How Much Do Car Washes Make? A Guide to 2024 Profits
My first vehicle was a black and silver 1985 Chevy Blazer. It had chrome wheels that, if clean, they’d shine and make all the difference in the world.
My personality likes things neat and clean, so I’d wash it several times a week. Back then, I’d spend 45 minutes in the driveway with a water hose, bucket, soap, and Shop-Vac.
There’s something really satisfying about driving a clean car. But as I’ve gotten older, I tend to use my time more wisely. Why spend 45 minutes hand washing when I can do it in 2-3 minutes at the Express Wash down the street?
What surprised me was that the Express Wash seems busy no matter the time of year. So this got me thinking. If this many people want clean cars (like me), then why not profit from it?
So I decided to take a look into how much do car washes actually make.
Here’s what I discovered…
According to recent estimates, the average income of a car wash owner can vary widely depending on the type of car wash and its location. For instance, one estimate for in-bay automatic car washes puts the average car wash owner’s annual income at around $86,500.
I found others making over $40,000 a month.
However, these figures may not accurately reflect all car wash businesses, as factors such as location, competition, and business model can significantly impact profitability.
But these findings sparked my curiosity and encouraged me to dig deeper. I wondered, are there some hidden secrets to making it big in this industry? I took it upon myself to conduct thorough market research and study various car wash business models.
In this article, I’m going to outline the different revenue streams for each type of car wash, and what can make or break your car wash income.
Why Is Owning a Car Wash Beneficial?
Let me share a statistic with you that will clearly demonstrate the potential in owning a car wash. The number of registered vehicles in the US is over 290 million. And guess what? They each need to be washed!
With the average car wash priced at around $15, you can begin to see the scope and market size of this industry. The prevalence of vehicles on every street makes it clear that the need for car wash businesses isn’t going anywhere.
Moreover, even in our age of innovation, the car wash service remains largely immune to full automation. The best it might get is having someone come to your door and wash your car on the spot. As such, there is no “real” alternate substitute for car washes.
This industry can’t be outsourced or fully automated. Typically, a car wash operates from a specific location, but newer options have started like doorstep car wash services.
Understanding Car Wash Businesses
Car wash businesses can be a profitable venture if run correctly. However, understanding the different types of car washes and the kind of car wash business you want to operate is important to ensure success.
There are various types of car washes, including full-service car washes, automatic car washes, self-service car washes, exterior conveyor car washes, and tunnel car washes.
Each type has its unique features, and the kind of car wash business one decides to operate will determine the potential revenue and profitability.
| Type of Car Wash | Description | Potential Revenue and Profitability |
|---|---|---|
| Full-service Car Wash | Offers a range of services, including exterior and interior cleaning, waxing, and detailing. | Requires more significant investments in equipment and personnel but tend to generate higher revenues. |
| Automatic Car Wash | Uses machines to wash the car, and customers typically stay in their vehicles during the process. | Requires less labor and equipment, making it a more cost-effective option for operators. |
| Self-service Car Wash | Allows customers to wash their vehicles using equipment provided by the operator. | Requires minimal labor and equipment but tends to generate lower revenues than full-service or automatic car washes. |
| Express/ Tunnel Car Wash | Similar to automatic car washes but typically have longer conveyor belts to accommodate larger vehicles. | Requires significant investments in equipment and real estate, but they can generate substantial revenues. |
How Profitable Are Car Washes?
According to industry estimates, the average annual revenue for a car wash business can range from $41,000 per year for a small self-serve car wash to $686,250 per year for a bigger luxury car wash.
However, the profitability of a car wash depends on the net profit margin, which is the difference between gross revenue and expenses.
The average profit margin for a car wash is around 35%, meaning that a car wash business earning $100,000 in gross revenue can expect a net profit of around $35,000. However, this can vary depending on the type of car wash, expenses, and other factors.
One of the biggest expenses for a car wash business is labor costs. A full-service car wash requires more labor than a self-service car wash, which can impact the net profit margin.
Additionally, the cost of utilities, maintenance, and supplies can also impact the profitability of a car wash.
The profitability of a car wash can also depend on the pricing strategy. The average price for a hand car wash is between $20 and $30, depending on the locality and the vehicle type. Compared to the drive-thru car wash, the manual car wash takes more time but protects the vehicle from scratches and swirl marks caused by the high-pressure car wash jet.
Cost Factors in Car Wash Businesses
#1. Start-up Costs
The start-up costs for a car wash business can be high. The initial investment includes the cost of land acquisition, construction, equipment, and labor costs. The cost of land acquisition depends on the location and the size of the property.
Construction costs vary depending on the design and materials used. The cost of equipment depends on the type of car wash, and the number of bays.
#2. Average Cost
The average cost of a car wash varies depending on the type of car wash. The cost of a self-service car wash is between $7 and $15, while the cost of an automated car wash is often lower. The cost of a full-service, manual hand, and touchless car wash types is higher than the average cost of an automated car wash.
