freddy333 Posted February 17, 2009 Report Share Posted February 17, 2009 I originally made this prediction while back, but as the global economy continues to teeter between doom & gloom, I am becoming more & more certain that 2009 will prove to be the worst year, profit-wise, for the mechanical watch industry since the Quartz crisis days of the 70s. As more & more owners of recently (within the past 5-7 years) purchased mechanical watches come to the realization that the engines that drive them require (regular) servicing (which is rarely mentioned at purchase time), especially when they are having to tighten the purse strings, I fear that many (non-collector) gen owners will decide to get out of the game & return to the sensible world of quartz/digital accuracy & (relatively) trouble-free ownership. Quote Link to comment Share on other sites More sharing options...
browngo1 Posted February 17, 2009 Report Share Posted February 17, 2009 I would think this will become very true freddy, and probably links up with this other post: http://www.rwg.cc/members/main-dealer-service-r-t91481.html More watchsmiths might become willing to reduce their charges to get the work in. The only danger is that if they become really desperate some of the more unscrupulous ones might attempt to take on jobs they can't handle Quote Link to comment Share on other sites More sharing options...
offshore Posted February 17, 2009 Report Share Posted February 17, 2009 Another side effect Freddy, is that regular servicing is being "put on hold" as a money saving excercise. My mechanical service jobs are down almost 50% these last 6 months, I do service a lower socio economic area, but I am amazed at the reaction to quotes. It is only the true collectors who continue to have their watches serviced. Even battery replacement sales are down. Previously I would have women arriving with 6, 8 and up to 20 watches , all requiring new batteries. These mass replacements are being put on the back burner, waiting for "better times" So the ripple effect will be that, for mechanicals anyway, we are also going to see more wear damaged movements in the future. Maybe it may result in some new sales sometime in the distant future, but I am not holding m breath, waiting for those $$. Offshore Quote Link to comment Share on other sites More sharing options...
Shundi Posted February 17, 2009 Report Share Posted February 17, 2009 Another side effect Freddy, is that regular servicing is being "put on hold" as a money saving excercise. My mechanical service jobs are down almost 50% these last 6 months, I do service a lower socio economic area, but I am amazed at the reaction to quotes. It is only the true collectors who continue to have their watches serviced. Indeed..and then when a complete failure occurs people are going to send the watches directly back to the manufacturer and the independent watchmakers are going to be screwed... On the flip side- we might be seeing more indies willing to work on reps... Quote Link to comment Share on other sites More sharing options...
Nanuq Posted February 17, 2009 Report Share Posted February 17, 2009 And the outcome of all this? A buyer's market for mechanical watches! *rubbing hands together* Quote Link to comment Share on other sites More sharing options...
nasosn Posted February 17, 2009 Report Share Posted February 17, 2009 People are cutting down on things of everyday use and first priority, let alone watch servicing and maintenance which do not exist even as thoughts! A friend of mine is a great watch fan but due to the economic crisis he was not able to buy the watch he had in mind...so when his father-in-law asked him what is that he desires the most as a gift before the upcoming wedding he grabbed the opportunity and he answered without hesitation...a Tissot Touch watch So only a marriage saves us during the economic crisis! Quote Link to comment Share on other sites More sharing options...
its_urabus Posted February 17, 2009 Report Share Posted February 17, 2009 I agree with Nanuq. I have seen at reputable preowned shops here great deals on watches. anyone looking for a near perfect 16610 for $3800usd or a 16800 for $4200usd? Quote Link to comment Share on other sites More sharing options...
freddy333 Posted February 17, 2009 Author Report Share Posted February 17, 2009 And the outcome of all this? A buyer's market for mechanical watches! *rubbing hands together* Exactly. Not to mention all of the currently pricey, hard-to-get gen parts (new, NOS & used) that may flood the market in search of a diminishing pool of buyers. But, on the negative side, I think we may also see alot of newly certified watchmakers in need of new careers as history repeats itself. Quote Link to comment Share on other sites More sharing options...
jmarin.72 Posted February 17, 2009 Report Share Posted February 17, 2009 Exactly. Not to mention all of the currently pricey, hard-to-get gen parts (new, NOS & used) that may flood the market in search of a diminishing pool of buyers. But, on the negative side, I think we may also see alot of newly certified watchmakers in need of new careers as history repeats itself. But what about the quality of the mechanical watches?will it follow the downfall of the prices just to cut the losses? Quote Link to comment Share on other sites More sharing options...
