Patek Philippe has reduced the prices of its watches by 7 percent in the Americas, effective Feb. 10, in reaction to recent currency fluctuations in Europe and Switzerland. In addition to the Americas price decrease, Patek Philippe is lowering prices by 7 percent in Hong Kong, 5 percent in Switzerland, and 3 percent in Asia-Pacific markets. And it is raising prices by 5 percent in Japan and 7 percent in the rest of Europe, minus Great Britain, where they'll remain unchanged.
Since the Swiss National Bank lifted the currency cap on Jan. 15, the exchange rate between the euro and Swiss franc has plummeted to 1.048, well below the 1.20 rate defended by the former policy. This has caused the franc to surge double-digits against some currencies, swiftly making luxury watches from brands such as Patek Philippe significantly more expensive.
This is good news and bad news for watch collectors.
If you don't already own a Patek, getting into the game just became a little easier. If you're already a collector, your watches depreciated overnight. Many collectors buy a fine watch in the assumption that it's a good investment that will, at the very least, hold its value over time. If these price reductions have a negative impact on secondary market values over the long term, it could hurt Patek Philippe's reputation amongst collectors.
Swiss Franc Shockwaves
The newly announced price changes cover all main collection watches from Patek Philippe but will not affect the special edition 175th anniversary collection (including the $2.6 million Grande Master Chime) and ultra-high-end pieces such as minute repeaters and split-seconds chronographs. Current price changes are valid through June 2015, barring further currency changes. This was communicated to retailers in a letter from Patek Philippe Chief Executive Officer Thierry Stern dated Feb. 9.
In an official statement, Patek Philippe USA President Larry Pettinelli said: "Based on the unexpected decision of the SNB on January 15th not to defend the Euro at the 1.2 level, Patek Philippe was forced to make some difficult decisions regarding worldwide pricing. Pricing adjustments were made in an effort to protect retailers and our clients, and ensure there is less of a disparity between the global markets.” Patek Philippe declined to comment further.
During an interview at the 2015 SIHH tradeshow just a few weeks ago, A. Lange & Söhne CEO Wilhelm Schmid touched on the sensitive nature of moves like this. Said Schmid: "VIPs, of course, they're always concerned if we would consider, for example, a price decrease, because you damage their assets."
A. Lange & Söhne is a major competitor to Patek Philippe. Here, it holds the advantage of being based in Germany instead of Switzerland.