Thinking of starting your own car wash business? When managed effectively, car wash businesses can be highly lucrative. If you’re interested in opening a car wash, it’s crucial to grasp the process of converting revenue into profits. Essentially, you need to determine the amount of revenue required to break even and generate profits.
Based on data from the International Car Wash Association, there were approximately 62,668 car wash establishments in the United States in 2020, resulting in a total revenue of $15 billion. Despite being a substantial industry in the US, it is highly competitive and involves significant upfront costs. Therefore, if you’re curious about the potential profits you can achieve with a car wash business, it’s essential to consider all the expenses associated with starting and operating such a venture.
Different types of Car Wash
Full-service car wash
The car wash service that includes both exterior and interior cleaning is the priciest option, but it also offers the best value for money. On average, this type of wash costs $15, which is more than twice the price of an in-bay car wash. A full-service car wash business can generate annual profits ranging from $500,000 to $900,000. In addition to basic cleaning, this type of car wash provides extra services such as vacuuming and detailing for the interior. The exterior cleaning may be done indoors or on a conveyor belt.
In-bay automatic car wash
In this kind of car wash, the usual charge amounts to around $6.34, resulting in a profit of $4.35 for each wash. On average, it generates annual earnings of about $139,000, which gives an average profit of $86,531. The in-bay automated car wash doesn’t require a lot of space and can be conveniently incorporated into an existing business like a gas station or auto repair shop. Moreover, it doesn’t demand much manpower since it operates automatically once the customer pays and enters the bay. Customers are more inclined to choose in-bay car wash services due to their lower cost and faster, more efficient process. Additionally, in-bay services use 10 to 50 gallons of water per car, while tunnel services consume 14 to 60 gallons.
Self-service car wash
With a self-service car wash system, car owners can clean their vehicles at their convenience without adhering to the fixed schedule and process of an automated car wash. This affordable option generates an average monthly income of $1,489 per bay and an annual revenue of approximately $41,000. Although the revenue is considerably lower compared to other car wash types, it is important to consider the minimal expenses for maintenance and staff employment.
Exterior conveyor car wash
These car washes use a motorized track to move cars through a tunnel where they go through a series of steps – rinsing, soaping, washing, rinsing again, and finally waxing. The exterior conveyor car wash is the second most economical car wash option, following the full-service car wash. It is approximated that this type of car wash can generate an annual average revenue of $686,250.
How Much Does a Car Wash Make a Year?
The revenue you can expect from investing in a car wash depends on the type you choose. Many owners of gas stations, mechanic shops, and rest stops opt to incorporate car wash services into their existing infrastructure to boost profits. Alternatively, some may opt to establish a dedicated space specifically for car washes.
Back in 2017, the average car wash generated sales of approximately $600,000. However, the specific type of car wash you establish will impact your sales as a business. Although certain car washes may be more popular than others, it’s important to note that each customer has their own preference when it comes to car washing styles. Consequently, you can anticipate attracting customers regardless of the type of car wash you set up.
Factors That Determine Profitability
Reducing costs can have a negative effect on your profits, but there are other factors that can cause fluctuations in your revenue, such as:
Location:
Choosing a favourable location can greatly benefit your car wash business. According to the International Car Wash Association’s findings in 2019, 75% of customers become aware of car washes while they’re driving. The ideal location would be near a major road where it’s easily noticeable. However, if your visibility from the road is limited, you can still attract customers by using signs and providing clear directions.
Marketing:
Your marketing efforts can also contribute to your profitability. Engaging in activities like managing social media pages, running promotional campaigns, building a strong website, and distributing flyers can increase brand recognition. Collaborating with local businesses to create coupons and promotions can expand your customer base as well.
Weather and seasonality:
The weather and changing seasons can significantly impact your business. Rainy days tend to result in reduced business activity. However, many car washes experience an upswing in customers during the winter and summer seasons when extreme weather conditions make it impractical for car owners to clean their vehicles themselves. Furthermore, periods with high pollen counts can also lead to increased business.
Frequency and customer retention:
It’s crucial to understand the needs of your target customers. If you’re aiming to attract frequent visitors, an in-bay or tunnel car wash would be preferable. Offering additional services, such as complimentary coffee or water, discounts, loyalty programs, and more, can help enhance customer retention.
How much does it cost to run a car wash?
There are various recurring costs of running a car wash, and they include the following:
Operational Expenses
Once your car wash is up and running, you’ll encounter various ongoing operational costs:
Labour
Hiring and paying employees is a significant part of your operational expenses. Consider wages, benefits, and training costs when calculating labour expenses.
Water and Utilities
Running a car wash consumes a substantial amount of water and electricity. Calculate these expenses based on usage and local utility rates.
Maintenance and Repairs
Regular maintenance and occasional repairs are necessary to keep your car wash equipment functioning correctly. Budget for routine check-ups and unexpected repairs.
Chemicals and Cleaning Supplies
Car washes require various chemicals and cleaning supplies to provide high-quality service. These costs can add up over time, so it’s crucial to manage your inventory efficiently.
Marketing and Advertising
Promoting your car wash is essential for attracting customers. Allocate a budget for marketing and advertising campaigns to keep your business visible in the market.