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The Future of Rolex: Increased Production and Its Potential Impact on the Market

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EL DORADO HILLS, Calif. - eTradeWire -- Despite popular belief, there is no grand Rolex conspiracy to limit production and create artificial demand. Rolex produces and sells over 1 million watches annually, more than any other brand in its price range. The high demand for Rolex watches far exceeds production, leading to multi-year waitlists for popular models like the GMT-Master II.

In 2022, Rolex announced plans to increase production by expanding its manufacturing facilities. Recently, Swiss newspaper NZZ reported updates on these plans, including renderings of a new complex in Bulle, Switzerland. This facility, expected to cost over one billion Swiss francs (~$1.1 billion) and employ about 2,000 workers, will have four production buildings connected to a central administration building.

Rolex, which produces most of its parts in-house across four existing facilities in Switzerland, will likely use the Bulle facility to handle some overflow. Additionally, Rolex is opening two smaller temporary facilities in Villaz-Saint-Pierre and Romont, set to open this year and next year. These facilities are expected to incrementally increase production until the Bulle complex opens in 2029.

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While increased production might seem beneficial for those waiting for their dream watch, it raises concerns about the secondary market. Currently, high demand and limited supply boost the value of Rolex watches on the secondary market. Many people keep their Rolexes as investment hedges against depreciation, contributing to the brand's exclusivity and high resale prices.

An influx of new Rolex watches could flood the market, potentially devaluing existing models and diminishing their appeal as investment vehicles. This has been observed with brands like Breitling, Tag Heuer, and Ulysse Nardin, where increased production led to a drop in secondary market values.

Filmmaker and music producer Jon Robert Quinn, a seasoned watch collector with over a decade of experience, sees a significant shift with Rolex's move. In his latest film, High Rise 3: Run to Peril, high-end watches and their auction prices play a central role, highlighting his deep understanding of the collector market. Quinn believes increased production will undermine the investment value of Rolex watches, significantly altering market dynamics.

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Rolex appears focused on selling new watches. Increasing production aligns with this goal and could undermine the secondary market. While this strategy might impact the resale value of existing watches, it would likely boost Rolex's revenue by meeting more primary market demand.

The future is uncertain regarding whether increased production will shorten waitlists or if demand will continue to outpace supply. These developments could transform the dynamics of the Rolex market, both new and pre-owned. The 2030s might end long waitlists, but at the cost of altering the investment value of Rolex watches and significantly impacting the secondary market.

Watch the High Rise 3: Run to Peril movie trailer https://youtu.be/2WYr599rl0I



Source: Jon Robert Quinn
Filed Under: Retail

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