trailboss Posted February 17, 2009 Report Share Posted February 17, 2009 I doubt it, quality is all they have. New prices won't drop either. The number available will but not prices. It would be suicide for the gen makers to drop prices by any great amount. Used however is a different story. Bargin days are a comin'! Col. Quote Link to comment Share on other sites More sharing options...
southcoast68 Posted February 17, 2009 Report Share Posted February 17, 2009 I will be at the NAWCC mid-winter regional in Daytona Beach FLorida on Friday, I am wondering just what the "mart" will have this year. Dealers and collectors lowering prices to create capital, dealers and collectors only bringing what they think will sell high and leave everything else at home, or less dealers and collectors even showing up at all? I was thinking of taking a notebook and writing down some notes on this years pricing just for kicks. As for me, limited funds will be forcing me to look at brands like Seiko and Poljot for any interesting finds. One thing for sure, I will be paying special attention to what shows up for the silent auctions this time. I'll be sure to report back (with pics) with anything cool that I can get. Wish me luck Quote Link to comment Share on other sites More sharing options...
jmarin.72 Posted February 17, 2009 Report Share Posted February 17, 2009 I doubt it, quality is all they have. New prices won't drop either. The number available will but not prices. It would be suicide for the gen makers to drop prices by any great amount. Used however is a different story. Bargin days are a comin'! Col. Thanks Col....I am wondering though...if the used watch prices go down,isn't that gonna affect the market and be a regulator to the new watches prices?I mean why should someone spent 5 to 10k for a watch that in a couple of years he won't be able to sell it for a price near the original? Just a thought... Quote Link to comment Share on other sites More sharing options...
Guest avitt Posted February 17, 2009 Report Share Posted February 17, 2009 I wonder if membership is up over at PMWF.com. Like the replica boards, that's an ideal place for watch enthusiasts to harbor tough economic times... Quote Link to comment Share on other sites More sharing options...
RobbieG Posted February 17, 2009 Report Share Posted February 17, 2009 No way. The situation isn't extreme enough to make mechanical watch lovers turn to quartz. Sorry, but people just don't take timekeeping that seriously to choose accuracy over luxury. Make no mistake. People buy these things because they are luxury items, not because they tell time well. LOL. So I agree with Boss. Most gen buyers aren't having to tighten stuff that costs $500 once every five years either. I mean come on. The average Day Date owner earns in the mid to high 6 figures or more. They aren't sweating the service bill, trust me. Maybe they are not buying a new car this year and downsizing the house, but $500-$800 bucks for service as a cut for a Rolex - or even Lange owner? Again, nah - capital "N". Nor will it really drive the industry anywhere drastic. The houses are already combatting it by decreasing supply and choking demand. It is working perfectly. Prices of new watches aren't budging and the machine is working pretty well. You have to keep in mind that the WIS who earns fifty grand a year and makes major sacrifices to own a gen watch or more that costs 10% of his annual income or more is the exception and not the rule. So sure, that guy who took a pay cut or lost his job is going to get stung by every bill, but the truth is, there just aren't as many of them. Believe me, if that were the center of the gen watch market NONE of the brands would ever be where they are today - it just wouldn't be worth it to them. Price is the key. So you are half right about the service quandry though. Meaning it is hard to justify for a lower income guy when it costs 10% or more of the value of the watch. But at higher retail price points not only are you dealing with a better % number, but you are also dealing with people who are very accustomed to paying so called "big" bills for practically everything in his life - vehicle service, electronics repair, dry cleaning, tailoring, travel expenses, etc. and watch service is no exception. In other words, when you routinely paying two grand for 1st class plane tickets your world is different in a nutshell. Recession effects at the consumer level can hurt some groups more that others but it is still linear phenomenon for the most part. In other words, on average everyone is off by a certain percentage of disposable income for the most part. But it is just simple math really. If one guy makes 50K and he loses 20% of his income he is homeless. If his neighbor next door makes 500K and loses 20%, he waits until next year to buy a new Turbo out of prudence only and not necessity. Trust me, if his watch needs service it is going in for service in 2009 and he is paying the bill without a second thought... I have two pretty good connections that help me gauge this stuff. One is a jewelry store who is also a very large volume Rolex dealer - top 5 in US. His jewelry biz is off 50%, but the Rolex biz is only down 10%. Hardly enough to notice in his words. Again, it is about price. I bet his average jewelry sale is $75K plus pre-recession, and his average Rolex sale is a fraction. The other connection is one of the largest multi brand AD's in the country (not a chain). They have AP, VC, Lange, Breguet, IWW, Dewitt, Droz, Glashutte, Panerai, Blancpain, and more I can't think of right now. They report retail tourist traffic is slow, but then the impulse buy isn't that biz anyway. They report hardly any slowdown as well. Used will continue to come down for sure, but the new market is still a luxury market and a reasonably priced one as far as luxury goods go. Don't forget guys, it is still a man's world. Women like to think that when cash gets a little tighter they won't be the first to get cut on Valentines Day. But the truth is, the guys find a reason not to buy that tennis bracelet as they drop off the Day Date for service and spa - not the other way around. Sorry girls, not saying I do, but that is really the way it is... Quote Link to comment Share on other sites More sharing options...
