Starting a car wash business can be a tricky task and requires some research into your area to see whether the local demographic wants automated car washes or only wants hand car washing.
If you want to be very hands-off and attempt to automate the business, an automatic carwash will be required. However, many larger cities don’t have room for a sizeable automated carwash, and many of the existing car washes are dying out in place of hand car washing businesses.
In the US, it’s estimated that consumers spend $5.8 billion every year on washing their cars and that a successful automated car wash will service 20,000 vehicles every year, averaging a profit of $9.56 per car.
What Are The Steps To Start A Carwash Business?
Research Your Local Market
Before you spend any money or additional time, you need to research your local market to see if a carwash business is feasible in the location you want to operate one.
It will help to expand your research to your city’s general or more significant area. For example, it’s possible that a city doesn’t have car washes, but the suburbs surrounding it, where most people live, do.
● Are there existing carwashes, either automated or handwashing?
● Have there historically been carwashes that haven’t survived?
● How many cars are coming and going from the city? Is this increasing or decreasing? Google can introduce you to a cities annual transport survey or other information related to this.
If there are existing carwashes in your general area, go and check them out, see what they charge, what services they offer, and what type of carwash they use.
Historically there were more and even self-service car washes, but these have gone out of business due to high costs and low usage. An example of this is my city; downtown, only hand carwash businesses operate. If you go further out, you find one in-bay touchless carwash at a gas station, then a little further out, you find a conveyorized tunnel car wash.
Determine What Type Of Car Wash
There are several different options when operating a carwash, and you’ll need to decide early on what type you’re operating as this can impact costs, location, and permits.
Full-Service Car Washes
A full-service car wash will involve manual washing and detailing by staff, the startup costs can be much lower, and you can operate in more locations, including downtown while people are working.
Self Service Car Washes
Self-service car washes provide a bay for owners to park and use a pressure washing wand to clean their cars. These are very hands-off and mainly coin-operated based on time.
Conveyor Tunnel Car Washes
Drivers will pull up to a long tunnel car wash, pay, and then be carried along your car wash tunnel as it cleans and dries. It’s possible to have multiple cars on the conveyer at once, which means it can wash much faster; however it takes up more space and may have a higher startup cost.
Initial estimated costs just for the equipment and construction are:
Automatic Car Wash Equipment - $250,000+
Car Wash Construction - $200,000+
In-Bay Automatic Car Washes
In-bay car washes are only big enough to have one car inside at a time; drivers will drive in and spend 5-6 minutes having their car washed and dried. The space taken is much lower, but it takes longer to process a lot of vehicles so that wait times can be high, and you lose customers that don’t want to wait.
Initial costs just for the equipment and construction are:
Touchless Car Washing Equipment - $250,000+
Determine Car Wash Profit Margins
If you’ve researched a good location and picked out the type of car wash you’ll operate, then it’s crucial to know your startup costs, operating costs, and the potential car wash profit margins you will be operating with.
You’ll need to research where to get, how much all of your equipment will cost you on startup, and monthly costs. You also need to factor in maintenance costs and replacement costs. Most automated car washes will need significant repairs or replacement after ten years.
A standard well-run car wash business expects that you will service 20,000 cars every year, with a profit of $9.56 per car, which gives you $191,200 every year. So it could take you several years to become profitable, and that doesn’t account for variable or surprise costs or significant issues like a pandemic that stops people from driving their cars.
In addition, you can increase profits with value-added services, such as coin-operated vacuums, detailing services, and different levels of car wash from primary to advanced.
Basic Monthly Operating Costs
The costs for operating a tunnel or in-bay car wash are similar; the startup costs are significantly different.
Rent - $10,000 to $30,000+
Labor- $5,000 to $15,000+
Water - $3,000+
Supplies - $3,000+
Electricity - $3,000+
Your costs may differ, especially if you’re adding other services or features to your car wash business, such as details, which will require higher labor costs from more employees working on cars.
Get Your Paperwork Done & Business Approved
There is a range of requirements to operate a carwash business, and which city or county you operate will determine the complete requirements; in general, you will need:
● Get a business license
● Register with the IRS
● Find a property to rent or buy and ensure it’s zoned for your business type.
● Verify that your location has appropriate utility usage; you’ll be using a lot of water.
● Get appropriate insurance for a car wash.
● You must get a wastewater permit; details can be found here.
Once all of your paperwork is done and approved, you’ve purchased or rented a location and built your carwash; then, it’s time to open up and start getting cars washed.
There is a lot of money in the car washing industry; however, more car washes are opening up every day, and even some that are operating in smaller locations like business parking garages are taking away some of the bigger spenders.
It’s crucial to find additional ways to upsell and increase your car wash profit margins for the limited lifetime of your car wash equipment.