USD to CHF Woes
Deep Thoughts, MB&F, Uncategorized

USD to CHF Woes

We, American watch collectors and professionals, are in for some rough times.  As of this writing, 1 US Dollar = .86 Swiss Francs (CHF).  Here’s the one year chart:

Unfortunately there are no good solutions here.  Earlier this year, MB&F had to raise the USD price over the CHF for the first time ever.  Now we are going to have to raise our USD prices again to keep up.  Even at $205,000, an HM4 in the US is STILL cheaper than the 178.000CHF world price.  And, if you’re lucky enough to snap one up at the current $188,000 retail, you’re getting nearly a 10% discount at full retail.

All the big brands either have already or are just about to raise prices.  Unfortunately that’s not the end of it.  It’s likely that prices will not be able to be raised as high as they should for fear of stalling sales, so that is going to mean dealers are simply not going to get the same quality of inventory.  I’ve been fighting to keep my MB&F deliveries on schedule, but I know it’s tough for a head office to send a piece out and immediately lose significant margin due to the exchange rate.  I have already heard from various retailers who are struggling to secure inventory from many of the big groups.

The scary part is there is no end in sight.  If you had to bet and knew the USD was going to move 5 points, would you bet it jumps up to .91 or down to .81?  Unfortunately I’d take the negative side of that bet.  For foreign buyers, the US is going to become a true bargain.  For the rest of us, I fear it’s going to be very difficult to find what we want here – and if we do, we better be ready to pay up big time.

  • Ariel Adams

    Interesting Steve – I think many of us saw this coming but hoped that it wouldn’t effect prices too much. The US dollars looks very weak compared to the Swiss Franc. You prediction of what will happen is interesting. I wonder about other possibilities.
    One outcome is that US watch lovers will travel more to buy watches. Probably to places where some negotiating is expected/allowed. I get the idea Switzerland isn’t a haggling hot spot. Another outcome which seems very likely is more internet sales from across seas. If priced get too high on US soil, I can’t imagine that buyers (and even retailers) will start shopping from around the world to buy their pieces and fill inventory.

    Not all of these situations are easy or simple, but double digit percentage increases in prices will feed those actions.

    • Unfortunately there are lots of sticky points. For a consumer with the money and patience to shop worldwide, he’ll always be able to find what he wants. But travel all we want, we’re still buying in dollars, which are the problem in the first place. As I mentioned, even AFTER the next set of price raises here, an HM4 will still be cheaper at $205,000 than 178.000CHF. Some pieces still fit with their new prices (HM4 is still a good buy at $205k IMHO). Others will get some sideways looks, especially long running series from bigger brands where we all feel pretty comfortable knowing their general prices.
      Of course retailers (authorized) are not able to shop around the world to fill inventory. They’re going to get worse inventory and have to sell it at a higher price. Not a good situation.

      When something as fundamental as the value of money drops, there are just no mechanisms to help anyone. It’s bad for brands, dealers, and collectors.

  • The other pincher is the skyrocketing cost of precious metals! See what’s happening with Swatch and Omega. Talk about a bind…

    • Absolutely. MB&F got lucky that their last few releases were not precious metals (really was not by design). Looking at production costs for some of the newer cases is staggering!