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The Inside Story of TAG Heuer’s $15,000 Heuer-02 Tourbillon

TAG Heuer has announced the production version of the Carrera Heuer-02 Tourbillon just a few weeks out from the 2016 Baselworld show. The watch draws on the stylistic themes laid down by the Carrera Heuer-01 and offers a unique party-trick: it’s powered by a TAG Heuer designed manufacture Tourbillon movement.

It was just over 12 months ago that photos of the prototype emerged, and at the time TAG Heuer speculated they could meet a sale price of less than CHF15,000 (US$14,500)- an amazing price for a tourbillon. TAG Heuer has delivered on that promised, announcing a price of CHF14,990 for the standard production model, with a 250-run limited edition “Phantom” model available for CHF19,990.

TAG Heuer Carrera Heuer-02T TourbillonThe question that the watch word is asking is how has TAG Heuer brought a tourbillon to market at this price? What tricks have been used? Speculate no more, because we have the answers for you. But first, let’s take a closer look at the new watch.

Design Changes

Carrera Heuer-02This side-by-side comparison of the original 2015 concept watch and the 2016 production model highlights a few key differences- for the moment, ignore that this comparison shows the standard model from 2015 and the Phantom version of the 2016 watch. The key differences are:

  • Bolts on the side of the lugs deleted
  • Newly designed crown
  • TAG Heuer logo no longer etched on the crystal- applied shield sits below the 12 o’clock position

So not that much changes really…just a few of the finer details. We still have a 45mm grade 5 Titanium case made from 12 modular components (lugs, case middle, case back, crown and its moulding, push-buttons, gasket between the middle and the bezel, sapphire crystals and bezel). And speaking of that bezel, it’s also made from titanium and features a tachymeter scale.

While the dial has the appearance of a skeleton dial, as per the Carrera Heuer-01, it’s not a true Skeleton, but rather a conventional dial with an exposed tourbillon window.

Calibre Heuer-02T: The CH80 Lives!

CALIBRE HEUER-02T PACKSHOT BLACK

As regular readers will know, the Calibre Heuer-02T is a flying tourbillon (meaning the tourbillon cage isn’t supported by a traditional bridge) and is based on TAG Heuer’s still-born CH80 movement.

Back in 2014 TAG Heuer manufactured the first run of CH80 movements, producing about 5,000 movements, and from this batch, they’ve taken 1,000 calibres and modified them to produce the Heuer-02T.

Given this heritage, the links between the Heuer-02T and the CH80 are many. It’s a 32mm diameter movement that beats at 4 Hz/ 28,800 vibrations/hour and offering a 65 hour power reserve. The movement is COSC certified.

The Heuer-02 draws on the know-how developed by the haute horlogerie team at TAG Heuer, which produced the Monaco V4T in 2014. These same watchmakers hand-craft the tourbillon from titanium and a carbon.

CALIBRE HEUER-02T BACK black

CALIBRE HEUER-02T FRONT black

And the good news is that TAG Heuer isn’t going to let the other 4,000 CH80 movements go to waste- CEO Jean-Claude Biver tells us that the CH80 movement will be back in production “soon” and will join the Calibre 1887/ Heuer-01 powering future TAG Heuer chronographs.

Carrera Heuer-02T Ref. CAR5A8Y

Version 2This is the standard Carrera Heuer-02t which features un-coated titanium lugs and matching silver brightwork on the dial. Note that both models feature the same strap- a black alligator strap sewn onto rubber- and are water resistant to 100m.

This model is priced at CHF14,900.

Carrera Heuer-02T Phantom- CAR5A8Z

CAR5A8Z.FC6377 TH CARRERA CAL. HEUER-02T - PR VIEW 2016

Turning to the darkside, the Phantom model adds TAG Heuer’s black-out treatment, coating titanium surfaces in black titanium-carbide and featuring black-out treatment on the dial, including the use of Grey superluminova.

The Phantom edition is limited to 250 watches and will retail for CHF19,900. Kylo Ren, your watch is here.

