Why are ultra-luxury watches selling so well despite the economic downturn caused by the coronavirus pandemic?

Q: Why are luxury watches selling well despite the poor economy?

This is due to the fact that monetary easing measures implemented as a measure against the COVID-19 recession have resulted in excess liquidity in some areas. It is also said that China's tightening of monetary policy has led to money flowing into watches and jewelry, which are easily convertible into cash.

A: The reasons cited are excess liquidity and China's monetary tightening.

The global economy has been hit hard by the COVID-19 pandemic. However, sales of some services and products are actually increasing. One of these is so-called luxury mechanical watches. Based on the opinions of many people involved, sales of luxury mechanical watches priced at 3 million yen or more appear to be going well worldwide, despite the COVID-19 pandemic. On the other hand, watches priced between 500,000 yen and 1 million yen, which have been the mainstay of luxury mechanical watches, are losing their former momentum.

Among these expensive mechanical watches, Richard Mille, Patek Philippe, Audemars Piguet, etc. are selling particularly well. Rolex and Grand Seiko are also doing well in the 100 million yen price range.

One reason for the bias in demand toward certain high-priced items is the so-called "excess money." Concerned about the economic downturn caused by the COVID-19 pandemic, governments around the world sought to stimulate their economies by providing subsidies and implementing monetary easing measures. As a result, some countries have had excess money. This money has flowed into cryptocurrencies or stimulated demand for watches, jewelry, and art. In addition, it is said that as a result of China's recent monetary tightening, money is flowing into watches and jewelry, which are easily converted into cash.

Some watches have risen in price to the used market price.

As a result of this situation, not only have some watches become harder to come by as new, but the prices of used watches have also skyrocketed. There are examples of watches that didn't attract much attention a while ago, but whose prices have jumped several times in just two years. However, some people in the watch industry say that the skyrocketing prices of used watches have started to come to a halt since around autumn this year.

It is unclear when this situation will calm down. However, given that the current state of excess money will continue, some luxury and rare watches will likely remain difficult to obtain for the time being. Some manufacturers are working to combat resale, but the reality is that they are not necessarily successful.