The secondary market for luxury watches is expected to face further pressure in the near future, with analysts anticipating a continuation of the current downward trend in prices. Industry commentator Danny Younis suggests that this shift reflects intensifying competition among dealers and a growing inventory surplus.
In a recent LinkedIn post, Mr. Younis, a recognized figure in the luxury watch sector, highlighted the market’s current buyer-friendly climate, with Rolex watches particularly susceptible to price declines. He attributes the market softening to a confluence of factors, including a sluggish economy, rising interest rates, subdued consumer spending, and the recent cryptocurrency crash.
Mr. Younis further emphasizes the impact of rising supply on pre-owned Rolex prices. He notes that the WatchCharts Rolex index, tracking 30 popular models, has fallen a significant 31% since its March 2022 peak, with an additional 9% decline so far in 2024. This trend is mirrored by the Bloomberg Rolex Market Index, which has experienced a 40% drop.
Data provided by Mr. Younis further underscores the rising inventory trend. The number of new-in-box (NIB) Rolexes offered on the Chrono24 marketplace has doubled since mid-2022, increasing from 19,000 to over 38,000 currently. This surge in supply suggests a direct correlation with declining sales, as listed volumes have remained relatively flat year-on-year while actual sales have dropped significantly.
Interestingly, Mr. Younis observes that some Rolex models are currently available on the resale market at prices below retail, particularly for Submariner and Sea-Dweller variations. He attributes this shift to a decline in excessive demand, particularly from younger enthusiasts. Even the previously coveted “Hulk” model, which traded as high as USD $28,000 two years ago, is now readily available for around USD $17,000. However, Mr. Younis acknowledges that certain models, such as the stainless steel Daytona and GMT-Master II “Pepsi”, remain in high demand on resale platforms.
It’s important to maintain perspective, Mr. Younis emphasizes. While pre-owned Rolex prices have dropped, they remain 25-30% higher than pre-pandemic levels, and a staggering 70% increase compared to 2017.
He sheds light on a potential contributing factor – Rolex’s considerable production volume. In 2023, Rolex is estimated to have manufactured over 1.23 million watches, exceeding the combined output of its top 11 luxury watch competitors. This translates to an astonishing 3,400 watches produced daily, or two watches every minute throughout the year.
Mr. Younis suggests that Rolex’s controlled distribution strategy, exemplified by the limited availability of sought-after models at authorized dealers, may be a deliberate tactic to artificially restrict supply and maintain high demand (and prices). This strategy was further bolstered by a second price increase implemented in 2024.
Mr. Younis concludes by estimating the current number of Rolexes available on various resale channels to be well over one million. This information, coupled with the trends discussed, suggests that the Rolex resale market is poised for further price adjustments in the near future.
