By Anne Baye Ericksen, Contributing Editor
The calendar officially states spring has sprung, and residents in the mountains, across the prairies, all the way to the New England coast welcome the reprieve from winter’s harsh grip.
Not only did the bitter cold try people’s patience with Mother Nature, but the snow-and-salt-crusted roads took a toll on their vehicles. For convenience stores and fuel retailers offering car wash services, though, tough winter conditions typically translates into robust sales.
“The longer the snow takes to melt and the longer it dirties cars, the more it should work in favor of operators,” said Eric Wulf, CEO of the International Carwash Association.
“The multiple winter weather breaks during the 2014-2015 season drove an increase in customer visits to WetGo. And as we approach the warmer weather months, we anticipate this customer growth will continue,” added Daniel Donovan, spokesperson for Giant Eagle, corporate owner of GetGo stores and
WetGo car washes in Pittsburgh, Ohio, Maryland and West Virginia.
Although weather has always been an influential player in the industry, other economic factors are combining to play a role in how car washes are perceived by consumers. Social media, automotive trends and even owner distribution could become influential players in the car wash category.
According to research released by IBISWorld earlier this year, the car wash industry is valued at $9.1 billion. It’s also an industry that’s been registering year-after-year growth. Between 2010 and 2015, it recorded an annual growth rate of 2.5%, which analysts attribute to improvements in the national economy.
“Real wages have moved upward [and] gas prices are down. This puts more money in people’s pockets, and as the economy gets better, the number of miles driven goes up,” said Wulf. “For car washes, that’s all good news.”
Researchers also expect the current momentum to carry over into the next five years. Not only do they anticipate earnings to climb, but strong economies support increasing car sales. The result will be more autos available to wash.
Additionally, more and more municipalities, counties and states are passing restrictions on where vehicles can be cleaned. In drought-stricken California, for example, numerous water districts have issued regulations mandating residents wash their vehicles in commercial car washes or with a bucket and a hose equipped with a self-closing valve.
“Some cities, such as Irvine, Calif., have banned using water at your home to wash your cars, and that’s great for our car wash business,” said Jack Kofdarali, president of J&T Management, a Corona, Calif.-based company that manages more than 30 service stations in the Golden State, including ARCO ampm convenience stores. “People can’t wash their cars themselves and it increases our sales. And it is the more prudent environmentally responsible thing to do.”
Because of the tight restrictions, however, Kofdarali raised prices this year.
“Water is getting more expensive, [but] people don’t mind paying an extra $1 to get their cars washed,” Kofdarali said.
Over the past two decades, car wash equipment manufacturers have implemented improvements, from soft cloth replacing polyethylene bristles that could scratch paint to systems with sensors that better detect car sizes and shapes instead of standard hydraulics. But the technology that could really make a splash has less to do with the normal washing process and more to do with customer outreach.
From tweeting specials to posting Instragram photos, businesses of all kinds have joined the social media generation as a means to stay connected with customers and appeal to new clients. It’s become the electronic equivalent of direct mail fliers. However, car wash retailers appear to have been slow to exploit the medium.
“While social media platforms dedicated to GetGo continue to build notable customer engagement, the focus on the company’s WetGo business via these vehicles is in its infancy,” Donovan said. “We are actively evaluating the best ways to interact with customers about our car wash business.”
“It has to become an integral part of the marketing mix,” echoed Wulf. “Operators can’t ignore social media.”
He also said tapping into cars’ onboard technology is another opportunity to market car washes.
“Increasingly, while cars are moving, they’re receiving Internet communications,” he explained. “There are opportunities there for cars to use GPS to help locate washes. If washes are not visible to the vehicle, then you’re at a disadvantage.”
Other developing issues that could affect the industry include American driving trends. One is the development of Uber and the trend of car sharing is taking off. Basically, participants benefit from the convenience of driving themselves without the cost and maintenance hassles associated with ownership.
“It will be an interesting opportunity for urban motorists,” Wulf said. “[However,] there will have to be some kind of diffusion of care. What we have to do as retail businesses is communicate to the fleet, or the vehicles, that we want to be the place where the cars go to get washed.”
When an industry experiences sustained growth over a period of years and that growth is projected to continue, it naturally attracts new business ventures, and car washes are no different. According to IBISWorld, the number of car wash operations is expected to climb at a rate of 1.3% annually.
What’s not projected to change much in the near future is the type of ownership. “Most car wash owners have one or two or three sites. There will be some aggregation that a person who owns two car washes will buy two more. That’s slowly increasing, but the industry is still incredibly fragmented,” said Wulf.
CHOOSING CAR WASH OPTIONS
There are several different types of car wash systems, from conveyor-driven to hand washing. While any car wash is a serious capital investment, a c-store operator can clean up with the right business strategy.
Conveyor or tunnel car wash
According to IBISWorld, nearly half of all car wash sales come from this type of system. Owners typically offer a variety of services, from the most basic to high-end inside-and-out cleaning. Researchers found that express tunnel operations that provide exterior cleaning and self-serve vacuum stations quickly have become the predominant sub-category.
In-bay automatic car wash
These operations, in which drivers remain seated in their vehicles as the equipment moves around the cars, represent slightly more than 10% of sales industry wide. However, in-bay automatic washes are more abundant as they are typically associated with fuel retailers. Due to convenience and price—average $7 per wash—researchers anticipate in-bay car washes to gain more market share.
This option is appealing to customers who still want to wash their autos themselves, self-service bays account for approximately 13% of industry revenue.
Due to the higher labor costs, hand-wash operations charge more—average $20 per wash—and often cater to luxury vehicle owners. Still, analysts expect the segment to account for more than 12% of industry earnings this year.