CPO: Designed for the benefit of ADs?

[dannyp]

Other than the "buy-in" (whatever that may entail) by the dealers, I don't actually think that the CPO program financially benefits Rolex itself. One line in particular about the new program, from Rolex website:

"The Rolex Certified Pre-Owned programme vouches for the authenticity of second-hand Rolex watches at their time of resale by an Official Jeweler displaying the special Rolex Certified Pre-Owned plaque."

That tells me that the purpose of the program is to:

1. Encourage more ADs to opt into something they pay Rolex for (certification, etc).
2. Encourage establishment of more in-AD RSCs (presumably a requirement).
3. Encourage more ADs to accept trade-ins (not all currently do, as many don't have a pre-owned section).
4. Offer ADs something of a differentiator vs secondary market sellers in response to frustration over an inability to sell new watches at market prices.

[horseco]

This gives the AD the ability to have watches in the now empty cases. Basically similar to the method Ferrari uses. You want a hot new model ? No problem first buy one or two CPO first, or trade in a desirable model under market value, then we will talk.

[Tools]

Any Dealer who chooses to have Certified watches will be paying Rolex for that Service and privilege, which will be passed on to the retail customer.

Not saying that there is anything wrong with this. Both the Dealer and Rolex will benefit, as will the Marque.

The customer will eventually dictate pricing. No business can sustain itself if the customer is not paying the price for their goods.

[Travis29]

I asked AD about their thought on it. All they said was it’s about time, good for rolex.

[Tim Plains]

Originally Posted by dannyp

Other than the "buy-in" (whatever that may entail) by the dealers, I don't actually think that the CPO program financially benefits Rolex itself.

Sway people towards RSC over independents.

[dnd2984]

I am sure the ADs Marketing Cost will go up.

[dannyp]

Originally Posted by Tools

Any Dealer who chooses to have Certified watches will be paying Rolex for that Service and privilege, which will be passed on to the retail customer.

Not saying that there is anything wrong with this. Both the Dealer and Rolex will benefit, as will the Marque.

The customer will eventually dictate pricing. No business can sustain itself if the customer is not paying the price for their goods.

Will probably be like the showroom buildout. Dealer buys the stuff from Rolex and/or pays for ability to certify. However my point was that Rolex corporate probably won’t get a cut off each or act as a distributor.

[Tools]

Originally Posted by dannyp

. . . However my point was that Rolex corporate probably won’t get a cut off each or act as a distributor.

Corporate won't likely get a "cut". This is little more than a full-service by Rolex Corporate for Dealers only, and they return it with a 2 year warranty and a shiny new "Certificate" for the Dealer to add to the package.

[dannyp]

Originally Posted by Tools

Corporate won't likely get a "cut". This is little more than a full-service by Rolex Corporate for Dealers only, and they return it with a 2 year warranty and a shiny new "Certificate" for the Dealer to add to the package.

But it seems that corporate is even taking itself out of that equation. Take a look at the word text. This is what’s making me think that part of the plan is encouraging more ADs to establish plaque service centers. Looks like that’ll be a prerequisite, since they’ll have to be qualified to authenticate. But looks like all of that will happen within dealership walls.

[francoamerican]

Originally Posted by dannyp

But it seems that corporate is even taking itself out of that equation. Take a look at the word text. This is what’s making me think that part of the plan is encouraging more ADs to establish plaque service centers. Looks like that’ll be a prerequisite, since they’ll have to be qualified to authenticate. But looks like all of that will happen within dealership walls.

Interesting. How can one tell if a dealer is “plaque service?” How many are there in the US?

I wouldn’t expect Rolex gets anything directly other than some business at RSC. However now that you may easily be able to sell back, I’d expect it will help continue to encourage people to buy anything new they are ever offered.

Somewhat incidentally, I had a GMT serviced and my local AD seemed quite annoyed I wanted to send to RSC. They haven’t ever done anything for me though so I didn’t really care what they thought.

[dannyp]

Originally Posted by francoamerican

Interesting. How can one tell if a dealer is “plaque service?” How many are there in the US?

I wouldn’t expect Rolex gets anything directly other than some business at RSC. However now that you may easily be able to sell back, I’d expect it will help continue to encourage people to buy anything new they are ever offered.

Somewhat incidentally, I had a GMT serviced and my local AD seemed quite annoyed I wanted to send to RSC. They haven’t ever done anything for me though so I didn’t really care what they thought.

If you look online at the service center locations, it’ll show all of them.

[fskywalker]

Originally Posted by Tools

The customer will eventually dictate pricing. No business can sustain itself if the customer is not paying the price for their goods.

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[sportsfan0704]

it seems to be a compromise between the empty cases/non-functioning display models and increasing production

[sski]

i assume there will be 'discounting' on the cpo items? (there better be- with the prices that will be charged!)

