Industry Trends of 2007

Trends of the Self Service and In-bay Automatic market for 2007-2008

I am thrilled and excited about the recent trends in the car care industry and I eagerly look forward to what 2008 has to bring. This report will examine the past and future for a wide assortment of areas within the car are industry. Each of these areas of the industry deserves it’s own in-depth analysis but for the sake of this report we will only discuss the top trends within each area.

Trends for Carwash Operators
In the past year I have interviewed car wash operators from all areas of the country hit hard by natural disasters, high costs of living, draughts, and rising prices at the pump. I spoke with operators that are claiming huge losses in their business, yet on the other side of town their competitors are claiming that they are seeing a huge increase in their business. Which side of this equation does your business fall into?

One consistent trend that carries over from year to year is that successful operators have within their power to determine their own success regardless of the hand that was dealt them. In evaluating published studies from the International Carwash Association and the Regional Associations the 2007 data suggests that there are some localized communities that have been hit hard across the board and business owners are taking the brunt of these changes in local economies. But I could not find a trend that supports an overall decline in car washing in the United States, but rather an increase. For years, business owners of car washes with declining revenue have been eager to point fingers at external variables such as gas prices and automotive sales to justify their losses to others and themselves. These variables may have impacted business in past years but recent data suggests that it is no longer the case. As more detailed and comprehensive business comparisons are done it is becoming far more clear that businesses that succeed and business that fail have one very common variable that is within their control and that is their ability to make changes to their own business over time.

What are the consistent trends amongst successful wash businesses in 2007?

Trend #1 - Successful washes update their business to meet consumer buying trends: What successful car wash owners of 2007 have been reporting is that consumers have been changing what they want, how they want it, and how they want to pay for it. This is the number one variable in whether business is good or bad. It comes down to the buying trends of the customers themselves. Successful car wash operators are quick to point out that by making the necessary changes to their own wash business they have been able to capitalize on competitors that have become complacent and fail to keep their appeal with their local customer base. Are you doing what it takes to keep your existing customers or are you doing business the same as always? Try new things and do not be afraid to go outside of your comfort zone.

Trend #2 - Successful washes make investments in new software programs:
Business analysts have been able to identify that car washes that had made new capitol investments to update their wash in the past two years are now showing positive returns. Survey results from 2007 indicate that 80% of car care operators saw “Real & Immediate” gains from new software purchases according to industry trade publication data. The number one software investment in 2007 for self service and in-bay automatic washes was remote management systems (including video, money tracking, and high-speed credit card clearing) and commercial fleet management software. Wash operators have found that in the past few years there are a wide variety of new software programs that save operators time and allow them to make more money. For most car wash operators their time IS money. If a software program can free them up to focus on running their business rather than running around their business it is an easy decision to make. Capitol investments must be made on a regular basis to remain competitive.

Trend #3 - Successful washes learn to tell the difference between marketing and discounting:
Successful car wash owners are taking business away from complacent car wash operators through superior marketing, not slashing prices. A successful west coast operator that wished to remain anonymous commented that his competitors have been slashing their own wrists by slashing their prices in an effort to increase business and bring old customers back. Running razor thin margins not only devalues your product but it also hurts your bottom line since price is such a low consideration to a modern wash customer. The successful wash operator explained that by providing additional value to his location by offering loyalty incentive programs, commercial business opportunities, and a well-lit clean location he was able to come out on top. Within every community there are only a finite number of customers that will wash their vehicles because they drive by your location as part of their daily routine. The challenge for wash operators is how to get new customers that normally do not drive by your location to give your wash a try. This is where wash operators that market their wash find increased traffic through fundraisers, charity washes, gift card sales, and becoming involved in their community. The wash business that supports it’s community will be supported by it’s community in return.

Trends in Consumer Spending Habits

How do customers decide where they wash?
At the 2007 Petroleum Marketeers Association Expo an amazing two-year study was discussed in one of the education seminars on car washing. The study was conducted in the midwest and set out to determine what factors play into the decision making process for consumers that want to wash their vehicle. When consumers choose where to wash they make their decision based on the four following criterion in the following order.

  1. Convenience

  2. Speed

  3. Quality

  4. Price

Convenience: In our consumer driven economy it should be no surprise that the number one concern of a wash customer is convenience. Consumers ask themselves many questions before the commit to their decision. Is it easy to get in and out of the facility? Will the wash accept my credit card? Will they give me a receipt if I use my credit card? Does the wash offer a fleet program for business customers? Are the wash packages easy to figure out? Is the location easy to get to? Are there easy access vacuums on the lot and do they require using bill breakers or will they take credit card payment as well?

