Rolex Watch Prices Drop Amid Rising Supply

Investors in high-end Swiss watch brands, including Rolex, are witnessing a significant trend: prices in the secondhand market are falling, and supply is increasing.

Morgan Stanley's recent report reveals that the WatchCharts Overall Market Index, which monitors 60 luxury Swiss watch models from 10 brands, experienced its ninth consecutive quarterly decline in the second quarter ending June 30. This follows the peak prices reached in the first quarter of 2022 during the pandemic. The second quarter saw a sequential drop of 2.1% and a year-over-year decline of 1.2%.

Morgan Stanley analysts emphasized that the decline is widespread, with few brands performing well in the second quarter. The downward pressure on prices is expected to persist throughout the year. Notably, only five brands, including Montblanc (+2.4%) and Hamilton (+2.2%), saw year-over-year price increases. In contrast, high-end brands like A. Lange & Söhne (-5.3%), Breitling (-5.9%), Omega (-6.8%), Rolex (-7.2%), and Audemars Piguet (-12.5%) were among the worst performers.

These price drops in the secondary market significantly influence the primary market, where new watches are sold by authorized dealers (ADs). One notable development is that Rolex, typically resistant to price and sales pressures, is starting to feel the impact.

Morgan Stanley attributes this shift to a decrease in the profitability of flipping Rolex watches. Dealers who purchase new Rolex watches and resell them at higher prices are facing challenges. The increased retail prices for new Rolex watches and the declining prices for gray market watches (new watches sold in the secondary market) are reducing the appeal of flipping.

Additionally, Morgan Stanley and WatchCharts observed improved wait times for popular Rolex models. Using data from the Rolex community on a subreddit, they found that wait times for models like the Submariner, GMT-Master II, and Explorer have decreased compared to previous years. The analysis excluded the Rolex Daytona chronograph due to limited sample size but highlighted a trend of shorter wait times since 2022 for other popular models.

The combination of reduced gray market supply and shorter wait times indicates a decrease in speculative purchasing and a potential decline in overall demand from Rolex enthusiasts. Charles Tian, founder and CEO of WatchCharts, noted, "We think there is generally greater [Rolex] availability on the primary market, and that primary market demand is waning as a result of both decreased speculative purchasing and decreased organic demand."

For regular consumers and Rolex fans who are not involved in flipping, this trend is promising. Increased availability of Rolex watches at ADs means that getting a coveted model like the 2024 Rolex Submariner may soon be more feasible.