vitalsigns
6134
A few observations
Apr 03, 2023,18:39 PM
(1) It will be interesting to see how this affects the price of new AP watches from gray dealers. This adds a clear advantage to buying via an AP boutique (often not possible, of course).
(2) Like all insurance, this will be paid for by the customer via price increase (or by driving more business to the AP boutiques, raising effective prices).
(3) There seem to be a lot of naysayers saying this cannot be done or that it's bonkers. This is an insurance model. If insurance companies can make a profit by insuring watches and jewelry (they can and do!), then so likely can AP using the same tools (actuary loss estimates; insurance reserves and the value of premiums (i.e., higher effective prices or more business at the AP boutiques)).
Also remember that coverage is only for 24 months.
And also, if AP just replaces the watch, the actual cost to AP is far less than retail price....perhaps only 25% of retail price (exclude for these purposes the valid consideration of an undersupplied market and the lost sale/opportunity cost of replacing a watch rather than selling the replacement watch to another customer; perhaps AP will slightly increase production to cover insurance claims, which if small enough won't have much of an affect on the overall supply/demand balance).
To me, this is a very intriguing move and while I'm not really an AP fan (way too much hype), I'm really interested in seeing how this turns out.
Cheers,
John