From pasta to petrol, it seems that many things have been in short supply in recent months.
Luxury brands are not immune to shortages and Rolex recently took the unprecedented step of making a public comment on its position. The watch market relies on supply chains that are broadly similar to other industries, and a combination of the pandemic and post-Brexit conditions amid continuing high demand has led to a global reduction in supply.
Interestingly, Rolex's statement was made via Yahoo News and not through the financial press. When asked “why Yahoo?” the luxury brand simply replied: “because they asked”.
In common with many other high-value assets, Rolex makes a relatively small number of watches compared to more mainstream watch manufacturers. They also only sell via their network of distributors, who manage sales to customers.
Rolex further commented to Yahoo News that "our current production cannot meet the existing demand in an exhaustive way, at least not without reducing the quality of our watches – something we refuse to do as the quality of our products must never be compromised."
"Rolex does not compromise on what it takes to produce exceptional watches," the statement continued.
Rolex watches have been in high demand for decades. The most recent example of this was the yellow gold Daytona with a green dial, produced originally in 2016 for a retail price of around $34,000 (USD). It quickly sold out and examples sell now for at least twice the original price (the lowest price we could find after a quick search was over £60,000).
While other manufacturers have reported similar production issues to Rolex, buyer and collector demand for luxury watches remains strong across the sector. This is true of both new and pre-owned models, the latter being particularly relevant for discontinued models.
It is therefore vital that you have adequate insurance for your watch, whether it is a single item or part of a collection.
This should include extended replacement cover. It is not unusual for items to be valued at their purchase cost or a professional valuation, as both act as a baseline. However, this will not factor in appreciation and could leave a claim settlement short of the amount needed to replace the item.
In simple terms, extended replacement cover enhances the way that claims for items specified within the extension are settled. It does this by paying out more than the sum insured stated by your policy at the time of the loss.
The actual level of percentage varies between insurers, and we can guide you through the specific wording under your own policy and identify whether this is suitable for your requirements.
As you might expect, there are conditions to this extension. The principle requirement by an insurer will be that a professional valuation must have been carried out within a set number of years prior to the loss; this again varies depending on the insurers, but two to three years is the usual level.
Extended replacement cover provides a built-in buffer to protect you should the value of a particular item or collection increase in between the regular valuations. It is therefore of great use when it comes to protecting your watches.
If you need further advice on how to protect your watches or any other luxury goods, please contact us today.