The Evolving Dynamics of the Rolex Certified Pre-Owned Market

In 2022, Rolex introduced a Certified Pre-Owned (CPO) program, enabling buyers to purchase used Rolex watches with a warranty and quality assurance directly from authorized dealers. This strategic move aimed to capitalize on the burgeoning demand for used Rolex watches, a phenomenon that intensified during the pandemic and led to premium pricing in the secondary market.

The Rolex CPO program requires watches to be certified by in-house watchmakers at authorized dealers, who underwent specific training for this purpose. The program was rolled out selectively, with an estimated 80 dealers worldwide currently participating. These dealers set their own prices, which generally include a markup due to the costs associated with certification, resulting in CPO watches being priced higher than their non-certified counterparts.

Despite the controlled rollout and pricing strategy, the wider impact of the CPO program on the pre-owned watch market has been significant. Recent analysis by WatchCharts, in collaboration with Morgan Stanley, highlights that as of Q3 2024, Rolex CPO watches command an average premium of about 33% over non-CPO used Rolex watches, with variations depending on the dealer and market conditions.

This premium reflects the ongoing appeal of Rolex watches, which continue to hold value better than many other brands. However, the report also notes a gradual stabilization in the used watch market, with demand cooling and supply increasing, which could potentially lead to a decrease in premiums over time.

Moreover, the inventory of used Rolex watches held by authorized dealers is substantial, with millions of dollars worth of watches waiting for buyers. This scenario suggests that if the current inventory levels persist, prices might need to adjust downward to align with market realities, similar to trends observed in other sectors like used cars.

For potential buyers, this could mean that waiting might yield better pricing opportunities, especially as market conditions continue to evolve. However, for collectors and enthusiasts, the allure of a certified pre-owned Rolex from an authorized dealer, with the assurance of quality and warranty, might justify the current premium.

As we look to the future, the trajectory of the Rolex CPO market will likely be influenced by broader economic factors and shifts in consumer behavior. Nonetheless, Rolex’s strategic approach to its CPO program demonstrates its understanding of brand prestige and market dynamics, balancing supply with high demand to maintain its luxury status while adapting to the evolving marketplace.