#3. Labor Costs
The cost of labor depends on the number of employees, the pay rate, and the hours worked. It can be reduced by using automated car wash systems that require less labor.
#4. Equipment Costs
The equipment cost depends on the type of car wash, the number of bays, and the equipment used.
The equipment for a self-service car wash bay is between $8,000 and $10,000, while the equipment for an automatic car wash bay ranges between $31,000 and $100,000.
#5. Land Acquisition
The cost of land acquisition depends on the location and the size of the property. The cost of land acquisition can be reduced by choosing a location that is not in a prime location.
#6. Variable Costs
Variable costs are costs that vary depending on the number of cars washed. The variable costs include water, electricity, soap, and other cleaning supplies. These can be reduced by using water-saving equipment and energy-efficient lighting.
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Sign up for my newsletterLocation, Location, Location
One of the most important factors to consider when selecting a location is the area’s traffic. High-traffic areas, such as near a gas station or residential area, can attract more customers to the car wash.
A car wash near a busy intersection or freeway exit can also be beneficial.
Another consideration is the amount of space available for the car wash. A car wash with multiple bays and ample space for vehicles to enter and exit can provide customers a more efficient and streamlined experience.
Real estate agents can be a valuable resource when searching for a location for a car wash. They can provide insight into the local real estate market and help identify properties that meet the business’s specific needs.
It is also important to consider the cost of real estate when selecting a location. Sometimes, a car wash may choose to lease a property rather than purchase it outright. However, weighing each option’s benefits and drawbacks before deciding is important.
Customer Base and Market Analysis
The car wash industry benefits from a broad customer base of car owners seeking to keep their vehicles clean. Reports indicate an average of 20,000 customers annually per car wash, from private car owners to commercial fleets, seeking services from basic washes to full detailing.
The industry is on a steady growth trajectory, with the global market valued at USD 29.3 billion in 2021 and projected to grow at a 3.1% CAGR till 2030. The US market was worth USD 15.21 billion in 2022, expecting to expand at a 5.7% CAGR till 2030.
The key to a successful car wash business is customer satisfaction, achieved through quality services, top-notch equipment, and exceptional customer service.
With increasing competition and customer options, car wash owners also need effective marketing strategies to attract new customers, such as discounts, social media advertising, and community partnerships.
By balancing customer retention and acquisition, owners can ensure their business’s sustained success.
Join the Passive Investors CircleAdditional Services and Revenue Streams
Car washes can offer additional services beyond the basic wash, wax, and vacuum. These services can provide an additional revenue stream for the business, and also increase customer satisfaction and loyalty. Here are some examples of additional services that car washes can offer:
| Additional Service | Description | Pricing |
|---|---|---|
| Tire Treatments | Use of high-pressure wheel blasters to clean the tires, and tire shine application to make the tires look new. | $5 to $10 per car |
| Interior Detailing | Deep cleaning of the carpets, seats, and dashboard, as well as leather conditioning and odor removal. | $50 to $150 depending on the level of detail |
| Engine Cleaning | Service for cleaning the engine bay. | $20 to $50 depending on the size of the engine |
| Headlight Restoration | Service for customers who have foggy or yellowed headlights. | $50 to $100 per car |
| Paint Protection | Service to protect the car’s paint from scratches and UV damage. | $100 to $500 depending on the type of protection used |
United States Car Wash Industry
The US car wash industry, with about 80,000 locations, is a lucrative sector according to the International Car Wash Association, contributing an estimated $15 billion in annual retail sales. It comprises a blend of large chains, regional entities, and independent operators, with around 70% being independent businesses.
Services aren’t limited to mere washing; many businesses also offer detailing, waxing, and oil changes. In fact, washing and cleaning make up 84.2% of total sales.
The industry experiences seasonal shifts, with business booming in spring and summer and slowing in autumn and winter. Despite seasonality and competition, the sector, valued at $15.21 billion in 2022, is expected to grow at a 5.7% CAGR from 2023 to 2030.
How To Start a Car Wash Business
Starting a car wash business can be a great way to generate a steady stream of income, provided you have a solid marketing strategy and cater to the needs of your customers.
Before starting a car wash business, it’s important to determine the type of business that is right for you. This can depend on various factors such as:
- your years of experience in the industry
- the needs of your business
- whether you’re an existing owner looking to expand or a new buyer
Once you’ve determined the type of business you want to start, it’s important to create a business plan. It should include details such as the:
- investment range
- revenue potential
- time to build
- profit potential
It should also outline your marketing strategy and any other relevant details to ensure the success of your business.
You should also consider the cost, including the purchase or lease of a property, equipment, supplies, and employee salaries.
