Will brands ever cater for the pre-owned market?

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By Andrew Morgan

In November this year, BMW took a marketing step that could account for it grabbing as much as 10% of car sales in one of the fastest-growing economies in the world, India.

The German car manufacturer already dominates 40% of the luxury car market in India, so what could it have possibly announced that is able introduce such a large chunk of additional trade? The answer is BMW Premium Selection, a marketing strategy to put those who can’t afford to be in the luxury car market into a BMW that they can afford. No, it’s not a finance initiative, nor is it a range of affordable cars – it’s plain and simple used car sales.

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BMW has arrived at a point where a generation of cars has passed, and their owners are now looking to move on and upgrade. Trading in a car might seem fairly run-of-the-mill to you and I, but for a car company that has only just started making a proper impression on a developing country that is rapidly increasing in wealth, it is a window of opportunity. It’s extremely logical and expands BMW’s share of the car market considerably.

In the US and in Europe, BMW’s used approved scheme has already been widely accepted, so why then do the luxury watch manufacturers not follow suit? The concept is as simple as it is for the car market – buy back watches from existing customers so they can buy more new, and sell them on again as manufacturer-approved used. This does two things – it broadens the market for watches, which is no bad thing given the current economic situation, and it also removes the uncertainty that comes with buying second hand. Moreover, it means the manufacturers have added control over their market, including aspects like depreciation, fraud and trade-ins – it’s a win-win situation.

So why don’t they currently offer this service? It is hard to tell. Swiss companies are often notorious for biding their time before making any kind of large decision like this. Will we see it in the future? Perhaps. Probably the most telling is the news earlier this year that A. Lange & Söhne have appointed former head of marketing and sales for BMW South Africa, Wilhelm Schmid, as its new chief executive. We’ll be keeping a close eye on things.

This article was taken from the March 2012 issue of WatchPro magazine. To read a digital version of this issue online click here.

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