Market Report - 2023 in Review

2023 was a story of the watch market coming to terms with its new normal. We saw a 11.3% decline in the Bloomberg Subdial Watch Index (GBP), taking place relatively steadily across the year. If you look at the index graph then you’ll see a little reprieve around March to May of 2023 when prices rose before dropping again during the summer. Since around August, the index has stayed relatively stable before dipping again at the end of November.

Compared to the unsustainable boom of 2021 and the peak of 2022, it’s clearly a different situation. Unlike last year’s freeze in trading volume, watches continue to actively change hands. Still, a decline of this magnitude is significant. The only question is whether we’ll begin to see a bottoming out of prices, or if we’ll continue to see a steady decline over the next 12 months.

If you follow the watch industry media, you’ll hear a lot about Rolex prices “crashing”. For certain models, that’s definitely the case. But you might also be surprised to hear that the top five performing references on the Index all came from Rolex - albeit with a variety ranging from entry-level Datejusts to high-end precious metal watches. Looking at the data, we see that only one watch saw an actual increase in value in 2023 - and only just by a tiny margin. The rest declined in value, but at a much lower rate than the market as a whole. At this point, it’s also worth noting that the majority of models on the Bloomberg Subdial Watch Index are Rolex references, reflecting their volume and value on the market.

The “winner” in question is the GMT-Master II 126710BLRO - the iconic Pepsi. This might feel unexpected given that this watch falls quite neatly into the bucket of what we think of as “hype” watches that were most heavily affected by the speculative bubble. Our model tracker shows prices peaking in April 2022, then falling to an all-time low in January 2023. Over the course of the year, it fluctuated slightly, but overall remains slightly above where it was this time last year. This is interesting, as few other Rolex models have appreciated over their price in January. Looking at the supply of watches on the market, we can see that there has been a slight constriction around that time, with supply more or less falling consistently since then.

Looking at the worst performing models, there’s a clearer theme. Out of the five models, four were among the most expensive watches we track. Unsurprisingly, references like the Patek Philippe Nautilus 5990 or the Audemars Piguet 15202 bore the brunt of the speculative fervour that flooded the market over the last few years, both continuing to course correct by a decline of 18.3%. These watches were impossible to buy at retail without an eye-watering spending history, pushing up their pre-owned prices to an unsustainable high. These watches still had the most room to drift downwards, even after the rapid declines of 2022.

Both Tudor and Cartier can be described as high-volume watchmakers, selling an estimated 270,000 and 620,000 units in 2022, according to the Morgan Stanley Watch Report. Both are, generally speaking, available at retail (we’ll discuss Cartier’s unique positioning more) and trade at a discount. But unlike Cartier’s stability this year, Tudor seemed to struggle in the secondary market, falling by around 10.3%. We’ve taken a look at a few reasons why this might be the case.

Cartier’s cultural impact on the watch world can’t be understated. Collectible Cartier watches had always existed as a cult “if you know, you know” category of super rare vintage and neo-vintage references. At some point, these pieces made their way from the realm of passionate collectors to the wrists of high-profile celebrities and musicians like Tyler, The Creator and Kanye West. While it was a large established luxury brand, Cartier’s presence in popular culture somehow felt a little subversive - after all, small, oddly-shaped gold watches weren’t exactly in fashion a few years ago. Simultaneously, incredible auction results captured the attention of watch collectors.

That's not the only reason for Cartier’s success - virtually none of the headline-grabbing watches were produced in quantities sufficient to reliably track on the pre-owned market. The Cartier Crash is a good example. It was originally produced to order in the 1970s, followed by another limited run in the 1980s. The largest volume of a single Crash model was produced by Cartier Paris in the 90s, and even then there were only 400 examples. Looking at a small handful of auction results doesn’t let us generate a market price for the model that we could include in the index.

What does matter, however, is the trickling down of this massive interest in vintage and rare Cartier references to the rest of the brand’s collection. The gold Tank Louis went from an old man’s watch to something that was suddenly part of the horological zeitgeist once more. Though it didn’t balloon in price, this underlying interest meant it was a rock solid performer on the pre-owned market. And once you’ve bought that first Cartier, there’s a plethora of options higher up in terms of price and exclusivity for you to swoon over.

Tudor doesn’t have the same headline-grabbing auction results or cult pop-culture endorsements. Once you buy a Tudor, there’s no logical next step within the brand itself. Virtually all collectible Tudors are vintage, while Cartier has a growing selection of modern Collection Privée pieces that keep the brand relevant. The only truly collectible modern Tudor watches are the collaborations with government organisations or large corporations, and even those aren’t exactly spoken of with the same reverence as Cartier’s icons.