Logan Posted February 17, 2009 Report Share Posted February 17, 2009 I think this economy will really sort out the swiss manufacturers.. and many luxury goods brands for that matter. The days when you built a brand then hiked up the prices and milked the market for all it was worth are long gone.. and probably aren't returning. Look at what Panerai got away with.. prices went from 1500 euro to between 10 & 20k euro based on nothing more than brand value. oh and an "in-house" movement which was of course worth double the price of the old one. Its being reported that the $5,000 watch market is almost gone completely today. The bracket above that is very low volume and mostly sales to collectors and enthusiasts.. ie the very rich who own a number of watches.. up there you've got a hundred brands competing for a rapidly diminishing pool of buyers. Below you're got the buyers who want a brand but for the most part don't really care or know what's inside. Many of them are happy to buy quartz for the accuracy and convenience. Add to that the young who aren't interested in watches at all.. Most of them have never worn one and would much rather put the money towards a cell phone. I think freddy has it right.. this will be as bad as the quartz crisis. Quote Link to comment Share on other sites More sharing options...
RobbieG Posted February 17, 2009 Report Share Posted February 17, 2009 I don't know if I can agree with the bracket above 5K being gone and reserved for collectors. Even small brands have done very well despite the downturn. The very high end has suffered, but that is more from price exhaustion than anything else - or perceived value. The 200K pieces were truthfully not even selling to collectors but to people who hopped on it as the latest "luxury fad" and had nothing better to do with their money so they decided to collect really expensive jewelry to show off to friends. Consider this, Ulysse Nardin made and sold around 15,000 pieces last year and grossed 190 million dollars. Down a little from the peak, but they are doing fine. It is a business centered around variable costs which makes it quite east to ride out recessions. Once the equipment is taken care of the rest is just labor and material to meet expected production. There is a lot of wiggle room there for them. Watch companies are very much limited by supply side economics. They can only make so many watches each year. Even if they had the ability to sell more, most have not the ability to and never did really. Long range planning dictates how far you can go before economies of scale eat you up. Most of the luxury brands we have all hear of are all operating at peak efficiency between 15k and 40k watches a year - AP, Lange, Patek, VC, etc. If the buy side gets a little lean, they limit supply further, bump up the price for a special edition or two and ride it out. It isn't quite as treacherous as some make it out to be really. Once a brand is over the hump, they can pretty much have a licence to steal forever as long as they don't completely f*ck up supply control which is how to stay in the game. Knowing Rolex is turning out a million units or so and most of them are gold Day Dates, one can imagine there is a lot of cushion there. The fact is if branding is done correctly and a brand can ease up on ad budgets when times are lean, they simply don't need to sell alot of units to have a highly successful enterprise. Sure its tougher now, but it isn't the end of the world for many of the big ones. They already cashed out the big ticket in the boom. The BRM's and Dewitts and Dubuis and FP Journe's and Forsey's and Kreiger's and that Titanic fad sh*t company whoever they are - those guys are all in trouble though. They never got over the hump in time and they are all going to wreck out. Quote Link to comment Share on other sites More sharing options...
trailboss Posted February 17, 2009 Report Share Posted February 17, 2009 I am wondering though...if the used watch prices go down,isn't that gonna affect the market and be a regulator to the new watches prices? Problem is if you cut three grand off the price of a ten or twelve grand watch those who bought last year get very unhappy with you. Ask the auto manufactures what huge price cuts do to trade. They learnt the hard way. What will most likely happen is the makers will reduce supply to keep prices up. Much like oil. Rolex for example take a very dim view of ADs drasticly reducing retail prices. There's a hell of a lot of new 'tonas sitting on shelfs at dealers but no reale reduction in price. If your interested in used gens BTW I can recomend subscribing to the free Gray & sons catalog. They mail world over and it's a monthly treat for lovers of fine preowned watches and jewelery. Februarys has about seventy Rolex alone inc two pages of lovely vintage stuff. Some nice DDs and DJs for arround four or five grand. About two or three hundred watches a mth from 600USD on up. www.grayandsons.com follow the links to subscribe. Col. Quote Link to comment Share on other sites More sharing options...
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