5 Year Warranty... what does it mean big picture?

[TheVTCGuy]

I bought my current Rolex just a few months ago, a birthday present to myself. It's a EX II Polar (42). I was at my AD yesterday and somehow they had one with a green tag, five year warranty and 10 year service interval reccomondation, they said something about it coming from a European AD. Whatever, anyway I spoke to the watchmaker on site and asked if there was any difference between it and mine, he said no.

So... Unless I'm missing something there was no upgrade in the movement or quality of the watches, why would Rolex double the warranty and service-interval time? This has to produce less revenue, they will have to repair watches with problems for a much longer time period then before, and they will earn less money from RSCs doing regular maintenance services (if people follow the recomondations). So... why do it? The only answer is marketing, and they believe in the long run they will earn more money (sell more new watches) by implementing this new warranty policy (is there any other explanation? ).

I wonder what prompted this Are they trying to compete better with Patek Phillipe? Do they feel pressure from, and believe this will set them apart from, say, Omega? Or?

I know nothing about marketing, or warranties, or ... well, a lot I just find this warranty increase a very interesting maneuver.

[desmoboy]

Patek Phillipe are in different market segmentation so Rolex would unlikely to be competing with them. Omega are more direct competitor in same segmentation they already offer 4 year warranty on their Co Axial watches so now Rolex offer 1 more year than Omega which would set them above them on warranty cover. Service interval for Omega service interval is I believe 5 years; so Rolex has intervals above them on that as well.

Rolex would have done the analysis concuding greater sales in future years will offset loss from more warrenty work and less people getting watch serviced

[Racerdj]

Bottom line, if the watch doesn't need service in the first year or so, it's good to go long term. With the longer warranty and service interval, sales will increase with minimal cost to them. Peace of mind for the purchaser too.

[Mezz72]

I'm surprised nobody mentioned that it's to avoid dropping price.

[brandrea]

Originally Posted by Racerdj

Bottom line, if the watch doesn't need service in the first year or so, it's good to go long term. With the longer warranty and service interval, sales will increase with minimal cost to them. Peace of mind for the purchaser too.

I agree with this.

[hchj]

While i am glad that rolex has made this clever move, I'd hope ppl at rolex can shed more light on how it is possible to stretch the service interval to 10 years after a overhaul.
If there's indeed something only rolex service centres can do, it means more businesses for them in a long run.

[zjd168]

there is rumor that RSCs operate at close to cost and not very profitable. Maybe it is true.

[travisb]

Originally Posted by Racerdj

Bottom line, if the watch doesn't need service in the first year or so, it's good to go long term. With the longer warranty and service interval, sales will increase with minimal cost to them. Peace of mind for the purchaser too.

x3

[RichM]

My GMT needed a complete movement overhaul at the 30 month mark. I bought it 9/12 and sent it in for service on 3/15 to RSC NYC. Lucky for me the service was free, compliments of Rolex.

The watch you saw at the AD was the same watch that had the red tag on it 2 days ago. Nothing changed except the warranty and service interval. It's not a different or newer watch.

[hbi]

Over the life of a watch, which is usually several decades, all else being the same, a 5 year warranty doesn't add much compared to a 2 year warranty. For people who intend to keep their watch(es) and aren't focused on resale value, this is likely the most important consideration.

From a brand perspective, regardless of the motivation, by virtue of giving even incrementally more value for the same money, Rolex may have ever so slightly diluted its brand. However, what will hurt the brand more over time is Rolex's apparent inability or unwillingness to communicate well with its customers, especially with the younger demographic that has grown up or is growing up in today's hyper-connected social world.

In the short (next 1 - 3 years), all else being equal, a watch with a 3-yr warranty might have lower resale value than a watch with the 5-yr warranty.

[watchwatcher]

Maybe it's meant to be justification for an upcoming price increase? Who knows...

[Speed]

Clearly Rolex did the analysis on watches needing work under warranty. Since the numbers were low, offering this sort of beni costs them little and let's ADs crow about low cost of maintenance to prospects / customers.

Could price increases be more justifiable? Sure.

[hbi]

Originally Posted by Speed

Clearly Rolex did the analysis on watches needing work under warranty. Since the numbers were low, offering this sort of beni costs them little and let's ADs crow about low cost of maintenance to prospects / customers.

Could price increases be more justifiable? Sure.

I'm sure Rolex knows what it's doing, but this increase and the manner in which it has been rolled out is a head-scratcher. Ultimately, I see this as a defensive strategy to protect or maintain pricing, and brand-neutral at best.

Historically, companies have used increases in warranty periods as a defensive strategy to alleviate customer concerns about product quality, not as an offensive, market-leading strategy.

Hyundai and Kia both of which suffered severe quality problems in the US market used a 10 year / 100K mile warranty cover to alleviate customer concerns, while working to improve quality. More recently, Toyota, the previously undisputed epitome of quality management, had to introduce its free ToyotaCare program to overcome customer concerns and market-share loss due to quality issues in the US market.

As a luxury brand, Rolex would/should be more keen on increasing prices and retaining the relative image of exclusivity, than on flooding the market and increasing market-share. IMO, a more effective way to highlight low-maintenance would have been to highlight or spin the "10 year service interval" by saying "we find customers are not having to bring their watches in more frequently and therefore a 2-yr warranty period is more than adequate". If they thought it necessary to go to a 5-yr warranty period, I'd have expected to see at least a token MSRP increase.

[Speed]

Good points...

