its really a cash game
when supply is adequate, more often than not, it simply mean that times are tight
if grey is cash rich and can afford to hold, ADs would gladly sell to them because AD still needs to show Rolex that they are performing
when supply turns inadequate, greys would have cashed out on the stock bought during the oversupply, and the cycle repeats
Not really true.. grey dealers can get a decent supply of the new models like GMT2 which was not even launched yet during the so-called oversupply.
What is probably true is that grey help AD to clear non/slow moving stock (much more than what a consumer can do) and in exchange:
- during oversupply, AD gives his Rolex sports models to the grey at cheap price and grey sell to end consumer below AD price but still can make money
- during shortage, AD gives his Rolex sports models to the grey at retail price and grey sell at premium
The part which I cannot understand then is how grey sell off the non/slow moving stock that they helped the AD to offload. I honestly don't think the premium they charge on the Rolex sports in grey market can cover the costs, more of cut loss..
The only logical conclusion I can come out with relates to money laundering, where buy high sell low or losing some money is not an issue to the source of fund..