With the news that Rolex are entering the Certified Pre-Owned Watch Market, we have been bombarded with questions about how this will affect us (and other pre-owned dealers), Rolex prices, and the pre-owned market as a whole.
This is undoubtedly the biggest shakeup to the secondary watch market in recent years, and only time will tell, but having examined the Rolex press release in detail, we do not believe the ADs will compete in our space.
There is much speculation that this change will lead to the death of the grey market and/or improve the availability of desirable Rolex models at prices closer to List, but this does not seem to hold true when you look at the detail:
The idea that Rolex Certified Pre-Owned will make desirable pieces more accessible appears to be incorrect. At present the only Rolex AD that has been authorised to pilot this new scheme is Bucherer, and their website has been updated with a number of Certified Pre-Owned Rolex models.
We have compared a number of their available watches with our own inventory and, on average, Bucherer are 25% more expensive. To illustrate this, here are a few comparisons (correct as at 5th December 2022):
ROLEX DEEPSEA 116660 (BLACK DIAL) – Bucherer advertise this at £16,100. BQ Watches have just one of these in stock, asking £10,750 (full set), making Bucherer £5,350 (or 50%) more expensive.
ROLEX SUBMARINER 116610 (HULK) – Bucherer are advertising two of these available at £23,500 each. BQ Watches has 4 of these available ranging from £17,000 (no papers) to £18,500 (full set), making Bucherer £5,000 (or 27%) more expensive at best.
ROLEX COSMOGRAPH DAYTONA 116515LN – Bucherer advertise this piece at £57,800, whilst BQ Watches have an equivalent one in stock advertised at £36,950 (full set). This puts Bucherer at £20,850 (or 56%) more expensive.
It would appear to us that it is not the intention of Rolex to make these pieces more accessible. If anything, this caters only to those to whom such a price difference is immaterial.
And it is not only the price point that makes trusted dealers such as ourselves more accessible – we can also offer financing options through our relationship with Humm consumer finance bringing your dream watch closer than you may think.
The main justification touted for this price difference is the additional peace of mind that buying Rolex Certified Pre-Owned gives you. This is quantified by Rolex as:
guarantees authenticity at the date of purchase and is functioning properly
guarantees its proper functioning for a period of two years from this date
This, in fact, is the same guarantee that BQ Watches has been giving for the past 30 years. Every watch we purchase is authenticated by our qualified and experienced watchmakers (half of whom earned their experience in authorised Rolex service centres), is checked against the Lost and Stolen Register, and is covered by our 24-month warranty.
Rolex would like you to believe that their guarantee is more valuable than ours, but we could not have remained in business for as long as we have if we made promises that we could not keep. Our 24-month warranty is 100% genuine and if there is a legitimate issue with your watch within that period then we will resolve it, be it by repair or replacement.
We believe our reviews speak for themselves – compare the comments on our preferred platform (Feefo) to those on Bucherer’s preferred platform (TrustPilot) and you will see that we are held in no less esteem by our customers than Bucherer are by theirs (in fact we have a 4.8/5 rating compared to their 4.6/5).
If you want to pay a 50% premium for this perceived piece of mind, then you have that option, but it may not be as valuable as you think.
Here we start to enter the land of speculation. One fact we can state is that, for whatever reason, Rolex certified pre-owned have 20% VAT added to them. “Nothing unusual there”, you may think, but in fact it is – pre-owned watches qualify for HMRC’s Second-Hand Margin Scheme, meaning that watch dealers (in most cases) do not need to add VAT to their sales, and only need to deduct 1/6 of their gross profit margin to pay to HMRC. If Bucherer, and presumably other ADs if the scheme is extended, are adding 20% VAT to every sale price, then that is one reason why they are so much more expensive.
Another possibility is that Rolex may be taking some form of cut from their ADs on certified pre-owned sales – maybe as a royalty fee, or maybe as a payment for the authentication of the watches and the issue of certification documents. We cannot state this as fact, but have to believe that Rolex are making something out of this, and the more slices of the pie that are being taken, the higher the sale prices need to be in order to make the scheme financially viable.
From what we have said above, it is probably no surprise that we do not think that the “Grey Market” is going anywhere. However, it has been interesting to read the public opinion on this matter and see alternative points of view. Below are some (conspiracy?) theories from the public that we thought we would address:
Rolex will have more buying power by moving customers up the waiting list if they agree to trade in their old models
Initially this may sound like it makes sense – Authorised Dealers will have a greater margin on their CPO pieces than they will on new, so giving preferential treatment to customers able to give part-exchanges would allow them to build CPO stock that they could sell for greater profits.
However, Rolex will still be limiting the amount of stock that is released each year in order to maintain scarcity and their status of exclusivity. So if part-exchange moves you up the list at your AD, then this would have to come at the expense of new customers – ones that have nothing to exchange. To penalise new customers would create negative press and only exacerbate the problems aspiring customers with no purchase history have. Therefore, we cannot see this being wide-spread practice.
This is just a way for Rolex to catch the Flippers so they can black list them
Unlikely. Rolex have specifically excluded watches under 3 years old from this scheme, so the only way to buy a brand new model on the pre-owned market will remain through professional dealers. This means that Rolex will have no more oversight of flippers than they currently do.
At least you can be certain that you are not buying a stolen watch
Actually, Rolex have not made this promise anywhere. When it comes to stolen Rolex watches, there are two places where the details may be recorded – the Art Loss Lost and Stolen Register (aka the Watch Register) and Rolex’s own Lost and Stolen Register. The former can be searched, for a fee, the latter Rolex covet secretively (which can surely only benefit criminals… oh, and Rolex themselves). Neither can be considered as fully comprehensive. If a theft is reported to Rolex after the watch has been resold, the new owner will still have to relinquish the watch. Rolex will probably substitute it like-for-like – just like we would.
