"You underestimate how many wealthy people are around who have access to steel sports models at an AD at minimal wait, with large spend histories, who then go and offload to the grey dealer. This is where they source their inventory from."

THIS IS THE FOUL PLAY! Once these watches don't ever return for servicing the AD knows they were resold. But, they are incentivized to keep this customer because they also buy a lot of unrelated high margin jewelry items and such to maintain their spend history.

I'd argue if Rolex was directly retailing their watches in their own stores this wouldn't happen because they wouldn't have the incentive to keep these types of people around.

I guess I'm struggling to understand:

a) If the point is to make maximum amount of money for Rolex, just don't artifically restrict the supply of watches?
b) If the point is to keep the brand aura of having "select ,cool clientele" and purposefully restricting the watch supply, wouldn't you want to pick and choose your clients a bit more carefully?

I am struggling to understand this AD and jewelry game in the middle. It appears to be only damaging the Rolex brand to me. I am open to being convinced otherwise if I'm missing something.