Rolex CEO Jean Frédéric Dufour said luxury watches cannot be compared to stocks as an investment category. He spoke against the backdrop of an expected decline in watch sales this year, as demand is likely to cool down for the first time in 3 years.
Stocks vs Rolex: Where would you prefer to invest your money? (Photo credit: X/ @ROLEX/ Pexels)
New Delhi: Rolex CEO Jean-Frederic Dufour rejected the idea that investment in watches was comparable with an investment in stocks, adding that this was a dangerous belief. Dufour spoke in response to the COVID-19 pandemic-led surge in queries for pre-owned luxury watches. The trend was fuelled by prevailing low-interest rates and the rise in the value of cryptocurrencies.
Rolex along with Patek Philippe and Audemars Piguet watches were much sought after during this pandemic fuelled craze for luxury watches. However, this frenzy has cooled since the pandemic with the Bloonberg Subdial Watch Index indicating a 40 per cent decline in prices of 50 most traded watches by value.
Why is demand for Rolex falling?
Swiss watchmaker Rolex is forecast to witness a decline in 2024 owing to multiple factors such as:
- A strong Swiss Franc
- Rising gold prices
- Elevated raw material costs
Rolex dominates the Swiss watchmaking industry with a 30 per cent market share. Its sales are expected to decline in 2024 after witnessing 3 straight years of pandemic-fuelled buying. From a 20 per cent surge in buying during peak demand, small watchmakers are expected to witness a 15 per cent decline in sales going forward, the Bloomberg reported, citing Dufour.
Another aspect of the watch industry that poses a problem for manufacturers is that they tend to overproduce when sales are good. The leftover batches are then sold at a discount during a lean sales period. Rolex sold watches worth $11.1 billion for the first time in 2023, according to a Morgan Stanley report.
Why are people investing in watches?
However, the Rolex boss’ warning notwithstanding, there has been a steady propensity to invest in luxury watches. In India, the demand for luxury watches soared as enthusiasts contemplated investing in these timepieces to hedge their money’s worth. To be sure, short-term investment in watches is not advised. Moreover, even for the long term, watch buyers must choose their investment timepiece carefully if they seek to sell it for higher later on.
What to keep in mind when investing in watches?
If you plan to seriously invest in watches, it is important to conduct your due research. Choose brands based on recall and popularity. Further, it is important to have the necessary paperwork to back the pedigree of a watch, according to the Gentleman’s Journal. Ensure that the watch which you plan to invest in has been serviced at manufacturer-authorised service centres.
Credit: Source link