costa Mesa South Coast Plaza a couple of hours ago. Not a sport model to be seen. I asked about Sub's and Sea Dwellers. "sold out" was the response.

 

Very interesting market tactic (if it is one).

 

It’s all conjecture. But I would imagine demand is strong despite economic slowdowns in specific regions

 

It’s a non profit trust. Your both right.

 

I agree that there probably is a lot of free advertising with IG and other versions of social media. That can definitely increase demand, especially in emerging markets.

 

Thanks for that. I wasn't disagreeing with @blufinz52. I think we both just responded at the same time.