Close

Choose your country

Or view all businesses for sale

Worldwide

Sell Your Business

Sector Spotlight: Car Washes

177132464

As a prime example of the 'convenience economy' that's been steadily growing in the United States for decades, commercial car wash operations have enjoyed steady growth in revenue and profitability for some time now. There's no reason to believe this will slow down any time soon.

A commercial car wash offers a perfect service for today's busy commuter: it satisfies a universal desire (looking our best), it's a relatively inexpensive luxury (generally anywhere from $3 to $20 for the full range of services available) and it only takes a few minutes to see satisfactory results, so it offers nearly instant gratification.

So, it makes sense that – given the right circumstances and proper management – a commercial car wash can be a secure and profitable investment for an entrepreneur or business investor.

The US carwash industry at a glance:

•  Average annual revenue for a single car wash location ranges from $41,000 for an in-bay self-serve operation to $686,250 for a full service operation.

•  25% of car washes are done on Saturday.

•  2% of car washes occur in the winter due to salt accumulation and the prevalence of wet and dirty roads.

• The last 15 years have seen a 69% increase in the number of people choosing to bring their cars to a commercial car wash rather than washing it themselves at home.

•  About 65% of car wash operations also dispense gasoline at the same location.

Location

As is the case with any venture that relies on customer traffic, location is a prime factor in the success or failure of a car wash operation.

If you are considering opening a car wash, you will need to locate a parcel in a busy location that sees a lot of vehicle traffic, preferably on a slow-moving road.  This maximizes visibility at the point at which people are most likely to consider the need for your services: while they're in their car.

The best option is on a main thoroughfare adjacent to a large, populated urban or suburban center so that commuters pass your location twice a day every day.

Car wash facilities require a larger overall footprint than many other types of commercial properties since they don't just need space for the building(s) and a small parking lot, but instead need room for cars to come safely out of traffic and wait in line out of the way of motorists who have finished their wash and need to safely exit the property back onto the main road.  For this reason, a large multi-bay facility may require as much as 3-4 acres of commercial land to accommodate high volume.

Lastly, it's important to situate your car wash in an area that is not already serviced well by one or more other locations.  In a circumstance where you must compete with other more established locations, your only option is to compete on price which is a losing battle for a new business.  It's far better to be the only logical choice in your immediate area and to thrill your customers with your services so they won't see a need to travel an extra few minutes to visit your competition.

Finances

The initial investment in your new car wash depends to a large extent on what type of car wash to you wish to open.  Of course, as the cost of initial investment increases, so does the price you can charge for services and the subsequent profit you can expect to earn from a well-run car wash.  The following list highlights each type of car wash in order from least expensive, complex, and profitable to most:

•    Self-serve bays  – This is essentially one or more large covered bays supplied with coin-operated equipment and drainage.  The customer pulls his car into the bay, feeds his money into the machine (generally $2-$4 in quarters) and washes his car himself.  

•    Automatic drive-through  – The customer pulls his car into the entrance of the automated bay and pays via a machine outside (generally $6-$12).  Then, the machine carries the vehicle through washing, rinsing, waxing and drying stages that are completely automatic, pushing the car through the exit when complete. 

•    Full-serve automatic  – Handled much like a fully automatic car wash, except human attendants generally handle the money transactions (generally $10-$15), participate to a limited extent in the wash itself, and may offer additional services such as hand-drying.

•    Full service – The entire process is handled by a team of employees who scrub, rinse, polish, and dry the entire vehicle by hand. (Generally $15-$20 and up.)

The more employees and equipment required for the size and type of operation you choose, the higher your initial investment for land, construction, and equipment, and the higher your operational costs as well.  But, as stated earlier, the highest initial cost (for a large, multi-bay, full service location) also yields the highest value per transaction, and the highest perceived value for the services rendered.  So, profitability tends to improve with each step up the initial investment ladder.

Management

As with any business, proper management also plays a huge role in the new car wash's eventual success or failure.

Customers are bringing you their second-most-valuable possession and trusting you to make it look good without damaging it.  Employees who fail to show respect for that trust, or equipment that malfunctions and either harms or fails to properly clean customers' cars, will quickly ruin any positive reputation you've earned.  It is vital for management to monitor every aspect of the work being done and ensure that every customer receives excellent service in a timely and courteous fashion or they'll simply go somewhere else.

Interested? Take a look at our carwashes for sale at BusinessesForSale.com.

If you enjoyed this article, sign up for a *free* BusinessesForSale.com account to receive the latest small business advice, features, videos and listings directly to your inbox!


Leave a comment

comments powered by Disqus

Subscribe to our monthly newsletter

*required

Are you a Business Owner?

Set up your Private Seller Account and create your listing today

Get Started Here

Are you a Business Broker?

Set up your BrokerWeb Account and list multiple businesses

Get Started Here