Based on data received from U.S. car-wash operators, 2015 represented the third consecutive year of growth in car-wash revenues. While the rate of growth slowed from 2013 and 2014, the average rate of gross revenue growth was nearly 10% in 2015. Total cars washed followed a similar positive trajectory.
What has led to this exceptional run of growth for the car-wash business? An improved macroeconomic situation from the 2009-2012 period is a big contributor. The decline in gas prices has also put more money into consumer’s pockets, allowing more for discretionary purchases such as car washes. Increasing car sales, including a new annual record for 2015, were also helpful.
Yet these results are cyclical, as witnessed in years past. It should be expected that when the economy is doing well, the car-wash business will perform similarly. Perhaps a more important question would be to ask if the car-wash business is undergoing any changes that will allow it to outperform these cycles—or remain more resilient when the business cycle inevitably turns negative.
Why Invest?
The good news for car-wash operators, or those looking to get into the car-wash business, is that there are some reasons to be optimistic for the long term.
One example is the dramatic upswing in loyalty programs. These programs are not a new concept, but it’s the way they are being implemented that have changed the game for some operators. First is the prevalence of new technology and equipment options, from automated payment devices to dedicated and automated entrance lanes for loyalty-program subscribers. Second is the integration of marketing programs, especially digital (social, text, email and Web advertising), to remain connected to subscribers and recruit new members. Third is the ongoing focus on delivering improved value to customers, particularly when it comes to the wash experience. Colors, fragrance, speed, lighting, ease of entrance and egress, site cleanliness and new areas of automation (such as on-line drying systems for conveyor washes) have given the customer a better experience than ever before.
Another reason to be optimistic is in the area of site management. The car wash remains a complicated endeavor. Requirements around managing equipment, chemicals and employees and processing cars efficiently and safely mean the car wash can’t be an afterthought. But, as with the growth of the “Internet of Things” in our homes, car-wash operators are increasingly benefiting from sensors, remote controls, video monitoring and real-time performance reporting. This allows the operator to dedicate more time to marketing and growing the business, not just managing it.
In the future, technology will become more important to successful car-wash operators. At some point, it will become as important to market to vehicles as it is today to market to the vehicle’s owner. Cars are increasingly relying upon real-time OTA (over the air) data to inform drivers about upcoming destinations. Many cars can already display a list of gas stations in the area when the fuel range gets too low—but how far away are we from the car informing the driver about the best-rated car wash in the area once it determines the car is dirty? Will tomorrow’s car washes be able to wash a car that travels from its owner’s home while she sleeps, so she can start the day off right? As autonomous vehicles gain more traction, it will be increasingly important to make the car wash a visible and viable convenience option.
Stay Current
In the right location, with the right configuration, marketing plans and management, the car wash provides exceptional revenue and profit potential. Yet, due to increasing customer expectations and a more informed motoring public, the car-wash business will increasingly require thoughtful leadership to help keep it successful. The most successful operators will invest in new technologies and the people to administer them, making them increasingly insulated from economic cycles and lower-end competition. In this environment, there is simply no ability to “sit back”—unless you are satisfied with watching your results move in the same direction.
If you’re looking for the latest in new technology and ideas, don’t miss the world’s largest car-wash event. The Car Wash Show comes to the new Music City Center May 7-9 in downtown Nashville, Tenn. The largest show floor in more than eight years is accompanied by a wide variety of educational programs, including a new investor seminar for those considering an entry into the carwash business. Learn more at carwash.org.
Eric Wulf is CEO of the International Carwash Association. Reach him at ewulf@carwash.org.
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