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Are you looking to start your own car wash business? You might be wondering how much money you can make by owning a car wash. In other words, how profitable can a car wash be?
Car wash businesses can be very profitable businesses if run correctly.
In this article we’ll go through how car wash actually make money. Also, we’ll look into what are the key startup and ongoing expenses you’ll have to incur. Finally we’ll see how profitable a typical car wash can be. Let’s dive in!
For more information on car wash businesses, make sure to read our guides below: How To Start a Car Wash: Complete Guide How Much Does It Cost To Start a Car Wash Business? How To Build a Financial Model For a Car Wash? 6 Strategies To Increase Car Wash Sales & Profits
What Are The Different Types Of Car Wash?
In these fast-paced times when car owners barely have time to self-clean their cars, owning a Carwash business is a promising investment. Are you dreaming of owning a carwash in your neighborhood? You may be wondering how carwash owners make owning a carwash.
The obvious answer is that carwash owners make money by offering various carwash types. Therefore, car owners choose the carwash type that fits their needs and budget.
Here are some carwash revenue streams to tap more money from car owners.
Self Service car wash
The self-service car wash is where the car owners drive into your carwash and opt to clean the vehicle rather than your staff. Depending on the facilities used, the average cost for a self-service car wash is between $7 and $15.
The Automated Carwash
The average cost for an automated car wash service is often lower compared to the average cost of full-service, manual hand, and touchless car wash types. The regular automated car wash price falls between $10 and $20 for a simple exterior wash.
The touchless carwash service compares to the automated one just that it uses a high-pressure jet and stronger detergents for washing the vehicle. Unlike the automatic car wash, the touchless car wash involves less chances of damaging the vehicle’s paint.
The average price for a touchless carwash is between $10 and $30.
Manual Hand Car Wash
The manual hand car wash costs much more than the automated and touchless carwash type. The average price for the hand car wash is between $20 and $30, depending on the locality and the vehicle type.
Compared to the drive-thru carwash, the manual carwash takes more time but protects the vehicle from scratches and swirl marks caused by the high-pressure carwash jet.
Full-Service Car Wash
The full-service car wash takes care of the entire vehicle, so the amount is way higher than the simple body wash. Services of the full-service car detailing may include engine wash, under wash, and interior detailing.
The average price for a full-service carwash is between $150 and $200.
How Much Does It Cost To Start A Car Wash?
The costs involved in starting a car wash business depend on the level you plan to operate.
For example, the equipment of the most advanced car wash type (touchless washing) will typically cost anywhere from $20,000 to $100,000. A car wash startup will require a considerable upfront investment. The upfront costs shall be:
Building the carwash bay
Once you have rented or bought, the following item is building the carwash bay. Typically, you will need to take care of landscaping, lay a stable foundation and construct the carwash bay.
Expect to invest approximately $42,000 to construct a decent carwash bay.
Carwash licenses and permits
You must have a carwash license to offer vehicle cleaning services such as washing, detailing, drying, polishing, vacuuming, and other cosmetic care of vehicles. You can apply for carwash permits and licenses online. The average cost of a carwash license in New York City is $550.
In addition to building the carwash bay, you will need to pay for the equipment as well. The average cost of carwash equipment depends on the carwash services you intend to offer. Typically, the cost for a self-service carwash bay is between $8,000 and $10,000. For an automatic carwash bay, equipment costs range between $31,000 and $100,000.
How Much Does It Cost To Operate A Car Wash?
In addition to the one-off startup costs, you must also consider the total recurring cost of running a car wash business. The expenses vary depending on the number of cars you wash per month and your services. Here is a brief overview of the carwash running costs to expect.
Salaries & commissions
You can offer carwash attendants a monthly salary or a commission depending on the number of vehicles they clean. As per Indeed.com the average salary for a car wash attendant in the United States was $15.38 per hour.
Water and electricity account for one of the most important expense for car wash businesses. Water especially, which depends on the type of car wash you are operating. For example:
- A high-volume car wash with 100 cars a day would consume approximately 105,000 gallons a month which would cost approximately $1,000 a month (assuming $10 per 1,000 gallons)
- An automatic touchless car wash with 100 cars a day would use in comparison 210,000 gallons a month, costing approximately $2,000 a month in water expenses
As you can see, the monthly expenses on water can vary significantly depending on the volume, the type of car wash and the price per gallon you are paying.
Make sure to budget accordingly when you set up the prices customers will pay.
The typical car wash lots are at least 5,000 to 10,000 square feet. Depending on the location and size, renting the carwash lot ranges between $10,000 to $50,000 per month.
You will need to spend some money in marketing and advertising. Car wash are local businesses, so it will mostly be offline marketing expenses (vs. online marketing) which can include billboards, posters, partnerships with companies, radio ads, etc.
Finally, you will need a monthly budget to finance soaps, sponges, dryers, brushes and other car wash supplies. The typical expense on the car wash supplies ranges between $1,000 to $5,000 per month, depending on the number of vehicles you will be cleaning.
How Profitable Is A Car Wash?
Based on our own analysis, car wash businesses can reach profit margins of around 10-20%. See below an illustrative cost breakdown of a car wash business. Unsurprisingly, rent, salaries and initial capex represent ~90% of total expenses.
The expenses, expressed as a % of revenue, can be divided between:
- Rent (30-40%) depending on the location and surface. Prime locations will likely spend 40% or more whilst tier 2 locations spend 30% or less
- Salaries (25-35%). Salaries vary depending on the type of car wash you offer (full service will require more manpower than self-service car wash businesses for example)
- Marketing (5%): mostly offline marketing (e.g. partnerships, billboards, etc.)
- Operations and other (10-15%): includes supplies (sponges, dryers, etc.), janitorial services, maintenance, etc.
- Capex: these are capital investments incurred at the start of operations (e.g. refurbishment of the building, equipment, etc.). Although significant, the amount varies a lot depending on the type of car wash (see more on startup costs at the beginning of this article).