Speed: Can you get in and out of the wash quickly? Does the wash have high-speed credit card payment? Is there any inefficient downtime where customers have to “hurry up and wait”? Are customers forced to run back and forth between changers or centralized activation systems causing back-ups? In-bay automatics that require customers to go inside a building to purchase a wash code were among the highest noted instances of customers that chose not to wash again due to issues of speed of service. Those customers interviewed said that had cash or credit card payment acceptance been available at the entry station they would wash more often at the location.

Quality: Most wash operators are very surprised that customers are more concerned about their own personal needs over the quality of the service provided. It goes to reinforce that customers will always pay for a better quality service, especially if the higher quality comes with factors of convenience and speed. Issues of quality are easily resolved in the in-bay automatic and self service business since a call to a chemical specialist can provide you with ways in which to improve the cleaning power of your wash equipment. Another way wash operators have increased quality for self-service markets is to properly convey the message to customers such as, “Use pre-soak for best results” through signage and onsite instruction for new customers.

Consumers will always ask whether the price for a service is reasonable or not based on comparisons between multiple washes. What many wash owners are figuring out is that pricing is more art than science in many cases. What works for one wash location may not work for another. Realize that IF you meet a customers needs for convenience, speed, and quality that you can charge more even if your competitor offers the same wash service!

Trends in Equipment and Technology

The past few years the car washing industry has seen a surge in new and innovative technologies. In past years the focus of car care technology has focused on the business of pumping soap and water better and more efficiently. Development of new and revolutionary technologies has slowed in regards to the large stainless steel behemoths that tower over the visitors of trade show exhibit halls. Although every year we see amazing advances and engineering in car washing washing equipment it is by no means revolutionary in comparison to other applications of new technology. The past few years has seen many new technology-driven companies and products. These new products and technologies will make a lasting impression on the modern carwash of the future.

Trend #1 - Software Development: Wash equipment manufacturers continue to find new applications for computer-driven systems as wash owners and wash customers create these demands. It should be no surprise that like your car, small computers go into every new piece of complex wash equipment. There are now as many software engineers on staff as there are mechanical engineers at many of the major wash equipment manufactures throughout the world.

Trend #2 - Integration of the Internet into Wash Operations and Marketing:
The use of the Internet has completely changed the business world. The car care industry is no exception as to how influential the Internet has been in recent years. Thousands of “connected” wash operators could not imagine what it would be like without their digital camera systems accessible from their home or office. Business owners now spend less time on the phone when they give their customers the ability to sign up for loyalty promotions and pay their commercial fleet bill from a website. This saves wash operators time that they don’t want to give back now that they have it to spare on other things. Car wash accountants can quickly bring up cash and credit card accounting with the click of a button for greater employee accountability. The list of innovations that takes advantage of an Internet connection grows rapidly within the car care industry benefiting car wash operators, car wash customers, and car wash manufactures alike.

Trend #3 - Credit Card Acceptance: Credit card acceptance is practically a standard feature with every piece of new equipment that already accepts cash these days. There is no denying that consumers want to pay with their credit card; especially younger customers who never carry cash. The market has been saturated with cashless acceptance systems that can be built into new equipment or old. Wash owners that own other businesses understand that you cannot afford to not-accept credit cards. Giving card carrying customers the ability to pay with their plastic is the only way to remain profitable moving forward. Credit card acceptance reduces security risks, increases the dollar per ticket in the bay, reduces employee theft, and empowers your customers by appealing to their needs for convenience and speed at the wash. There are few investments that a wash operator can make that actually makes them more money.

2008 - Are you up to the challenge?
Although the car wash industry is getting competitive these days it should only worry those operators that do not have the desire to build their business through marketing or are unwilling to make the necessary capitol investments to bring their wash operation up to date. The power of the consumer in a service-based industry such as car washing is both exciting and frightening depending on who your talking to. According to the America’s Car Care Business reader survey results, 8 out of every 10 respondents where confident that they will attract new customers in 2008. The real question that should be asked is whether or not your business is in a position to cater to the next generation of consumers getting behind the wheel?
Posted on January 14, 2008 and filed under Industry Talk.