Automatic, In-Bay, Express, Mini, Conveyor – Let’s Decipher the Mess of Terms
Automatic, In-Bay, Express, Mini, Conveyor – Let’s Decipher the Mess of Terms
The first half of 2024 has brought a major and significant slowdown in carwash M&A, along with a stark decrease in the dispersion of acquiring parties. Transaction count is down ~46% and the number of sites sold and acquired is down nearly 40%, both compared to the first half of 2023. By way of most active acquirers, 2024 posted a large increase in deal concentration. Most notably, during the first half of 2023, the most active acquiror by transaction count was El Car Wash, having been the acquiring group in just 11% of the announced transactions. The first half of 2024 had Whistle Express representing a commanding 43% of deals as the acquiring group. In this industry report, we cover all announced M&A transactions in Q2 and provide a candid overview of market trends.
Terminology in the car wash industry can be confusing, but it should not prevent action or learning. Many terms overlap and are not mutually exclusive. Review the image for a visual understanding of the landscape and terms.
Please refer to the above image throughout your read to have a visual map and understanding of how the entire landscape and its terms fit together.
Hand car washes require no setup or fixed location. These are at home type services, or establishments where the car is completely washed by hand. In a commercial setting, these are most often present in the form of very high end “detail shops”.
The throughput of hand car washes is typically low given its complete dependence on human labor.
The price tag of hand car washes vary the most of any wash type. This is due to the extraordinarily large spectrum which falls under this specific wash type label. Your middle school neighbor knocking on your door asking to wash your car counts, as does a $500 full car detail of your luxury sports car.
Undeniably the absolute lowest in terms of cost to start, hand washes require no actual equipment costs beyond the low variable costs of the soaps, brushes, and products used to perform the wash… and the cost of the human labor of course. Overall, the cost structure of hand wash companies is the lowest and has the highest proportion of variable costs.
Self-Serve car washes are where the customer washes their own vehicle with the provided equipment and bay / location provided. These are often thought of as coin-operated car washes. The equipment provided typically includes a sprayer, brushes, and some form of chemicals.
Self serve car wash volume and throughput is customer dictated. With this car wash model, customers choose how long they want to spend washing their car. That said, in general Self Serve car washes typically have capacity to do roughly 3 to 6 cars an hour per bay (depending on customer preferences and behavior).
Prices vary on self serve car washes given that the customer pays by time spent and can decide how long to spend washing their car. That said, the current industry average price is ~$5 per car.
The cost of buying or building a self-serve car wash varies widely based on location. Of all the wash
types, self serve ranks at the top in terms of the typical proportion of purchase and / or build
cost that is attributed to real estate value. Unlike some of the other wash types, notably tunnel
washes, where the higher equipment costs numbs the cost basis percentage of the land compared to
total project cost, self serves almost always have an abnormally large portion of their entire
project cost basis which is attributable to land.
Buy Cost:
+$50k
Build Cost: $25k - $30k per bay + Land
In-Bay Automatic car washes are typically non-attended (no employees) washes where the customer pulls
into a location and the equipment moves around the car and performs the wash. The customer remains
inside the vehicle during this type of wash.
In the touchless variant, the equipment does not
use friction and rather uses a combination of chemicals and high pressure water to wash the vehicle.
Although touchless washes can technically exist in other structure types (specifically tunnel), it
is extrordinarily rare and therefore fair to say if you are talking about a touchless wash, you are
most likely speaking about an In-Bay Automatic.
Friction IBA’s are the same in the way that
the machinery moves around the vehicle (rather than the car moving through the equipment). The only
difference here is that the wash is performed with friction (brushes, clothes, etc.)
In-Bay Automatic washes typically take between 6 – 10 minutes per car.
The average IBA car wash costs ~$6.50 per wash.
As will become a common trend here, land throws a big unknown variable into determining cost figures.
IBA's are second only to self serves in the way of highest proportion of total project costs being
real estate. That said, below are some general ranges and figures.
Buy
Cost: +$35k - $55k per bay + Land
Build Cost: $70k - $90k per bay +
Land
The most discussed, touted about, and fastest growing segment of the car wash industry is the express wash model. These are tunnel washes which use conveyor or belt equipment to move the vehicle through the machinery throughout the car washing process. Of the tunnel models, expresses are the most automated (and often completely automated). These washes often feature automatic teller / pay machines and very few if any employees present. This type of wash is typically the lowest ticket price of the tunnel car washes. In terms of interior cleaning, many express washes offer free vacuums, but there is no employee on site that will perform any sort of interior clean for the client. If the interior is going to be cleaned at a true express tunnel wash, it will be cleaned by the client.