The Secrets of the $15,000 Tourbillon

CAR5A8Z.FC6377 TH CARRERA CAL. HEUER-02T PHANTOM PACKSHOT 2016The main speculation about how the (relatively!) low price was achieved centre on two themes: that TAG Heuer must have either imported some tourbillon parts from China or decided to forego its usual profit margins and instead launched the watch as a PR exercise at a loss. We can tell you that both of these are wrong, because we went straight to the top and asked CEO Jean-Claude Biver:

“I’m ready to show numbers, prices, but then it will hurt the whole industry when you start to show prices! The industry has no other way to fight and find excuses than saying some parts are made in China, which is totally stupid. Nothing is made in China on the movement, of course not. The movement is 100 percent made in our own company. It’s just that we have an organisation, people, an internal productivity that enables us with a normal margin.”

OK, so if this is what hasn’t be done…what has? As you might expect, there is no secret to the pricing- it’s simply a matter of mathematics.

HEUER 02T SKETCH FOND NOIR

Production Efficiency

One of the first initiatives of M. Biver was to dramatically reduce the operating costs at TAG Heuer, forcing a fresh look at production processes and removing an entire layer of management cost. Mobile phones and accessories have been dropped, and the focus is very much back on watches, meaning that TAG Heuer is leaner and with lower costs. This meant that in December 2015, every subsidiary of TAG Heuer (case, dial and movement companies) made a profit.

While many new CEOs make it a priority to quickly launch a new model with a new style direction, Biver instead focused on fixing things that watch buyers don’t see- the internal processes and workings of the company. It’s only now that these things are fixed that we are seeing the new designs and ideas arriving.

All of this means that far from making a loss, TAG Heuer makes the same profit margin on the Carrera Heuer-02t as it does on a Formula 1 or a Carrera..and that’s even with a pricing strategy quite different to most brands offering a tourbillon.

Pricing Strategy

Put simply, while a tourbillon is expensive to produce, one of the reasons that they are typically priced at more than US$50,000 is because the market is willing to pay more for a watch with a tourbillon. Brands price them at a premium because they can, as Jean-Claude Biver told us:

I know a few brands take additional margins because it’s a Tourbillon and they might take some provisions for after sales service, etc. But we have taken the same margins, not the special margin. We have taken the same margin as a normal Carrera and we have applied this margin to the Tourbillon cost. It ends up at 14,900. What can I tell you? We could also have said no, let’s make additional margin, let’s make a lot of profit, and let’s sell at 30,000. “No”, I said… there is no reason.”

CAR5A8Z.FC6377 2016 HD fond noirMany people had assumed that the arrival of Biver meant the end of TAG Heuer’s haute horlogerie adventures, and there is no doubt that the strategy has changed- remember that some of the Mikro-platform models cost well over CHF100,000. But the expertise and desire is still there to design these special watches, and while CHF15,000 is still a price outside the reach of many people, the Carrera Heuer-02T is a far more affordable proposition and the best way yet for TAG Heuer collectors to enjoy a Carrera regulated by a tourbillon.

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  • Carl Johnson

    Great article, but I hope this isn’t the end of the story as far the tourbillon is concerned. The 02 is a really interesting watch to look at but I think Tag could go a lot further by incorporating a tourbillon into some of their more classic Carrera models. For example, something similar to a Calibre 6, with the tourbillon at 6 o’clock, or a Calibre 17 with a tourbillon at 9 o’clock and small seconds at 3 o’clock.

    If Tag went down the more traditional Carrera route, I think they’d be able to produce tourbillon watches which were (almost) as refined as Moser, Parmigiana, IWC etc, but at a substantially lower price point. That could really upset the established tourbillon market.

    However, I wonder that may go against the recent strategy of trying to clearly place Tag, Zenith & Hublot at different levels of the market.

    • Thanks Carl. I’m not sure whether the idea for the watch started with “wouldn’t it be good to make an affordable tourbillon” or “hey, what are we going to do with that pile of partially completed CH80 movements in the corner”!