Carwashes

Industry Snapshot

An estimated 97 percent of Americans take their automobiles to commercial carwashes, with over 100 million vehicles washed every year. In 2008, the International Car Wash Association estimated that professional car washing generated nearly $20 billion in revenues in retail and business-to-business sales. However, other industry experts, such as IBISWorld, reported industry revenues at less than $8.4 billion. There were approximately 14,000 carwashes in the United States in the late 2000s. Wash facilities types included conveyors, which pulled the car through a tunnel as the equipment washed it; in-bay or automatic washes, in which the driver parked the car in a bay and the washing equipment moved over and around it; and self-service, which provided a bay with (often coin-operated) equipment such as brushes and wands for the consumer to use to manually wash the car. The weak economy in the late 2000s was negatively affecting the carwashing industry, with many consumers cutting back on discretionary spending by either delaying washing their cars or doing it themselves.

Organization and Structure

The carwash segment of the SIC 7540 industry group (which also includes Automotive Services, Except Repair) covers commercial establishments primarily offering car washing; car cleaning, polishing, and detailing; and bus or truck washing. These services are provided both to private individuals and to automotive dealers, automobile rental establishments, automobile fleet owners, and other businesses. Although carwash establishments may offer a combination of facilities and options, carwashes generally can be classified as coin-operated, self-service facilities, automatic facilities, full-service conveyorized facilities, or automobile detailers.

Coin-Operated Self-Service Facilities
In these self-service facilities, which generally do not require full-time supervision, customers clean their cars in drive-through bays equipped with "wand" type high-pressure spray nozzles and other car-cleaning accessories. Coin-activated controls determine the length of spray nozzle operation and allow the customer to switch among presoak; engine cleaning; tire cleaning; and foam, rinse, and wax sprays. In addition, these facilities generally provide coin-operated vacuums for the cleaning of car interiors and may have car care products such as towels and polishes available though coin-operated dispensers. Traditionally, self-service centers targeted consumers who rented and did not have the capability to wash their cars at their residence. However, in the late 2000s this low-end sector of the industry also drew increasing numbers of homeowners who sought the convenience of self-serve facilities.

Automatic Facilities
Like self-service washes, automatic facilities do not require full-time supervision, and they can service approximately 20 vehicles an hour. Here customers activate the automatic system by driving their cars onto platforms within open-ended bays. Rollover carwashes are based on guide wheels that follow a vehicle's contours with horizontal overhead brushes and vertical "wrap-around" brushes that clean the car in presoak, undercarriage, foam, rinse, and wax spray cycles, followed by a hot-air dryer. Customer concerns about vehicle and paint finish damage have led to the development of "brushless" soft-cloth systems, and, subsequently, to the marketing of "frictionless" spray-only systems controlled by electric eyes and robotics technology. Like self-service facilities, automatic carwashes generally provide coin-operated vacuums for the cleaning of car interiors. By the late 2000s, most automatic facilities were equipped to dispense a varied level of washing and treatment, depending on price. Most were also capable of accepting credit and debit cards as payment.

Full-Service Conveyor Facilities
Full-service facilities not only require more space than self-service or automatic systems, they are also more labor-intensive. In these facilities, full-time workers service 60 or more cars per hour as an automatic conveyor carries the vehicle through an open-ended service tunnel. Full-service conveyorized facilities used cloth-only systems, friction/frictionless wash combinations, or frictionless washes only. On-line services typically provided by conveyorized facilities include exterior wash, rust-inhibiting undercarriage wash, tire and whitewall cleaning, various waxing options, and the scenting of interior air. Off-line services typically include cleaning and polishing of exterior and interior vinyl and leather, shampooing of carpet and upholstery, cleaning floor mats, cleaning ashtrays, cleaning the engine, and applying a polymer protectant. In the late 2000s, the typical cost of a customized car cleaning package at a full-service conveyorized system was approximately $15 to $25.

Automobile Detailers
In these facilities, the focus is on manual cleaning of cars both inside and out, using hoses and brushes, as well as hand-held tools, rather than high-technology car washing equipment. The "detailing" of an automobile is an exhaustive process. In addition to essentially manual versions of the on-line and off-line services provided by full-service conveyorized systems, detailing operations focus on such car parts as hood interiors and spare tires and on "details" such as shining the interior of gas caps and dusting the spaces between radio buttons. Although prices vary according to geographical area, services offered, and type of vehicle (e.g. passenger car, SUV, minivan, truck), in the late 2000s, fees for a basic detailing package ran approximately $60 to $90 dollars. Upgraded packages cost between $150 to $190.

