Price trend for the Rolex GMT-Master II 126710BLRO on the secondary market. (Data: WatchCharts.com)
The discontinuation of the GMT-Master II "Pepsi" was not completely unexpected. What is a surprise, however, is that four months after the brand killed off one of its most difficult-to-obtain watches, prices have settled so quickly, in one of the most unusual market responses to a Rolex discontinuation.
The model might be iconic, but today’s prices suggest there is a limit to what buyers will pay for a bezel color. With more GMT-Master II options than ever, the market is deciding just how much red and blue is worth.
The market is also skeptical the 126710BLRO is the last Pepsi. When Coronet asked a Rolex representative in Geneva about the fate of one of its biggest icons, the response seemed purposely ambiguous. So, the Pepsi’s historical importance is working against its premium, something we've rarely seen at Rolex. The market fears an improved version will draw buyers to the new watch, especially if Rolex has perfected the bicolor-bezel process.
But the more interesting explanation may be long-term buyer psychology. Few Rolex watches have been rumored for discontinuation as often as the Pepsi. As prices steadily rose in anticipation, much of the effect was already baked in, leaving little new catalyst when production finally ended. To be sure, prices did jump once the discontinuation became official, but they settled far sooner than anyone expected, as Coronet observed already in May.
Finally, there is the unusual way the Pepsi market was divided. The model was nearly impossible to get at retail, and buyers willing to pay a premium had already turned to the secondary market. Those who refused and stayed on retailers’ waitlists are not suddenly willing to pay today’s prices. Ending production simply closed the already-tight retail route; it did not remove the thousands of Pepsis in circulation on the preowned market, many of them hoarded by dealers lying in wait for production to end.