Both companies also have a relatively accessible core collection, though with different consequences. Cartier’s core collection trade at a discount to retail - while the rest of the watch market’s bubble grew, nobody was hyping them up to unsustainable highs. Customers bought watches to wear, not just as an investment.

Tudor’s watches are similarly easy to access even directly after a launch. Unlike its older sibling Rolex, Tudor focuses on being able to immediately fulfil the demand created in the wake of a product launch. We’ve seen this manifest in the brand’s practice of shipping watches to authorised dealers and boutiques before they’re announced. Virtually all of its releases, even extremely popular ones like the Pelagos 39 or Black Bay 54, trade above retail for a few short weeks until supply catches up with demand - and, in our experience, it always does.

Unlike with Cartier’s core collection, people weren’t always just buying Tudor watches to wear. Certain Tudor models, such as the Black Bay Harrods Edition, had always traded for above retail. During the boom of 2020 and 2021, demand for Tudor’s high-profile launches consistently outstripped supply. This made it easy for speculators to make quick money flipping popular models. Unfortunately, this mentality trickled down to normal consumers, who were suddenly seeing Tudor watches as investments, or at least watches that could be easily sold on for a profit if they didn’t like them. This created a positive feedback loop, exacerbated by social media “FOMO”.

It wasn’t until the watch market correction that this feedback loop would be disrupted. Once it became obvious that there were more watches than there were buyers, prices fell. Unlike Rolex’s strategy of generating exclusivity through scarcity, Tudor’s goal of creating as many watches as there were buyers meant that it was willing and able to quickly and consistently meet demand.

What does this tell us? We know that two brands with similar levels of recognition and market saturation can adopt policies that lead to vastly different outcomes for its secondary market performances. We can’t say for certain whether it’s part of a longer-term strategy or merely trying to make hay while the sun shines, but Tudor’s willingness to meet demand has led to a very different outcome than Cartier’s similarly accessible sales strategy for its core collection.

Subdial Big Watch Survey 2023

In December, we sent out a survey to our users to hear more about their thoughts on the past year. With hundreds of enthusiastic responses, we got a chance to listen directly to the collectors.

The watch of the year, with 19.5% of the votes, was the Rolex Daytona 126529LN “Le Mans”. For a brand that doesn’t do tributes, this Daytona came as a surprise. It featured a design inspired by the legendary “Paul Newman” Daytona, as well as an open caseback showing off the brand new movement. The Blancpain Swatch, despite being one of the headline watches of the year, was the least popular answer at only 3%. In second and third place respectively were the Jaeger-LeCoultre Reverso Tribute Chronograph and Lange 1 Time Zone Platinum - both horological crowd-pleasers.

Rolex dominated the news cycle, first by launching its certified pre-owned program, then following that up by making its move into the retail and second hand market through the purchase of Bucherer. While not traditionally known for making dress watches, its newest release, the Perpetual 1908, actually came third in the “Dress Watch of the Year” category. That’s a sentence that would’ve sounded incredulous only a few years ago. Rolex’s Day-Date Puzzle “Emoji” watch was also controversial, with over a quarter of respondents saying it was the “Most Disappointing Watch of the Year”.

Looking Ahead

It’s a few months until the next Watches and Wonders. While there was a lot of news around the “death” of the trade fair, it’s obvious that W&W is here to stay. 2023 was the fair’s most successful year yet, with nearly twice as many attendees as the 2022 edition. This year, we’re expecting to see smaller watches continue to become more mainstream driven by the commercial and critical success of launches like the Tudor Black Bay 54 or the Chopard 1860.

We’re also expecting to see the market further polarise towards more expensive and more accessible watches, with a thinning out of the middle. Brands such as Rolex and Omega continue to raise prices year-on-year, leaving relatively few large players left in the mid-market.

The pre-owned market will continue to be at the front of consumers’ minds. Pre-owned remains the only way many will ever access certain watches that require long spending histories, even with the market correction. The other driver behind pre-owned is, of course, the ability to get watches for below retail pricing. That’s pretty self-explanatory, but we’re also expecting this to be less and less of a barrier for mainstream consumers who are now more familiar and comfortable with the idea of buying pre-owned watches.

Finally, the elephant in the room - interest rates. The biggest story in the financial markets will continue to be the biggest story in watches. Last month, we showed a strong inverse correlation between US Federal Reserve interest rate hikes and the initial decline in the secondary market in Q2 of 2022. It does seem like the rate increases are coming to an end, which hopefully correlates to a more stable watch market in 2024.

2023 in review. Coming to terms with a new normal.

Broader Market

Subdial Big Watch Survey 2023

Looking Ahead

Latest Subdial release