June 29, 2018

Who is causing the price explosion for vintage watches?


Prices for vintage watches have never been higher, and the issue is worth discussing.

 

There are many reasons for the increases, but I think it is especially important to talk about a subject that blogs and magazines about watches do not typically explore: what I call the "conspiracy theory" of the price of watches, especially for some high-end vintage models.


Carefully-chosen vintage watches has always been a good long-term investment. For example, some models of Universal Compax watches that sold for $ 1,500 fifteen years ago can be worth 10 times as much today, and select examples are worth even more.

Part of the increases we’ve seen is the result of inflation since 2003. But in the last seven years, prices for vintage watches have risen much faster than the inflation rate, and new records for auction prices are being set every day.

Especially interesting are the prices for some particularly prominent models that have been increasing exponentially and totally disproportionate to other models; these watches that once cost a few thousand dollars are now worth hundreds of thousands.

It is this category of high-end watches and how their prices are rising that interests me.

Social media and higher prices

The advent of social networks is part of the reason that prices are jumping for high-end watches. With so many digital methods to communicate, quantifying and rating a watch has become much easier. As a result, it is no surprise that rarer models have appreciated in value more than most common models by the same manufacturer.  

Heuer autavia collectionFor instance, 15 years ago (I include myself in this), few people knew the difference between a Heuer Autavia Viceroy and an Autavia Jo Siffert. In 2004, the watches were worth almost the same amount; today, in large part because of social media, collectors know well the difference between the two models; as a result, the Jo Siffert costs five times as much as the Viceroy.

In large part because of these new information channels, there are examples of watches that have increased in value by three thousand percent in seven years.  For instance, a rare first execution Heuer Autavia 2446, which sold for $7,000 in 2010, was resold at auction in 2017 for $200,000.

This growth in knowledge and information has meant rarer models have found a much larger audience – and an eager market.

Last year we saw Heuer Autavia sold at auction for $125,000, Omega Speedmaster Broad Arrow for $275,000, and an Omega Tourbillon sold for $ 1.5M (more than 15 times its expected price). Each of these watches had historical value as the first of their kind or prototypes, which inflated their value considerably, but the prices were impressively high under any circumstances.   

But one watch sale surpassed them all: the Rolex Daytona owned by actor-racer Paul Newman – a watch so iconic that the model now unofficially bears his name – which sold at auction in October 2017 for $18 million (Newman’s wife, Joanne Woodward, originally paid $200 for it, and Newman wore it throughout his auto racing career). More on that watch later.

Watch manufacturers: learning a useful lesson from vintage sales

In my view, taking advantage of the sale of high-profile watches is one of the most effective ways that manufacturers can promote a particular model or brand; it is easy and cheap to get attention for new watches by exploiting high prices paid at auctions.  

And this leads to the increasingly popular idea of manufacturers creating new watches inspired by vintage models.

When a watch sells for an extraordinarily high price, the model and the brand immediately becomes a hot subject in blogs, social networks, and the media in general. The models and brands become well known overnight. And then, not long afterward…Bingo! The manufacturer announces the reissue of that classic model.

One of the first manufacturers to successfully use this strategy was Tag-Heuer.  The starting point was December 15, 2010 at Bonham's in New York, with the sale of an exclusive auction of Heuer watches from the Haslinger collection. These watches sold for record prices for the time.


first & second generation AutaviaFrom then on, prices for vintage Heuer watches have been rising in auction after auction – especially for the early Autavia chronographs --  the model that was then reissued by the manufacturer three years ago.

Who in the watch world doesn’t remember Tag-Heuer’s research on the web, asking if we collectors preferred the first or second generation of the Autavia? These were precisely the models that exploded in price just before the research began, and not long before the later new editions.

This philosophy has been repeated with model after model, brand after brand: first, prices erupt at auction. As a result, specific watches become famous. Then not long after, manufacturers launch similar new “tribute” models (and at much higher prices than other current watches in their line). Simple and effective.

This is exactly what happened recently with the so-called “Trilogy” promoted by Omega. At auction, prices quadrupled for the vintage series with broad arrow pointers, a year before the release of the trilogy. A coincidence? I think not!

Then, original versions of the Omega Speedmaster CK2998 and Speedmaster Ed White also skyrocketed, and the CK2998 was recently reissued. And now that the Omega Tourbillon has sold at a sky-high price, we can expect the launch of a new version.

And what of the Rolex Daytona -- so-called Paul Newman model?

A few years ago, the prices for the Paul Newman Daytona had stabilized. The most common models sold for around $100,000 to $150,000. These prices had recently been surpassed by the rarer Heuer and Omegas -- something absolutely unthinkable and disproportionate.

But now that the original Paul Newman Daytona has become the most expensive watch ever sold, we can be sure that prices of other models will jump. In fact, a theme auction of Daytona models is already scheduled for this May. I have no doubt that at this auction, Paul Newman prices will explode.

ROLEX PAUL NEWMAN PRICE

We can also be sure that Rolex will use these opportunities to promote its most famous watch. I’d wager that Rolex will launch a Daytona Paul Newman Edition, using the vintage sale to highlight the model.

What does all of this mean for watch collectors?

In my view, we can expect increasingly high prices for the top end of the vintage watch market. These increases will be driven in part by the blowing up the prices of a particular vintage watch model at auction, which the leading Swiss watch manufacturers will continue to exploit in their marketing strategies for their new lines.

And contrary to what many people think, it is not the collectors who are the big beneficiaries of this valuation, but rather the manufacturers and their brands; in my opinion, the watch companies are responsible for the increase in prices for top vintage watches, and not the market itself.

EXPENSIVE VINTAGE WATCHES

 

 




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