Global demand for Swiss watches softened in
2025, weighed down by elevated US tariffs, persistent currency headwinds, and
the continuing shift toward digital wearables. Export performance is expected
to remain under pressure through the first half of the year, with a gradual
stabilization more likely in the second half if tariff and macro conditions
ease.
Recent developments and current state
On Nov 20, 2025, the Federation of the
Swiss Watch Industry reported that October exports fell 4.4% year on year to
2.2 billion Swiss francs (S$3.6 billion), marking the third consecutive monthly
decline. Shipments to the United States—the industry’s largest market—slumped 47%, while China recorded a second straight month of growth,
hinting at a potential easing in the luxury downturn.
A major drag has been the 39% US import
tariff on Swiss watches, which took effect on Aug 7, 2025 and sits above the
rates applied to the European Union and other advanced economies. The policy
has amplified price pressures and disrupted order patterns, contributing to the
sector’s weak run into 2026.
Structural forces shaping 2026
Competition from digital wearables and
health-focused watches (e.g., Apple) continues to erode entry-level and mid‑range
demand, reinforcing a two‑speed market in which high‑end mechanicals remain
more resilient than volume segments.
The post‑COVID economic moderation has
cooled discretionary spending. After the pandemic-era surge, demand
normalization and elevated inventories have made for a bumpier recovery in
wholesale shipments.
In 2024 the trend towards high end
products accelerated, with watches priced above 50,000 Swiss Francs accounting for
33.5% of the market value and contributing 84% of growth This Suggests consumer
are increasing inclined towards high-end
watches rather than entry -level or mid-range products.
Pricing and currency: a strong Swiss franc
and previous rounds of brand price increases have pushed up end prices,
pressuring volumes and incentivizing cautious restocking at retail and
wholesale levels.
Channel dynamics: growth in the pre‑owned
market and the need for tighter inventory management are prompting brands to
recalibrate launch cadences, discount policies, and regional allocations to
maintain margins and sell‑through.
2026 outlook and risks
Near term: expect subdued year‑on‑year
export performance in early 2026, with the US market remaining the single largest
source of uncertainty due to tariff persistence, price elasticity, and retailer
caution.
Downside risks: prolonged tariff measures,
further franc appreciation, weaker Chinese demand, and continued wearables
penetration.
Upside risks: a tariff rollback or
exemption, stabilization in China and Europe, and a pickup in global travel
retail—each of which could support a second‑half recovery.
Sector response: ongoing currency hedging,
selective price optimization, and cautious production scheduling remain the
core tactics; near‑term guidance is likely to stay conservative until demand
and channel signals improve.
Note on the rumor about China assembly
Claims that many Swiss brands are “made in China with
final assembly in Switzerland” are widespread online but are not supported by official trade
statistics or brand disclosures. Under current Swiss export rules, a watch may
carry a “Swiss made” label only if at least 60% of its manufacturing value is added in
Switzerland and the final assembly takes place there; widespread offshoring of
final assembly would undermine that designation.
As my opinion, those top 3% of luxury watch
collectors are not affected. They are still being notified by phone calls from
Patel, AP, FP Journe for their watches are ready for collection even though they
are bundled sales with some other less “important” watches as part of the deal
say for Rolex or AP.
Vintage collectors are either holding their
top collection items whereby selling their mid low range watches in open
market to slim down their collection. Waiting the vintage hype is coming back.
More bigger brands are spending effort to attract
younger watch byer of the age group of 30-45.
As these are the majority of big spenders
for mid – high end luxury watches.
In general, overall situation will not be as
good as 2025 for 2026 unless there are upcoming economy miracle from these big
countries: US, China, EU, Japan…as these
are the largest Swiss watch export countries.