[Travis29]

I asked my AD about their thoughts and they really didn’t care ����*♂️. Guess time will tell.

[1665fan]

My AD said they are not doing CPO….

[77T]

My nearby AD doesn’t need CPO because he had a robust secondary line going with Rolex’s blessing. All he had to do was keep the Pre-Owned in separate cases.

If anyone wanted a 2yr warranty he sent it to Rolex for them and split out the servicing as if it was a discount.

That was all before this current hot market. He’s not a volume secondary dealer - handles his own trade-ins and OTC purchases.


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[Calatrava r]

ADs still have to get inventory and thus, pay competitive used wholesale prices to the public or offer trade ins against new watches. Prices on the used market are soft to declining, so it may be slow starting.

[Demon Barber]

It seems unlikely, for instance, that a customer will sell their meteorite GMT or Daytona, for example, back to an AD for $20k-$50k less than they could get out of it by selling it to a grey dealer, all in hopes of buying another watch they're maybe going to be offered to purchase.

I also don't see any way Rolex CPO will allow ADs to price pre owned models higher than MSRP to be competitive with grey market prices. So imagine a scenario where a pro owned panda Daytona is for sale less than MSRP. That acquisition allocation would be more contentious than allocation for a new one.

These two situations leave the inevitable outcome that no high end, highly desired, expensive pieces will be found in CPO inventory at ADs. Maybe datejusts and other entry level models will be because there's no substantial money to be made on them selling to grey, but that's about it.

I just don't see many people giving up the 2x MSRP value of a $30k+ watch just for the increased probability to be invited to buy a DIFFERENT watch, losing one from their collection at a huge loss in the process. You can take the same loss by buying the watch now from a grey dealer, but you're going to get exactly what you want when you want it, instead of gambling away the same value in hopes of getting what you want if the AD feels so inclined.

[SLWoodster]

You'll need to adjust your outcomes because your assumptions are incorrect.

1. For a discerning customer like you, it will be unlikely for you to sell to CPO when you know market value. But you have to look at this like high end auto trade ins like Porsche or Ferrari pre-owned programs. It's easier for customer to trade in, less hassle to sell private. The ease will convince some customers, not all. Then, some Porsche or Ferrari dealers want the used inventory. So they will take note of customer's trade in and bump you up the list for a GT3. This has already been happening for years. YMMV of course.

2. Rolex CPO pricing is currently NOT dictated by Rolex. Maybe Rolex will control it at some point. But here is the link to the Rolex CPO program where they are selling my Rolex GMT Master 2 BLNR for 21,000 swiss francs. At the time these watches were actually sold, the retail price was app $8000 swiss francs.

3. High end, highly desired expensive pieces are where consumers are most fearful of fake or unoriginal parts. This is also where these certificates will create the most value. What high end means to everyone is relative. But, for example a newman dial 6263 daytona or 6241 daytona from the 60's. By Rolex giving the watch CPO papers certifying everything is "original" or everything is "OEM Rolex", or whatever they say... it will increase the value of the item. The price difference between a box and papers 6263 and a no box, no papers 6263 is more than $50,000 USD.

Would like to hear your new assessment after adjusting for the above parameters.

Originally Posted by Demon Barber

It seems unlikely, for instance, that a customer will sell their meteorite GMT or Daytona, for example, back to an AD for $20k-$50k less than they could get out of it by selling it to a grey dealer, all in hopes of buying another watch they're maybe going to be offered to purchase.

I also don't see any way Rolex CPO will allow ADs to price pre owned models higher than MSRP to be competitive with grey market prices. So imagine a scenario where a pro owned panda Daytona is for sale less than MSRP. That acquisition allocation would be more contentious than allocation for a new one.

These two situations leave the inevitable outcome that no high end, highly desired, expensive pieces will be found in CPO inventory at ADs. Maybe datejusts and other entry level models will be because there's no substantial money to be made on them selling to grey, but that's about it.

I just don't see many people giving up the 2x MSRP value of a $30k+ watch just for the increased probability to be invited to buy a DIFFERENT watch, losing one from their collection at a huge loss in the process. You can take the same loss by buying the watch now from a grey dealer, but you're going to get exactly what you want when you want it, instead of gambling away the same value in hopes of getting what you want if the AD feels so inclined.

[MILGAUSS88]

So the wholesale price for new Rolex watches are 60%.

What are they going to pay for used watches that need to be serviced and verified by RSC first? 50% of retail? I think the idea of dealers paying a "competitive price" is a pipe dream. I don't see them paying you $15k for a GMT II that they just sold you for $11k. With this scenario, they made $4,500 on the new watch, maybe $2,500 for a used?

