[Fearsome Puppy]

Originally Posted by MoBe

As I have said before in this forum,it is the rise in the value of the Swiss Franc that has been responsible for most of the increase in the cost of Swiss manufactured goods over the last 18 to 24 months.Other major factors include metals prices as well as transportation costs.Add to this the decline in the value of the American dollar during this same time period and the combined effect on prices is what you see at your local AD.

You don`t have to be a Harvard economics graduate to see how closely the price increases of Rolex products has tracked the rise in the value of Swiss and the drop in the value of American currencies over the last several years.What consumers are forgetting in this situation is that the value of their currency is not absolute but rather is dependant on the value of the currency in the country where a product is produced.You only have to go as far as Washington to see how the current administration has been arguing with China over the valuation of the Yuan against the Dollar to get a measure of just how much currency valuation affects markets everywhere.

Needless to say this basic description is an oversimplification for the sake of argument only and there are many other factors involved in currency valuation.

In the case of Rolex products one other factor to consider might be the overall market strategy of the company.Perhaps the leadership in Geneva have decided it`s time to move upmarket with their product.In light of how well Rolex have weathered the economic turbulance of the last couple of years it would appear to be the right direction.All of this of course is mere speculation on my part and will never be proven until Rolex puts their marketing plan information in the public domain.

Now that the value of the Swiss Franc has been stabilized I predict that the upward trend in the price of Rolex products will slow considerably for the foreseeable future.Unfortunately these days the forseeable future is a brief period at best but lets say for the sake of this argument a minimum of 12 months.

Let`s see what happens.

Agree totally with Mobe that the strength of the Swiss currency in recent times has been the key driver of increases rather than inflation and I'd suspect that Rolex as a company is happy with the stabilization of the Swiss Franc. In the theoretical scenario that the Swiss Franc continued to strengthen over a long long period of time Rolex would be faced with the options of being overpriced (reaching that tipping point), being less profitable or the unthinkable and moving production to a lower cost environment...