The secondary market for luxury watches is set to soften even further in the short-term as competition between dealers intensifies and inventory rises put downward pressure on prices.
That’s according to industry commentator and investor Danny Younis, who insists it is undoubtedly a “buyer’s market” at the moment – with Rolex the most exposed to current negative pricing trends.
Posting on LinkedIn, Mr Younis, who closely tracks the direction of the luxury watch sector, noted that the secondary market had sunk to its lowest level in over two years, due to a slowing economy, higher interest rates, weak consumer spending and the crypto crash.
He said the backdrop of falling prices but increasing supply was especially true of pre-owned Rolex timepieces.
Mr Younis said Rolex resale prices peaked in March 2022 due to the unprecedented surge during Covid pandemic, but the WatchCharts Rolex index – which benchmarks 30 models – was down 31% since the spike and has fallen 9% this calendar year alone.
Similarly, the Bloomberg Rolex Market Index has fallen 40%, while since mid-2022, the number of new in box (NIB) Rolexes for sale on marketplace Chrono24 has doubled from 19,000 to over 38,000 now. (See graphic published by Mr Younis below).
“This increase in supply is primarily a result of significantly lower sales, as listed volumes fell slightly y-on-y while sold volume has fallen much more heavily,” he wrote.
“This suggests in the short term, the market will continue to soften as competition between dealers intensifies and inventory rises which will continue to push prices down.
“You can now buy some Rolex models on the resale market for less than it would cost at retail, especially some Subs & Sea-Dwellers that are down and no longer chased by hysterical teenage boys (even the coveted Hulk which was US$28k two years ago is now trading as low as US$17k).
“Of course, some models are still in huge demand on reseller marketplaces, notably the SS Daytona & GMT Master II ‘Pepsi’.”
Mr Younis acknowledged that pre-owned Rolexes are still up by 25% to 30% compared to pre-Covid – and 70% since 2017- but said it was important to provide some “context”.
He said: “In 2023, Rolex manufactured over 1,230,000 watches – that’s more than double the next largest 11 luxury watch competitors combined, including Patek, Vacheron, Jaeger, IWC, A.Lange, Breguet, etc.
“That’s around 3,400 watches every single day of the year, or two watches every single minute of every single day! You won’t find many though in any “exhibition only” Rolex Authorised Dealers (AD) – except the gauche gold models that no one wants that lose their value once you walk out of the boutique.
“It’s all part of the strategy to artificially restrict supply and prop up demand (and pricing: a 2nd increase already applied in 2024!)”
It is estimated that there are more than one million Rolexes currently for sale on various resale channels, Mr Younis said.