Rolex boosts production to meet surging luxury watch demand

Rolex fans complaining about a dearth of watches may be in for a surprise, at least in the not too distant future.

The Swiss watch giant and king of the luxury watch industry is opening three temporary production facilities for its timepieces in the Swiss canton (or state) of Fribourg in western Switzerland. Rolex will break ground on the facilities later this year, with production to begin as early as 2025. Bloomberg first reported on these developments; however, when Yahoo Finance reached out for comment, Rolex said it had nothing further to share beyond what was originally reported.

Currently Rolex operates four facilities in Switzerland — the world headquarters in Geneva, the Plan-les Quates site that produces cases and bracelets, the Chêne-Bourg site that makes dials and performs gem-setting, and its Bienne site that manufactures Rolex’s mechanical movements. Rolex is also planning to build a fifth permanent facility in Bulle, Switzerland, as well.

The Rolex Oyster Perpetual Yacht-Master 40
The Rolex Oyster Perpetual Yacht-Master 40

“The new production site in Bulle, just like these three temporary installations, will allow Rolex to expand its production capacity, support growth and meet ever-increasing demand,” Rolex said in a statement to Bloomberg.

A shortage of Rolex supply has been a phenomenon for some time now, and the company has commented to Yahoo Finance in the past about it.

“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,” the company said back in September of 2021. “[Rolex watches] are assembled by hand, with extreme care, to meet the brand's unique and high-quality standards of quality, performance and aesthetics. Understandably, this naturally restricts our production capacities – which we continue to increase as much as possible and always according to our quality criteria.”

BCG report on booming luxury watch market (March 2023)
BCG report on booming luxury watch market (March 2023)

It appears Rolex is now finally addressing its need to boost production capacities. Since Rolex is a private company run by a foundation, it does not report production numbers or financials, but it has been estimated that Rolex makes one million timepieces a year.

Around one million mechanical timepieces produced a year is an extraordinary number for what is a handmade good, and even that large number is seemingly not putting a dent into Rolex’s global demand. A report issued last week from BCG found the new luxury watch market was a $53 billion industry in 2021, and will expand to a $66 billion industry by 2026. The report also found the luxury watch industry was dominated by the likes of Rolex, and fellow Swiss watch icons Patek Philippe and Audemars Piguet (AP).

Rolex late last year decided it needed to enter the fast-growing certified pre-owned market, not just to cash in on that demand, but to also give its authorized dealers like Bucherer and Tourneau some much needed supply to sell. The move also provides more liquidity in the market for pre-owned Rolex watches, and perhaps a bit more value versus new watches.

"Certainly demand far outstrips supply for Rolex and it is welcome news to watch lovers that Rolex is expanding," said Eric Wind, owner of Wind Vintage, a high-end pre-owned watch dealer. "For speculators on new Rolex watches, it might not make sense to hoard new watches, however. The good thing about vintage Rolex watches is that the company is not making anymore vintage models, so perhaps the pendulum for those seeking value will swing back to vintage watches."

It seems in the watch world what's old is new again, and the scarcity element that's boosted new supply, may now lift pre-owned prices.

The Rolex Oyster Perpetual Deepsea Challenge
The Rolex Oyster Perpetual Deepsea Challenge

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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