Phillips Rides Vintage Timepiece Demand Amid Watchmaking Gloom

(Bloomberg) -- As Switzerland's watch industry goes through the longest slump in decades, there's one area that's actually growing: rare vintage timepieces.

A stainless steel Patek Philippe chronograph that's one of four known to exist will go under the hammer at Phillips, which has built a reputation handling the most rarefied timepieces and estimates the model is worth more than $3 million. The lower-profile firm kicks off the Geneva fall auction season Nov. 12 and expects to sell about 100 million Swiss francs ($102 million) of timepieces this year.

“For the highest-quality vintage 20th century watches, the market is very much on the up,” said Aurel Bacs, who will lead the sale. “Other auction houses, or those who have focused on big volume, not-so-great and not-so-rare contemporary watches, they're probably taking hits exactly in sync and parallel to what we read in the press about the Swiss watch industry.”

Because of their scarcity, vintage Swiss watches are protected from a slump in demand that has bedeviled the modern industry, which been churning out between 20 million and 30 million timepieces annually in recent years. Phillips's narrow focus on only the rarest lots is giving it a leg up over bigger rivals Christie's and Sotheby's. With a total estimate of 23.9 million Swiss francs, Phillips's sale overshadows those of its two larger rivals combined.

‘Not Enemies'

This wouldn't be the first time 220-year-old Phillips outshines Sotheby's and Christie's in the watch world. In 2014, the New York and London-based firm hired Bacs after he spent two decades at the top three auction houses specializing in timepieces. Within two years, Philips displaced its bigger rivals in the Geneva and Hong Kong watch markets. Sotheby's and Christie's declined to comment.

“We're not enemies,” Bacs, 45, said in an interview in his office, located on a small island in the middle of the Rhone river in Geneva. “We just have a different business plan.”

Phillips is making up for volume as it sells more by value. Its sale is comprised of fewer than 200 lots, while Sotheby's and Christie's are selling more than 300 pieces each.

The top lot at Christie's Geneva sale is expected to raise $1.5 million and the most expensive piece at Sotheby's may go for $410,000.

‘Gentle Decline'

“Contemporary watches are selling a touch below from what they would've sold 12 months ago,” Bacs also said. “There's a gentle decline on the pre-owned side for watches of the last five to 15 years of production.”

Phillips has struggled in the past two decades to find its niche amid three changes in ownership. Mercury Group, a Russian investor in luxury businesses, bought it out in 2013.

With a narrower focus, Bacs said Phillips can devote more time searching for rare pieces, meeting with clients and doing research. American watch collectors have asked if he'd do auctions in New York, though so far he's refused because he doesn't have the volume to justify it.

“We don't want to sell more watches,” Bacs said. “To be the house of first choice, that's the ambition.”

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net. To contact the editors responsible for this story: Matthew Boyle at mboyle20@bloomberg.net, Thomas Mulier, Albertina Torsoli