Express car washes, depending on the setup, can wash anywhere from 60 – +120 cars an hour.
Express washes often offer washes at the $5 ticket price range, with some going as low as $3 for their lowest cost wash package. The industry average ticket price for expresses comes in at around $7 - $9 per car.
Express car wash costs vary greatly. Not only due to real estate, but also due to there being far
more variability in tunnel and site design, extras, and more. Due to such, below are rough cost
figures and there are most certainly outliers to such.
Buy Cost:
+$1.5MM
Build Cost: +$1.5MM + Land
Be sure to check out our more detailed
piece on how much it costs to
build and construct a tunnel car wash for an even more in-depth breakdown of the express
model carwash build costs.
The Flex car wash model sits in between that of Express and Full Service. Flex car washes are tunnel structures that offer the option of express exterior only washes, along with the extra add on offerings similar to that of traditional full serves. Flex washes give customers the option as to what extent and how they want their car cleaned.
Flex car washes are the most interesting in terms of throughput as these washes are based on their ability to throttle on and off customer behavior with variable pricing. Typical throughput varies between 20 – 100 cars per hour.
Flex car washes typically have the most variability in their price tag options of all automatic wash types. This is due to the inherent variability of their core model. They offer some basic wash packages at price tags as low as many express washes, while also offering high end full service price tag options. The average flex wash ticket price ends up being $12 - $15 per car.
Buy Cost: +$1.5MM
Build Cost: +$1.5MM + Land
See a more
detailed breakdown of the cost to
build a tunnel flex-model carwash
Full-Service car washes are on the decline but still exist. FS car washes carry the highest average ticket price and revenue per customer of all automatic wash types. Full-service car washes are tunnel washes where there is also manual labor work extras done after, depending on the wash package purchased by the customer. Full-service car washes are most easily differentiated by their employee count and their price tags. During full service car washes, customers exit their vehicles and the car travels through the tunnel unoccuppied.
The number of cars a full-service wash is able to process is dependent on their ability to process post tunnel customers with extra services. The average washes 10 – 30 cars an hour.
Full service car washes normally have a bottom price tag offering of roughly $15. Their average ticket price is typically $17 - $20 per car.
Buy Cost: +$1.5MM
Build Cost: +$1.5MM + Land
For more
detailed info on the cost to build
a full-service tunnel car wash see our full guide in our Learning Center.
The lines between full service, flex and express have become increasingly blurred over time. It is very rare to see a bonafide full serve with no type of “flex offering”. It is also often hard to draw the line between a flex and an express, especially for first time owners thinking of entering the car wash arena. Definitions change person to person, and I have literally been in the parking lot of the same wash with multiple people from the industry, with one referring to the wash in front of us as an express and the other as a flex. So let’s clear this up.
The truth is that the line is blurred, and believe it or not, there is no strict definition of flex wash in Websters latest dictionary. I choose to draw the line around vacuums. If a car wash allows customers a decision as to who is going to vacuum, it is a flex - plain and simple. Some people will disagree and say the definition hinges on pay station automation, and price tag, but I am an ardent believer that these definitional guides are less reliable and clear cut. So here we go:
Full Service Model: If you want your car vacuumed - You must pay an employee to do it. Some full serve washes now offer exterior only wash packages - this does NOT make them a flex unless they offer the ability for the customer to vacuum themselves. This is a full serve wash with an exterior only offering. It’s still a full service.
Flex Model: You can choose whether you vacuum yourself, or pay someone to vacuum for you The key here is who will be doing the vacuuming - not whether it is paid for. Some express washes have free vacuums, while others have coin operated vacuums for the customer to use. Either way, the key is the vacuum, not the method of or lack thereof payment for the vacuuming.
Express Model: If you vacuum - you have no option but to do it yourself Whether free or coin operated, there is no employee / attendant offering that has someone else (besides your loving passenger) vacuum for you
Before people get too upset or confused, it’s important to frame this in the way of why I choose to strictly define through vacuuming (rather than say pay stations). The entire reason for having the this lingo is to have an easy and meaningful way to group types of washes based on their operations and economics. The largest determinant and difference between one type of wash and another is labor. This changes the type of management, way of management, cost structuring, pricing, etc… Vacuums, and more importantly, whether you force or give optionality as to who performs such, is the most accurate and deterministic proxy into the wash type and therefore labor requirements and operations.
Private equity doesn’t always “work.” Hopefully, this comes as no surprise. Private equity’s involvement in the car wash sector is no exception. The formula that combines outside money, tenured industry experts, and a fitting and applicable industry is far from infallible.
What They Mean for Valuations: Featured in AutoLaundry News
