At Baselworld 2014, TAG Heuer’s main novelties were Carrera models with 3 hands and a day/date window. Not really something that we here at Monochrome-Watches get extremely exited about. However we already got a bit of a pre-announcement of the new Carrera, which would be introduced after the summer, and that got us on the tip of our chair. TAG Heuer’s new Carrera is heavily inspired by vintage models, and we even got word that the design will be slightly, but significantly, changed, and shared that with you. Also the new in-house developed and manufactured movement, calibre CH80, was something that got us exited. HOWEVER… TAG Heuer’s latest press release tells us that the launch of the TAG Heuer Carrera CH80 is postponed and it won’t be delivered to stores until further notice.
Official press release
The official release mentions that all production capacities will be focused exclusively on the Calibre 1887 for an unknown period. According to TAG Heuer that is to ‘respond more effectively to current market needs.‘ This integrated column-wheel chronograph movement, launched in 2010, caused a bit of a riot in the beginning, because its technical design was kindly bought from their Japanese competitors. No biggy you might say, however they forgot to mention it.
TAG Heuer ‘is postponing the launch of the Carrera CH80 chronograph, even though the company has completed the development of the movement that powers it.‘ This new movement was supposed to be build inside TAG Heuer’s recently opened production plant (inaugurated in November 2013) based in Chevenez, Switzerland. Fortunately, ‘Production staff will not be affected by this measure and will be redeployed to TAG heuer’s three other industrial sites in Switzerland.‘
That’s bad news, period. Sadly we will all have to wait for the new Carrera CH80, with its redesigned dial and hands, and its new in-house developed and manufactured chronograph calibre. Surprisingly because TAG Heuer claims that the movement’s development is finished.
You know that we at Monochrome Watches are always looking a bit further, and do not simply copy everything from press releases. So let us share our thoughts on what led TAG Heuer to postpone the launch of the CH80.
Before that, we have to keep in mind several things: first, the appointment of Jean-Claude Biver, a few weeks ago, as Head of Watchmaking at LVMH Group. He’s now responsible for, among others, TAG Heuer, Zenith and Hublot. Secondly, we have to take the slowdown in the watch industry into consideration. After a few years of tremendous growth, the consumers in the sub-10k region is not spending too eagerly anymore.
In the past decade, TAG Heuer did pretty well and the sales had been increased by 2.5 times and prices by 200%. The main reasons seems to be some very successful products and also calibre 1887. The latter allows TAG Heuer to sell a chronograph, with a column-wheel, for a reasonable price, and still make a decent profit on it. That’s because the development of calibre 1887 is based on technical movement drawings and plans that TAG Heuer bought from Seiko. This calibre is partially based on Seiko’s calibre 6S37. Thanks to this strategy, TAG Heuer reduced the R&D costs considerably. Developing a movement is just one factor, but industrializing it, is something completely different and extremely expensive!
Now that you have the background, we see several possible explanations:
- TAG Heuer is lining up to become Omega’s biggest competitor, and wants to set the price for the Carrera CH80 higher
- TAG Heuer needs to increase the price of the CH80, to cover the costs of the new factory and development of the movement
- Calibre CH80 was maybe fully developed, however the industrialization of the movement is not entirely ready
1) Biver wants to reposition TAG Heuer, ‘under’ Hublot and Zenith, as one of Omega’s main competitors. Omega already made a move to upwards and comes close to Rolex price levels with their in-house calibres. When TAG Heuer increases prices for its Carrera chronographs, they come close to Omega’s timepieces with in-house movements, but remain just south of that, and will directly compete with them.
2) By creating the CH80 and its new production plant in Chevenez, TAG Heuer is preparing itself to face some serious competition. However the costs for building such an immense production plant and developing the calibre CH80, have to be astronomical. ETA keep delivering affordable movements to Swatch Group brands and the margins they can make are very good! In order to make a decent margin, TAG Heuer could, when it will finally be launched, increase the price of the Carrera CH80 from around 4k to 5.5k – 6k EURO. Selling under cost price is of course no option. At that price point they will directly attack Omega.
3) As already said, developing a movement is one thing, industrializing a movement is an entirely different thing. Maybe, just maybe, something didn’t go as planned. And that is also a possible reason that would not surprise us.
Jean-Claude Biver is now in charge and we’ll follow this closely. We’re very curious if TAG Heuer will go for direct competition with Omega, the company that Biver left in 2003. We’ll keep you informed!
More details at www.tagheuer.com.