However, I don't think Rolex is terribly exclusive any more...relative to their peers. Not thinking of Patek.

The sheer numbers - 800k- 1mm watched per year dwarfs Ap at ~ 35-40k for example.

[hbi]

Originally Posted by Speed

Good points...

However, I don't think Rolex is terribly exclusive any more...relative to their peers. Not thinking of Patek.

The sheer numbers - 800k- 1mm watched per year dwarfs Ap at ~ 35-40k for example.

Good discussion! I agree and that's the reason brand image, with which pricing has a strong interdependency, establishing a direct communication channel with customers, and customer perception of it all are even more important. I presume the overwhelming majority of Rolex customers buy it based purely for its brand and only the true WIS'es buy for horological excellence.

On a side note, do we know whether those Rolex production numbers include Tudor and Cellini?

[Speed]

Originally Posted by hbi

Good discussion! I agree and that's the reason brand image, with which pricing has a strong interdependency, establishing a direct communication channel with customers, and customer perception of it all are even more important. I presume the overwhelming majority of Rolex customers buy it based purely for its brand and only the true WIS'es buy for horological excellence.

On a side note, do we know whether those Rolex production numbers include Tudor and Cellini?

Well since Rolex is privately held, the only proxy for their volume is the # of COSC certs they are issued.

Don't think Cellini are certified chronometers...Tudors up until now we're ETA. Not sure there either.

[hbi]

Originally Posted by Speed

Well since Rolex is privately held, the only proxy for their volume is the # of COSC certs they are issued.

Don't think Cellini are certified chronometers...Tudors up until now we're ETA. Not sure there either.

Thank you for that. This may be going off on a tangent, but for others who like to understand business models (in addition to appreciating their Rolex timepieces), I google'd and found some good discussion on production volumes and the watch industry another forum (http://forums.watchuseek.com/f2/watc...es-804639.html). That discussion is a little less than 2 years old but most of it still seems correct.

[springbar]

Originally Posted by hbi

IMO, a more effective way to highlight low-maintenance would have been to highlight or spin the "10 year service interval" by saying "we find customers are not having to bring their watches in more frequently and therefore a 2-yr warranty period is more than adequate". If they thought it necessary to go to a 5-yr warranty period, I'd have expected to see at least a token MSRP increase.

That's backwards and I think customers would see through a rhetorical trick like that. If the watches never break, Rolex should be happy to sell them with a long warranty. A 5-year warranty means that Rolex is betting against the likelihood of a warranty claim in the first 5 years.

Rolex sells expensive heirloom items that come with warranty fit for a throwaway consumer product. I wouldn't be surprised if this was costing them some sales, and they decided to change course.

[douglasf13]

Originally Posted by TheVTCGuy

I bought my current Rolex just a few months ago, a birthday present to myself. It's a EX II Polar (42). I was at my AD yesterday and somehow they had one with a green tag, five year warranty and 10 year service interval reccomondation, they said something about it coming from a European AD. Whatever, anyway I spoke to the watchmaker on site and asked if there was any difference between it and mine, he said no.

So... Unless I'm missing something there was no upgrade in the movement or quality of the watches, why would Rolex double the warranty and service-interval time? This has to produce less revenue, they will have to repair watches with problems for a much longer time period then before, and they will earn less money from RSCs doing regular maintenance services (if people follow the recomondations). So... why do it? The only answer is marketing, and they believe in the long run they will earn more money (sell more new watches) by implementing this new warranty policy (is there any other explanation? ).

I wonder what prompted this Are they trying to compete better with Patek Phillipe? Do they feel pressure from, and believe this will set them apart from, say, Omega? Or?

I know nothing about marketing, or warranties, or ... well, a lot I just find this warranty increase a very interesting maneuver.

I think Rolex's new warranty and longer recommended service intervals are a direct result of competition with Omega, who makes equally good watches at a generally lower price point, and, up until recently, had a better warranty.

Of course, this is a delicate balance, because, being a Veblen good, higher price means "better." Rolex added value to the line without actually lowering the price, thus keeping their image intact.

AP and Patek are at another level. Think Rolls Royce, versus Rolex's Mercedes and Omega's BMW.

[hbi]

Originally Posted by springbar

That's backwards and I think customers would see through a rhetorical trick like that. If the watches never break, Rolex should be happy to sell them with a long warranty. A 5-year warranty means that Rolex is betting against the likelihood of a warranty claim in the first 5 years.

Rolex sells expensive heirloom items that come with warranty fit for a throwaway consumer product. I wouldn't be surprised if this was costing them some sales, and they decided to change course.

I can see your perspective too, and that's how Rolex is going to position this move.

I agree that Rolex sells expensive, long-lived assets that never or rarely fail. For something like that, and especially with the impressively small failure others have described, wouldn't a lifetime warranty make even more sense? Certainly not unheard of.

[douglasf13]

Originally Posted by hbi

I can see your perspective too, and that's how Rolex is going to position this move.

I agree that Rolex sells expensive, long-lived assets that never or rarely fail. For something like that, and especially with the impressively small failure others have described, wouldn't a lifetime warranty make even more sense? Certainly not unheard of.

Now THAT would be interesting, and it would have certainly convinced me to buy new, rather than buying slightly used second, as I usually do with watches.

[cornerstore]

I think this maybe part of the reason .

Whether you bought the goods in a shop or online, under EU rules you always have the right to a minimum two-year guarantee period at no cost.
http://europa.eu/youreurope/citizens...s/index_en.htm