jkingston
356
Interesting Post, Steve. A few other thoughts
Jan 13, 2012,09:27 AM
First one correction. 10 years ago a Patek perpetual chrono did not cost $35K. List price was about double that--$70K (I am assuming you are talking about the 3970, which was the model then in existence).
I share your worry about prices however. I am seeing the same trend across the board for luxury items and it seems that it is being driven by demand from Asia. Have you checked the price of any Bordeaux first growth lately? Opening prices north of $1K per bottle! The reason: Chinese demand. Something similar is happening with watches, demand is driving prices and the suppliers are reacting with price increases. When Vacheron says that it can sell twice as many tourbillons into China as it can produce, it has only one rational response: raise prices. Overall this is not healthy as it sets up a possible bubble if demand from Asia were to sag. History has taught that adjusting prices downward is nearly impossible as it alienates every single purchaser who bought at the higher price. So raising prices in effect paints the brand into a corner.
But things are not quite as gloomy as you paint them. For one thing, the quality of the movements being produced today is better than it has ever been in history. In house movements are now the norm and they are technically superior to those of the past--free sprung balances, multiple barrels, long power reserves, better finishing. And in many cases the value is just extraordinary. Look at Omega's new chronograph movement: free sprung balance, co-axial escapement, silicium hairspring, column wheel control, vertical clutch, co-axial minute and hour counters and date indication. A huge amount of substantive content. The price? Around $7K US. If I dial back 10 years, you couldn't match that value proposition. To be fair, there are a lot of fluffy propositions out there now--hugely price inflated showy watches, but you don't have to buy those. But when I look at the solid, honest brands I think they are doing better things now than they did 10 years ago and that more or less holds true across the board. My conclusion: although there are exceptions, this is the golden age of watch making.