I don't think this works unless they raise production dramatically to get the second hand price of Rolex watches well below retail and then sale the used watches slightly below retail.

[miro1270]

It's already happening in UK:
1.AD starts selling 3 years and older watches 40-50% higher than gray market. (because of the certificate)
2. The Gray market dealers start to sell 3 years and older watches to AD - back to them :)

Probably The Gray market will start to sell more new watches -up to 3 years old. They will come directly from AD and the problem with the "waiting list" will remain the same even worse and probably 3 years and older watches will start missing even from the Gray market. They will be found in the AD with 40-50% higher price...

[Demon Barber]

Originally Posted by SLWoodster

You'll need to adjust your outcomes because your assumptions are incorrect.

1. For a discerning customer like you, it will be unlikely for you to sell to CPO when you know market value. But you have to look at this like high end auto trade ins like Porsche or Ferrari pre-owned programs. It's easier for customer to trade in, less hassle to sell private. The ease will convince some customers, not all. Then, some Porsche or Ferrari dealers want the used inventory. So they will take note of customer's trade in and bump you up the list for a GT3. This has already been happening for years. YMMV of course.

2. Rolex CPO pricing is currently NOT dictated by Rolex. Maybe Rolex will control it at some point. But here is the link to the Rolex CPO program where they are selling my Rolex GMT Master 2 BLNR for 21,000 swiss francs. At the time these watches were actually sold, the retail price was app $8000 swiss francs.

3. High end, highly desired expensive pieces are where consumers are most fearful of fake or unoriginal parts. This is also where these certificates will create the most value. What high end means to everyone is relative. But, for example a newman dial 6263 daytona or 6241 daytona from the 60's. By Rolex giving the watch CPO papers certifying everything is "original" or everything is "OEM Rolex", or whatever they say... it will increase the value of the item. The price difference between a box and papers 6263 and a no box, no papers 6263 is more than $50,000 USD.

Would like to hear your new assessment after adjusting for the above parameters.

You make good points here. However, the hassle difference for selling a watch to the AD vs grey is way less than it is for cars trading in vs selling elsewhere. Selling a watch to a grey is easy. And when you trade in your car to the dealership, even if you take the transaction at a loss, you're immediately guaranteed to get what you want and drive off in it. Not going to be the case with Rolex CPO. These things just aren't as comparable as it seems at first glance.

[Gab27]

FWIW, I think this is partially a response to many ADs already functioning as secondary dealers, as Rolex probably wants slightly more standardization/control over this.

The AD closest to me currently has something on the order of 150-200 used Rolexes in stock. It seems like many ADs are doing a lot of secondary sales transactions already. As this is being done by Rolex ADs, I would think that Rolex probably wishes to have influence over this situation/experience given these watches have their name on them, and they are being sold in buildings that have crown logos. I guess it is yet to be seen how this program could impact ADs already functioning in this manner, and if it would entail certain imposed constraints.

[TBT]

Good, bad, or otherwise, I'm excited to see how this turns out.

I think they're taking these ideas from someone's playbook in another industry and making slight changes to make it their own.

[Tricolore66]

Rolex RSC will perform a service on every CPO watch, and I’m quite certain Rolex will be charging AD’s a fee to certify the watch. Huge profit upside for Rolex HQ.

Very likely that new watch allocation to AD’s will be tied to how well they manage their CPO business as well. This is a game-changer and AD’s who don’t embrace it fully are going to pay a steep price.

[Tools]

In the end, most CPO watches are likely to be older DJ's and Subs.

Expecting to have a pile of less-than-10 year-old watches pipelined into this expensive process, when you can sell any of these as-is, will not be profitable.

[amh]

Originally Posted by TBT

Good, bad, or otherwise, I'm excited to see how this turns out.

I think they're taking these ideas from someone's playbook in another industry and making slight changes to make it their own.

I'm not. Life is already impossible for the one-and-done Rolex buyer via AD. The only viable path is Grey. I don't see how the situation improves.

[rambo99]

Originally Posted by amh

I'm not. Life is already impossible for the one-and-done Rolex buyer via AD. The only viable path is Grey. I don't see how the situation improves.

actually you can buy a rolex certified authentic second hand rolex from the AD now, if you are willing to pay 30% premium over grey market price.

[tifosi]

Originally Posted by Tricolore66

Rolex RSC will perform a service on every CPO watch, and I’m quite certain Rolex will be charging AD’s a fee to certify the watch. Huge profit upside for Rolex HQ.

Very likely that new watch allocation to AD’s will be tied to how well they manage their CPO business as well. This is a game-changer and AD’s who don’t embrace it fully are going to pay a steep price.

Rolex is not servicing every CPO watch. They are merely authenticating and verifying it functions correctly. I assume if it doesn't function then a servicing may be on the table to make it CPO.