When envisioning beginning a car wash business, it may seem questionable whether a car wash business can genuinely be a profitable idea for a small business. However, even if starting a car wash business can be profitable, you will likely want to know how to determine if it is. One key factor which makes car wash businesses worthwhile relates to the growing demand for car wash services.
The annual market for car wash businesses increased from $11.9 billion in 2020 to $13.1 billion in 2021, representing just over 10% growth. On average, industry market size increases are in the single digits. Thus, the recent rise in market size provides evidence that the car wash industry is growing. Moreover, this increase is an excellent indication that the overall profitability of car wash businesses, too, will continue to increase. Further, Statista estimates the revenue in the United States from car wash businesses will increase from 9.4 billion in 2021 to a projected 10.05 billion in 2022.
Additionally, according to Kelley Blue Book, the average price of a new vehicle has steadily risen. In 2019, Americans paid $1,799 more for the average new car than they did in 2018. That number rose in 2020 to $3,301 more than the last year and nearly tripled in 2021 to consumers paying $6,620 more than in 2020 for the average new vehicle. December 2021’s average final transaction price for cars was $47,077. In 2019, the average final transaction price was just over $34,000. As a result, car wash businesses’ utility has recently become increasingly apparent.
Since vehicle costs are continuously rising, many consumers are attempting to elongate the life of their purchases, now seen as investments. With the growth of the average price of a new vehicle (from $1,799 to $3,301 to $6,620) increasing almost tri-fold, it is no wonder car wash businesses have become such rewarding undertakings. Car wash businesses allow consumers to further protect their investments. In addition, operating a car wash business provides measurable value to consumers. This is because they can sustain the upkeep of their vehicles which typically results in maintained value over time, subsequently saving consumers additional money in the long- run. Indeed a benefit that is high on most consumers’ lists of needs.
Alongside statistical evidence supporting the continued profitability of car wash businesses, profitability also depends on the kind of car wash business you plan on operating. Mobile car wash businesses, tunnel car washes, and in-bay rollover car washes provide distinct benefits and profit margins. In addition to your primary car wash services, offering premium services and upgrades can also increase the profitability of your car wash business.
Mobile Car Wash Business Profits
A mobile car wash business can be one of the most straightforward small business ideas to start up, with minimum initial costs. This small business idea will allow the owner to set their own hours and have a more flexible schedule overall, which in turn means greater control over how much the business profits. In addition, many automobile owners now seek to extend the life of their purchased vehicles. In response, a mobile car wash business provides cost-effective maintenance, often preferable over tunnel or in-bay rollover car wash options.
A mobile car wash business gleans most of its profitability from simple convenience. More individuals are willing to pay someone else, even when it is a task they could efficiently perform themselves. The convenience of a mobile car wash business means that individuals do not even need to stop their day to have their vehicle cleaned and detailed. Bringing the services to the customer definitely increases benefits.
Additionally, because of the need to extend an automobile’s life, many individuals are unwilling to patronize automated car washes. This is due to micro-scratches from some automated car wash brushes that lead to premature rusting and ‘paint swirl’ marks on vehicles. These cosmetic issues can be nearly entirely avoided by having the car hand-washed by a mobile car wash business.
An individual just beginning is likely to see an income of around $1,000 per week. To calculate this estimate, there are several factors to consider. First and most apparent, a mobile car wash business will not require a monthly lease. A mobile car wash business will also not have a payroll since the owner will be the only ’employee.’ For a mobile car wash business, profits vary significantly depending on how services are priced.
Take, for example, a customer who would like an exterior wash, vacuum, carpet shampooing, and waxing. Typically a mobile car wash business will have set packages priced competitively. Still, for example’s sake, we’ll use the industry averages. Let’s say, for the above-referenced customer, the base service of hand-wash and vacuuming the vehicle costs the customer $30. Here, you can charge for the services à la carte and the base rate, significantly increasing profitability.
If the carpet shampooing is priced at $40 and the exterior waxing at $60, you will profit $130 from just one vehicle. Servicing only two cars per day with these same services would net you $260 a day and $1,300 in a five-day workweek. Cleaning for the entire month nets a total of $5,200, with $62,400 earned annually. The numbers for a single owner just beginning a two-car per day mobile car wash business make it understandable why the industry is so profitable.
Tunnel Car Washing Business Profits
A tunnel car wash is where the customer’s vehicle is on a conveyor belt and is taken through a tunnel. Various car wash processes are performed in succession to one another. In terms of automatic car washing, tunnel car washing is preferred to in-bay rollover car washing, primarily due to tunnel car washing’s increased speed. This upgraded version of the in-bay rollover car wash increases thoroughfare significantly, a perk necessary to most when deciding to use an automatic car wash. In addition, typically customers will not want to wait extended periods. This further strengthens the profitability of tunnel car washes by providing quality service quickly.
A tunnel car washing business can be profitable because it can provide a form of passive income. The owner will not necessarily need to be on-site at all times. Still, considerable costs are associated with the setup and maintenance of a tunnel car washing business. The U.S. Census Bureau puts the average annual revenue for tunnel car washes at approximately $139,000. While this may seem lucrative, it comes at a cost. Looking at the WashWorks Mini Car Wash Tunnel package, the price is just over $345,000. Although this includes construction and installation, it may be difficult for most individuals to secure the necessary funding to build a tunnel car wash. So, while a tunnel car wash can provide an excellent source of passive income, it will require a more than robust investment to even begin providing the service.
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Similar to tunnel car washes, in-bay rollover car wash businesses can also turn a significant profit. However, an in-bay rollover car wash differs from a tunnel car wash because the customer drives their vehicle into the bay and parks. Then the equipment in the wash bay “rolls over” the car to perform the different cleaning processes. This type of cleaning typically requires much longer time than tunnel car washes, resulting in decreased profitability.
The decreased profitability is evidenced by the average annual profit, which sits slightly above $86,000. This indicates more than $50,000 less on average than a tunnel car wash and has yet to consider any costs associated with building the in-bay rollover car wash. Typically, a rollover car wash costs no less than $20,000, not always including installation. As a result, the initial year of revenue will be slashed by $20,000 plus the cost of continuing maintenance and parts for the machine. Passive income is lovely, but keep in mind that owning high-powered machinery creates new responsibilities. These include water usage necessary for running the car wash, particularly if you plan to have a car wash with 24-hour access.
Overall, there are several factors to determine whether a car wash business can be profitable. The critical determinant lies in which kind of car wash business you plan to begin. Starting a mobile car wash business is an excellent option, mainly if you have limited startup funding available at your disposal. A mobile car wash business allows you to bring the service to the customer and net just over $60,000 annually, washing only two cars per day, 5 days per week.
Alternatively, there are automated car wash options that are also available. Tunnel car washes are the most upgraded option and allow customers’ vehicles to be conveyed through a tunnel through the multiple processes of the cleaning process. Conversely, an in-bay rollover carwash reverses that set up by having the customer stationary and the equipment’ rolling over’ the customer’s vehicle.
Though this is a slower method, it still leaves room for revenue over $80,000. The only caveat to that is that the systems themselves are considerably pricey for tunnel and in-bay rollover car wash systems. Some individuals may have difficulty obtaining financing sufficient to support such a large purchase price. With that in mind, car wash businesses can be profitable. Still, a mobile car wash business would provide the most significant profits for individuals seeking to invest the bare minimum. In addition, a mobile car wash business is profitable for someone without access to large amounts of liquid assets, with a continuously growing market. They also do not have to concern themselves with building permits, water recycling, etc. All in all, a mobile car wash business can be highly profitable.
