Rolex CPO – Precision Decision or Timing Error?

At the start of December 2022, Rolex announced its 'Certified Pre-owned’ program with much fanfare and discussion. Given that Rolex makes changes and decisions on an almost geological timescale, this must have been in the works for some time. It makes sense and follows a well-worn path in the pre-owned car market with manufacturer-linked dealers offering ‘approved used’ at a premium to those buyers who are happy to pay for the perceived security. After all, while business at a Rolex AD is hardly tough, it must be galling to see the profits being made in the secondary market that are out of your reach.

Cue much slapping of backs in the pre-launch phase of early 2022, when the market headed skyward. Rolex execs must have been congratulating themselves on their fortuitous timing and adjusting their profit projections upwards.

And then the climb stopped, and the wheels came off… which suddenly made the CPO project a whole lot more interesting to market watchers. Rolex must have been building a pre-launch stockpile, and they would have had to pay the market rate. Why would you sell your watch to Rolex for less than the dealer down the road would offer you?

When the market is climbing, they, like any other dealer would expect to turn a handsome profit, especially with a ‘premium’ service, but what about when the market turns? Launch prices at Bucherer, the initial CPO partner, were definitely ‘premium’ with a Daytona 116515LN being advertised at £57,800 (£30,000 more than the equivalent selling price on www.watchcollecting.com for a newer watch) – but December’s prices are not January’s, and the slide may continue for some time yet.

It will be fascinating to see how Rolex reacts. Will they cut their prices to track the market down, albeit at a higher level? This may be interpreted as a lack of confidence in their initial values. Or do they hold firm, risking their sale prices looking ludicrous amidst an oversupply of stock in the secondary market, and give a whole new meaning to ‘exhibition only’?

Time will tell, but this is the first occasion that The Crown have skin in the pre-owned game; and while the long-term strategy seems sound, it may be something of a baptism of fire.