Audemars Piguet: US Market Supply & Availability

Key Points from the Discussion

• Authorized Dealers and boutiques often reserve inventory for their most loyal, high-spending customers, contributing to the perceived scarcity for general buyers. This practice has intensified as some regulars purchase watches to flip on the gray market.
• The industry's supply chain is disrupted by the 'herd mentality' of buyers, leading to empty AD displays while gray market dealers openly showcase numerous sought-after models.
• Audemars Piguet's former CEO, François-Henry Bennahmias, outlined a strategy in 2019 to maintain production at 40,000 watches annually, with plans to increase to 42,500-43,000 in 2020, while reallocating production among collections like the Royal Oak, Royal Oak Offshore, and CODE 11.59.
• The labor-intensive nature of watchmaking, particularly hand-finishing, limits automation and rapid production increases, distinguishing luxury timepieces from mass-produced goods like automobiles.
• Some speculate that brands manipulate the market by intentionally limiting supply, creating artificial scarcity to drive up demand and prices, a tactic observed after Rolex prices began to approach AP territory.
• The perceived availability of watches on social media platforms like Instagram often contrasts sharply with the reality of limited supply at authorized dealers, creating a sense of frustration among collectors.
• While popular brands face shortages, the overall health of the industry benefits as collectors explore and invest in independent brands and other luxury timepieces like Bvlgari Octo or Ming.
• The current market trend suggests that luxury watches are increasingly pre-ordered and allocated, similar to high-demand automobiles, with collectors expressing willingness to place full deposits for confirmed allocations to potentially curb flipping.