In the GDR, the buyers of a trabbis had to adjust to waiting times of over ten years. There is no such thing in our market economy. No kidding? The market for luxury watches shows that this is not the case. If you want to buy a certain model of the Swiss luxury brand Rolex, you even have to expect waiting times of up to twenty years; at least if you want to buy the watch officially. On the grey market, these watches are traded almost twice the list price. Supply has not been able to keep up with demand for a long time. This is a direct consequence of neoliberal policies and the widening of the wealth and income gap. While many people are getting worse every day, a few people don’t seem to know where to put the money. We have an idea.
Swiss luxury watches by brands such as Rolex, Audemars Piguet and Patek Philippe have always been the insignia of a small but financially all the more powerful upper class. For many decades, the supply of these watches withstood demand in the broadest sense. As is customary in a market economy, suppliers regulated demand by selling price and fed rising demand by expanding production capacities. For a long time, the golden rule also applied to luxury watches, which every buyer of a new car knows: as soon as the goods are delivered, there is a sharp decline in value. Those who wanted to sell a new watch again had to accept heavy losses. In the luxury watch segment, however, this changed fundamentally in the mid-2010s and for a few years there has even been the paradoxical situation that new luxury watches from certain manufacturers are more expensive used than new watches from the official retailer.
For example, the Rolex GMT-Master II steel sports watch in the blue-black colour variant (nicknamed “Batman”) is listed by the Swiss manufacturer at a list price of 9,000 euros. The “problem” - if you want to buy this watch through a concessionaire, an official Rolex-certified retailer, you will get a tired smile at best. The few concessionaires who put new customers on a waiting list at all date the waiting period to up to 20 years. There is a better chance of good regular customers leaving at least six-figure sales in the store every year, or less good regular customers getting involved in a special kind of tie-up business: if you want to get the popular Rolex at the list price, you have to agree to purchase a few shopkeepers at an overpriced retail price. Then you get on the waiting list and may in a few years perhaps pick up his desired watch including additional input.
Those who want to buy the watch immediately must do so via unofficial dealers, the so-called gray market. Here, however, gray market prices then fall. For the aforementioned Rolex model, the grey market price for used watches exceeded the list price for new watches at the beginning of 2018. The same phenomenon can be observed for the even more expensive watches of the type Royal Oak by Audemars Piguet and Nautilus by Patek Philippe, which can also only be purchased for selected customers via very long waiting lists or at almost double the price on the grey market.
20 Years waiting time for watches that are as expensive as small or midsize cars? Used prices that are twice as high as the list price? How do these bizarre developments come about? The answer is very simple. The demand for new luxury watches has far exceeded the supply for years and for about two years the “Rolex shortage” has intensified once again. Rolex produces around 800,000 watches per year. The estimated average sales price ex works (i.e. excluding dealer margins and excluding taxes) is around 6,000 euros. But now there is obviously much more demand for these watches. If the supply can no longer be increased and the demand exceeds the supply, the price rises or it comes in a “planned economy” – and there the elite luxury watch sector in our society hardly differs from the egalitarian automotive sector in the GDR – to long waiting lists.
Corona has even reinforced this trend. A special evaluation of chrono24, the largest grey market portal for luxury watches, shows that the market for luxury watches has collapsed for a few days in March last year. Stock prices fell on the stock exchanges. But concerns about the future of the global economy – at least from the perspective of the upper class-did not last long. Sales of luxury watches increased by 50% between the dent in March and mid-April in Germany and are now larger than ever.
Unfortunately, no more recent figures are available. However, it can be assumed, and grey market prices also suggest this, that there has been a further surge in demand since the lockdowns began in the autumn. Apparently, the upper class, which is in a way “hit” by the lockdowns and can leave less money in posh restaurants or for extended shopping trips and holidays in the luxury resorts of the world, does not know where to put their money. And if the skiing holiday in St. Moritz falls into the water, you just buy a Rolex or a Patek Philippe for comfort.
The costs of the crisis are borne by those who do not belong to the target group of these brands. If you work in Germany at the minimum wage, you would have to work more than three years at a time for a 40-hour week without a holiday in order to be able to afford a steel sports watch of the type Patek Philippe Nautilus. And especially during the corona crisis, most people have other concerns anyway.
While many children are forced to eat their hot lunches due to the school closures, the upper class is concerned about how they can spend all their money in style. The “Rolex shortage” is not a social problem. A social problem, however, is that there are so many people who can afford to sign up for a crazy waiting list for a luxury watch.
But should one really wonder about it? The divergence of the income and wealth gap in Germany began already in the 1990s and has continued ever since at an increasingly rapid pace. Without a wealth tax and a stronger taxation of high incomes, this situation will not change either. And this problem is not limited to Germany, but international.
At least in Germany, however, the phenomenon of “Rolex scarcity” could be dealt with relatively easily. Those who have so much money that they can afford luxury watches, the price of which partly corresponds to the multiple annual salary of an employee at the lower end of the income scale, can also be asked to pay more through the tax system. In a society that is becoming increasingly unequal and unjust, there should even be no alternative. After all, who should cover the costs of the corona crisis? Those who can not pay their children a hot lunch? Or those who register on waiting lists for luxury watches?