The wait list for a Birkin or Rolex is getting shorter

Subscribe to enjoy similar stories. A handful of brands have what all luxury bosses want: a wait list to tide them over in quiet times. But resale values suggest that even rare goods such as Hermès Birkin bags and Rolex watches aren’t pulling in crowds like they used to.

A scarcity-based business model, where a luxury company deliberately produces less than the market demands, can be a gold mine. Take carmakers Ferrari and Porsche. Milan-listed Ferrari has a market capitalization equivalent to $59.6 billion at current exchange rates, to Porsche’s $45.4 billion.

The Italian brand delivers fewer than 15,000 cars a year, compared with more than 300,000 for the German company. Starving the market of supply and catering to the superrich means Ferrari can charge millions of dollars for limited-edition cars, while Porsche has to sell in much larger quantities at lower prices. In the luxury-watch industry, privately owned Swiss company Patek Philippe makes 72,000 watches a year, according to the latest estimate from Morgan Stanley.

Cartier, owned by luxury company Richemont, produces almost 10 times more. Scarcity in the primary market tends to drive up secondhand values. Patek Philippe’s watches fetch an 11% premium to their original price on average when they are resold, while Cartier watches resell for a 31% discount, data from WatchCharts show.

Because the wait time for a new Patek can stretch to years for in-demand models such as the Nautilus and Aquanaut, shoppers are willing to pay up to get their hands on a watch today. But value retention, a proxy for underlying demand, is falling even for scarce brands. Resale premiums for Patek and Rolex watches have been slipping for three years.