The leading professional trade organization was the 5,000-member International Carwash Association, which publishes a semiannual directory and a monthly management report both in print and on the Internet. Chief among industry trade publications was Professional Car washing and Detailing.

Background and Development

An article in a 1923 edition of Literary Digest discussed the "first automobile washbowl that has been built in this country," a carwash located in St. Paul, Minnesota. For this three-minute carwash, "the owner drives his car in and around the bowl until he is satisfied that the mud has been cleaned from the chassis and wheels--at the exit door there is a spray with forced water which cleans the body--an electric drier completes the job." Three years later the same magazine described a seven-minute "Automobile Laundry," a carwash relying on two pitmen; hoses of hot, cold, and soapy water for car exteriors; and a compressed air hose for car interiors. The article predicted that the carwash would become "one of the largest specialized industries in the country."

The modern carwash industry began in 1946 in Detroit with the opening of Paul's Auto-Matic Car Wash, the "first automatic autowash in the world." The establishment was a conveyor-style carwash through which the car was pulled by a moving chain. Twelve years later, the first full-service Jax Kar Wash opened in Detroit. This pioneering operation serviced 280,000 cars in its first year of business. Coin-operated self-service facilities and automatic rollover carwashes emerged in subsequent decades.

In the early 1990s, the carwash industry was in a dynamic phase. Important trends in the carwash industry included a customer preference for soft cloth or frictionless carwashes over automatic brush rollovers and the emergence of detailing operations and growth in the high-quality carwash segment. The adoption of sophisticated computer software for business planning, customer service, and bookkeeping needs, and an industry focus on environmental issues were other important trends.

The carwash industry grew rapidly from 1977 to 1987, but its growth began to slow in the decade following 1987. In 1977, there were 5,785 carwash establishments nationwide classified in SIC 7542. It was a business oriented to small-scale proprietors; these establishments were owned by 5,290 firms, of which 5,091 operated only one carwash. Approximately 45 percent were incorporated, another 42 percent wereowned by individual proprietors, and just 3 percent were owned by partnerships. The total receipts for carwash establishments nationwide came to $668.6 million in 1997. Forty-two out of 5,290 carwash firms and 243 out of 5,785 carwash establishments reported annual receipts of $1 million or more.

At the beginning of the 1990s, Forbes described carwashes as one of the nation's largest small businesses, with an annual growth rate of 5 to 10 percent. However, conditions began to change by the latter part of the decade, and while the industry continued to grow at a rate of 6 percent, new forces--particularly environmental laws and competition from service stations offering free carwashes with a fill-up--had begun to encroach.

Just ten years later, there were 9,132 commercial carwash establishments nationwide, an increase of almost 60 percent. The proportion of incorporated establishments had risen to just over 50 percent (but still a low figure for the service industries as a whole, in which 60 percent of all establishments were incorporated). The number of sole proprietors had dropped to 37 percent (compared to 32 percent for all service industries), and partnerships had jumped to almost 13 percent, nearly double the overall service industry figure of 7.3 percent. The total national revenues for the carwash sector had reached $1.8 billion, with California and Texas together representing more than one-quarter of nationwide revenue. Nationally, the average revenues per establishment were just over $197,000 a year (only 34% of the average for the service industry as a whole). But because carwashes tended to be less labor-intensive than many other service industries, average revenues per employee for carwash establishments ($23,534) were slightly more than 50 percent of the service industry average.

In 1992, the number of carwash establishments in the nation had risen to 11,589, an increase of 27 percent. This indicated a slight leveling off in the rate of increase compared to the 1977 to 1987 period. The proportion of incorporated establishments had increased to 56 percent while the service industry average remained at 60 percent, individual proprietorships had dropped another two points to 35 percent (slightly more than the service industry average), and partnerships accounted for only 9 percent. California remained the leading state in the nation (1,408 establishments), followed by Texas and New York. National revenues had increased by 47 percent to $2.64 billion, or $228,158 per establishment. However, this was still only about 35 percent of the service industry average. Revenues per employee had increased by 21 percent, to $28,407; a mere 46 percent of the industry average.

The carwash industry is heavily affected by such issues as weather, climate, and time of day. A May 1996 survey conducted by Auto Laundry News reported that Saturday was overwhelmingly the best day for business, with an 82 percent vote. February, with 19 percent, was chosen the best month of the year, and November (0.5 percent) the worst. Not only did carwash owners have a favorite season (winter, with more than half the votes, as opposed to fall, with only 3 percent), they even had a favorite time of day. Just over 40 percent of respondents said the majority of their business was conducted between 1:00 and 3:00 p.m.