Existing car washes looking to expand should focus on analyzing their current operations and identifying areas for improvement. This can include upgrading equipment, improving customer service, and implementing new marketing strategies to attract more customers.
Operational Considerations
Several operational considerations need to be taken into account, ranging from the number of bays and car wash stations to the amount of water used and the cost of new equipment.
| Operational Considerations | Description |
|---|---|
| Number of Bays/Car Wash Stations | The more bays or stations a car wash has, the more cars it can wash at any given time, increasing revenue and reducing customer wait times. |
| Use of New Equipment | New equipment can improve efficiency and customer satisfaction. However, the cost and benefits need to be evaluated carefully before investment. |
| Gallons of Water Used | Water-efficient equipment and practices can reduce water usage and appeal to environmentally conscious customers. |
| Cost of Labor | Labor regulations and minimum wage laws can impact labor costs, affecting the profitability of the business. Careful consideration is needed when setting prices and making business decisions. |
By carefully considering these factors and making informed decisions, car wash owners can increase the efficiency and profitability of their business.
What About a Car Wash Franchise?
Car wash franchising has become popular for entrepreneurs looking to enter the car wash industry. Franchising provides a way to leverage an established brand, proven business model, and ongoing support from the franchisor. Here are some key points to consider when looking at car wash franchising:
#1. Franchise fees
Franchise fees for car wash franchises can range from a few thousand dollars to hundreds of thousands of dollars. These typically cover the cost of training, site selection, and ongoing support from the franchisor.
#2. Royalty fees
In addition to the franchise fee, most car wash franchises charge ongoing royalty fees. These are typically a percentage of gross sales and are paid regularly.
#3. Site selection
Many car wash franchisors provide assistance with site selection. This can include demographic analysis, traffic studies, and real estate negotiations.
#4. Training
Most car wash franchises provide initial training to franchisees. This can include classroom instruction, on-the-job training, and ongoing support.
#5. Brand recognition
One of the biggest advantages of franchising is the ability to leverage an established brand. Car wash franchises often have a recognizable name and logo, which can help attract customers.
#6. Marketing support
Marketing support can include advertising materials, social media campaigns, and other promotional efforts.
#7. Equipment and supplies
Car wash franchises often provide access to specialized equipment and supplies. This can include high-pressure washers, water treatment systems, and cleaning chemicals.
How To Invest Passively In a Car Wash
If you’re a busy professional like me, aiming to convert active income into passive income, you may want to consider investing passively in a car wash syndication investment.
To learn more about how syndications work, check out this video:
With syndications, the general partners own and manage the asset while we (limited partners) enjoy the benefits without active involvement.
If you’re an accredited investor interested in car wash investments, join our Passive Investors Circle today!
The life cycle of this type of a syndication might look like this:
#1. Acquisition: Projects which need capital are identified by sponsors.
#2. Underwriting: After researching, sponsors document their investment theses, including due diligence and assumptions.
#3. Financing: Investors evaluate the offerings and make an investment decision.
#4. Closing: The offering is closed and will no longer accept new investments.
#5. Asset and portfolio management: An asset management team regularly looks at how the asset is performing and sends quarterly reports.
#6. Disposition: All distributions and principal payments are reconciled by asset managers.
Conclusion
Based on the research, car wash businesses can be profitable, with potential earnings ranging from $50,000 to over $500,000 per year. However, the actual income levels can vary depending on the type of car wash, location, and business model.
Factors such as the cost of equipment, maintenance, and labor can affect the profitability of a car wash business. It’s important to consider these factors when planning to start a car wash business or to improve the profitability of an existing one.
Additionally, providing quality service and creating a positive customer experience is essential to attract and retain customers. Additional services such as detailing, waxing, and interior cleaning can also increase revenue and profitability.
Owning a car wash business can be a promising venture, but it requires careful planning, strategy, and attention to detail to ensure profitability and success.
Frequently Asked Questions
How much does it cost to open a self-service car wash?
The average cost varies and can range from $100,000 to $400,000.
How much does a car wash cost to build?
Generally, a basic self-service car wash can cost around $15,000 to $25,000 per bay. A more advanced automatic car wash can cost around $31,000 to $49,000 per bay.
How much does a self-service car wash make a year?
On average, a self-service car wash can make around $50,000 to $100,000 per year.
What is the profit margin for a car wash business?
The profit margin can vary from 35% to 60% on average.
Is owning a car wash a good investment?
Owning a car wash can be a good investment if done correctly. However, it requires a significant initial capital investment and ongoing maintenance costs. It’s important to conduct thorough research and analysis before investing in a car wash business.
How do you calculate profit on a car wash?
To calculate the profit on a car wash, you need to subtract the total expenses from the total revenue. The total expenses include the cost of equipment, maintenance, supplies, and labor. The total revenue includes the income from the car wash services and any additional revenue streams such as vending machines or detailing services.
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