So, did you enjoy Baselworld this year? Yes? No? Do you even know what Baselworld is? If not, I’ll fill you in: It’s the luxury watch industry’s equivalent of the Geneva Motor Show. I didn’t attend it myself, because I don’t have that kind of disposable income, but I know a few people who did, including one R&T staffer, and they all had an absolutely wonderful time. I suspect that at least part of their enjoyment came from being surrounded by people who share their love for mechanical watches.
In the era of the smartphone and smartwatch, owning and wearing something like a or a is pretty much a horribly expensive act of deliberate anachronism. It’s unlikely that your friends and family will understand it, much less approve of it. This past weekend I wore for my NASA races. At one point I was struck by the realization that my son’s generation will likely find the idea of racing a gasoline-powered automobile while wearing a wind-up watch to be repugnant at best and criminal at worst. Right now it seems like there’s enough fuel and enough metal for everyone who really wants it—but I also recall reading that the passenger pigeons used to blot out the sky.
Vacheron Constantin Malte
The most interesting thing to me about Baselworld is the regularity with which new luxury watch brands appear on the scene. The vast majority of them fail in rather rapid and expensive fashion, but some of them persist and even thrive. Apparently quite a few people are ready to take a chance and spend anything from a thousand to a million dollars (or more) on a new watch from a new company, even though there is a genuine risk that the manufacturer will simply disappear without so much as a box of replacement parts to mark the place where it once existed.
It’s not just the heedlessly rich who buy the Johnny-come-lately brands. I’ve met plenty of middle-income people whose one “good” watch is by a firm that didn’t exist a decade ago. That seems insane to me. I don’t understand why they didn’t just buy like the vast majority of people who are buying their first luxury timepiece. But when I press them on the issue they often say something along the lines of, “Well, a lot of people have a Rolex and I don’t want to be like everybody else.” They have a point: Rolex doesn’t release production numbers, but the company is commonly thought to produce over a million watches a year. That’s one new Rolex for every eight thousand human beings, which just isn’t exclusive enough for some.
Thus the market for alternative brands. They don’t necessarily cost any more than Rolex, and indeed some of them cost less. They’re just different. You don’t see them on every wrist. And their owners are willing to give up being envied by the man in the street in exchange for acquiring a little bit more credibility with the cognoscenti.
While my friends were at Baselworld, I was driving a lovely new Mercedes-Benz in Southern California. At one point during said drive, I found myself surrounded on all sides by Mercedes-Benzes. A total of six cars, including mine. A few of them seemed rather worse for wear, and one of them was the front-drive GLA compact crossover. Blame it on the fact that I was near Beverly Hills, where the brand is unusually popular. Still, it got me thinking.
On the one hand, Mercedes-Benz, BMW, Audi, and Lexus all make some very good products right now, the same way that Rolex does. On the other hand, they’ve all extended their brands pretty far downmarket while pumping volumes into the American fleet to some suspiciously Rolex-like numbers. As a consequence, I think there’s some room for a new luxury auto brand for people who are tired of seeing themselves coming and going on the freeway.
You could argue that at least some of Tesla’s popularity is due to the fact that it’s a neat-looking luxury car that is easily identifiable by the public, while also being difficult for said public to purchase. For the buyers who chose it on those merits, the electric-power thing is a drawback, not a reason to purchase. I guarantee you that if Tesla offered, say, a 6.2-liter General Motors V8 as an alternative powerplant, the annual sales total would not be zero.
The fact is that the luxury auto market, like the luxury watch market, is surprisingly receptive to new brands. When Rolls-Royce and Bentley were sold to BMW and Volkswagen, respectively, the products and philosophies of those brands were more or less completely rebooted. The Phantom was a clean-sheet design in a clean-sheet factory; the Continental GT was a VW Phaeton in a party hat. Neither had anything to do with the Silver Spirit or the old Mulsanne Turbo. It was much like the oft-repeated process by which the names of eighteenth-century watchmakers are attached to brand-new factories funded by venture capital.
Going slightly down the price ladder, the Lexus LS400 was a success from day one, as was the Acura Legend (until they changed the name). Even Infiniti has survived despite a recurring shortage of truly competitive product. Let’s not forget how well Hummer did until bankrupt GM pulled the plug—it was essentially a luxury brand masquerading as an off-road brand. On the stratospheric side of the business, we’ve seen plenty of interest in Pagani and other ultra-exotic marques.
Alright, so maybe you’re convinced that there is room for a new luxury nameplate. Who would fund it, given the relatively mature state of the industry and the low returns on offer? I’d suggest that a new upmarket automobile is a better place to put your venture capital than five hundred iPhone app developers, but the truth of the matter is that the only players with the know-how and the gumption to try are probably in China.
My recommendation for those players: Create a brand-new luxury brand that is obviously and unashamedly Chinese, the same way that the Acura Legend was proud about being built in Japan. It could have another one of these not-quite-a-word names that the Japanese Big Three created for their upscale dealers, or it could resurrect some long-interred nameplate like Duesenberg. It doesn’t really matter. You make it massively powerful, hugely opulent. Set the price at an even $100,000 and make a big deal about it being limited production.
As long as the product is even remotely decent, it should find traction on the West Coast. At that point there would be nowhere to go but up. After ten years of limited production, you build an RX350-sized crossover, then you build an NX200-sized crossover, and so on, maximizing your profit at every step. Eventually the day will come when the brand is as common as Lexus or Benz, at which point there will be room for a new luxury brand and the circle of life will start again.
There will be people who make fun of it, the same way there are watch aficionados who dismiss everything besides a Rolex as a waste of time and money. That’s not important. The key is in capitalizing on the basic human desire for novelty. It’s what keeps us moving, keeps us buying. “Getting and spending,” Wordworth once said, “we lay waste our powers.” Yet there is also power to be gained in the process, at least for the makers and sellers.
If I had the capital behind me, I’d give it a shot myself. And once I’d made my billions, once I could afford anything I wanted, I’d hold a big press conference. “Jack,” they would ask me, “you created the world’s hottest new luxury sport-utility vehicle and got filthy stinking rich in the process. What are you going to do next?” I would grab a microphone and yell, as loudly as I could:
“I’M GOING TO BASELWORLD!”