States and communities have passed sewage, water conservation, and water reclamation codes that affect or are directed at commercial carwash establishments, and individual businesses are increasingly turning to a combination of fresh and reclaimed water in the operation of their car cleaning systems. In addition, the federal Environmental Protection Agency has begun to regulate the underground tank storage systems and to analyze the chemicals, detergents, and wax products used by the carwash industry.

Establishments in this industry sector have also faced increasing competition from service stations, convenience stores, and other facilities that offer washes as one of several on-site profit centers. Some of these utilize innovative technology such as a television, which customers view while pumping gas. On the screen they see an advertisement for a carwash, which they can purchase when they pay for their fuel. Others give away free washes with a gas fill-up.

According to industry statistics there were an estimated 26,120 carwashes scattered throughout the United States in 2005, employing 126,038 people. The average number of employees per establishment numbered five. The industry boasted estimated revenues of $4.12 billion. States with the majority of carwash facilities were California, Florida, Illinois, Georgia, Michigan, New York, Ohio, Pennsylvania, and Texas. Together, they were responsible for more than 50.0 percent of the market, with California holding a 10.9 percent share.

Commercial carwashes represented 15,953 establishments or 61.1 percent of the industry total. The carwash sector boasted revenues of $2.3 billion and employment of 72,638 people. The automotive washing and polishing sector followed with 7,647 carwash facilities, or 29.3 percent of the market, and $851.6 million in revenue. Next were facilities that catered to trucks only, numbering 7,647 establishments. Combined, the washing of trucks generated $337 million and put 6,719 people to work. Lastly, the industry had 769 self-service carwashes, employing 2,759 people with estimated sales of $91.9 million.

The Wall Street Journal reported that big-box retailers, as well as service stations, were increasing their market presence, which prompted independent carwashes to increase their services. For example, some facilities were offering discounted pricing, monthly pay plans, a wireless Internet connection while waiting, and even a bay specifically for bathing pets in an effort to maintain a competitive edge over service stations and convenience stores.

While competition was still a concern by the likes of the big-box retailers, carwashes had to contend with higher energy costs as well. In fact, carwashes were being hit twice; once for their boilers, which showed up on their utility bills, and another since consumers were not washing their vehicles as often. The International Carwash Association, which maintains the CarLove.org Web site, found that 52 percent of drivers washed their vehicle less than once a month, with 15 percent admitting that they never wash their cars. Thus, "gas prices are taking that discretionary income away from the consumer," according to the Detroit News.

Current Conditions

In the late 2000s, the car care industry was slumping due to a recessive economy that had consumers cutting back on discretionary spending. Convenience Store News reported in March 2009, "Many convenience store owners [said] that their car wash business has been one of the biggest casualties of the current recession--noting many consumers can easily put off a car wash when money is tight (or wash their cars themselves)." Brad Simonis reported for Modern Care Car at the beginning of 2009: "The perfect storm of plummeting new car sales, slowing retail sales, the housing crisis, a nose-diving stock market and a never-ending media blitz on the state of the economy has resulted in dramatic dips in carwash volumes unlike most of us have ever seen." To lure customers, owners whose carwashes were linked to a convenience store offered incentives such as a frequent buyer program or discounts on gasoline. Other operators increased prices.

Overall, however, fewer consumers were washing their cars at home and more were seeking out professional car care facilities. According to the International Carwash Association, in 2008, 65.6 percent of consumers surveyed for the association's latest Study of Consumer Car Washing Attitudes and Habits, reported using professional carwashes, up from 62 percent in 2005. Nonetheless, the industry was making little progress on upgrading its imagine. According to the survey, despite technological advancements in the washing equipment, nearly 84 percent of respondents believed that washing their car at home was safer for their car than professional services--up from 81 percent in 1999. In addition, in 2008, just 50.7 percent of respondent considered car washes more convenient than home washing, down from 54. 8 percent in 1999.

The industry did show slight improvements in convincing consumers that professional care car provides a better quality wash (28.7 percent in 1999 versus 34.6 percent in 2008) and better overall value (16.7 percent in 1999 vs. 21.7 percent in 2008) than home carwashing. Carwash firms continued to attempt to improve their image and their business practices by offering more ecologically friendly services. To that end, in 2009, the International Carwash Association launched WaterSavers, a program that promotes car wash owners' environmentally friendly business practices and educates consumers on professional car washing's "green" practices.

Industry Leaders

The industry is highly fragmented and is dominated by individual enterprises or regional franchises and operations. Franchises include Cactus Car Wash; Car Wash Guys; Rapido Rabbit, LLC; Spot-Not Car Washes; and Super Wash, Inc. Also, in 2008, Proctor & Gamble tested the market with several Mr. Clean Performance Carwash outlets and were expected to expand operations of its upscale carwash service in 2009 and beyond.