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Dealership Car Washing - 649 Million Washes Annually, and Counting

By Robert Roman

06/01/14

The car wash industry is literally fed by vehicle sales from new- and used-car dealerships.

New-car dealers sell an average of 726 vehicles a year at an average selling price of $30,659. The desired level of inventory is a 60-day supply so a dealer has 120 new vehicles on the lot plus a selection of pre-owned units.

Dealers write an average of 50 repair orders a day or 14,140 annually. The average customer repair ticket is $241. To service these cars, dealers have an average of 19 service bays and 15 technicians. Average labor rate is $95 an hour. Dealership employees earn an average of $925 a week.

New-car dealers are open an average of 56 hours a week, and 46 percent have weekend hours. Dealers have an average gross profit of 46 percent and net profit of 7.1 percent.

Dealers spend 1 percent of gross sales on marketing or an average of $600 per car. In 2001, 53 percent of marketing was spent on newspaper ads, 20 percent on Internet and TV. Since then, newspaper ads declined to 21 percent and Internet and TV spending increased to 45 percent.

Dealers have a variety of car-care appearance requirements. This includes pre-delivery inspection of new vehicles, reconditioning of pre-owned cars, and maintaining the appearance of showroom vehicles. Inventory must be washed. Cars from the body shop need to be cleaned. Some dealers wash their service-customers’ vehicles, and others will provide free car washing for life.

My experience working with car dealers suggests the average store washes about 37,000 vehicles annually (27,000 customers, 8,000 lot washes). Applied against 17,540 dealerships, this would equal 649 million car washes annually.

At smaller stores, lot washing is usually done by porters and occurs at week’s end so vehicles look good for the weekend. At larger stores, dealers usually subcontract this work to firms in the mobile high-pressure cleaning business.

A mobile contractor is an alternative for dealers because of cost. When labor and supplies are accounted for, in-house maintenance averages about $6 per vehicle whereas contract price is $0.75 to $2 a vehicle. The average is $1 to $1.25 per vehicle.

Car washing at dealerships runs the gamut from simple hand washing to “drive-through” wash rack, to in-bay automatic, to freestanding retail facility.

Shown in Figure 1 is Lokey Mercedes, Clearwater, FL where the wash is located between the new and pre-owned showrooms at the main entrance of the property. Every Saturday is free car wash day for all Lokey customers.

At Coconut Point Ford, Ft. Meyers, FL the dealer centralized operations by building a separate facility, Coconut Auto Spa, next to the new-car lot.

The Spa consists of a four-bay, canopied pre-wash area, automatic car wash, nine-bay service center (pre-delivery inspection, oil change, and detailing), mechanical room, and office and waiting area. Thus, the requirements of the dealership are met and the Spa is also a separate profit center.

The Spa’s full-service car wash prices range from $11.99 for the basic to $34.99 for the ultimate car wash. The Spa does not offer an exterior-only or express wash service.

Prices for a complete detail range from $140 to $180. Prices for exterior and interior detail services range from $40 to 70. The Spa also offers spot paint repair, headlight restoration, clay block treatment, Scotchguard, ozone treatment, and engine cleaning.

 

Bob Roman is president of RJR Enterprises – Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at bob@carwashplan.com.

Figure 1 – In-House Automatic Wash

 

 



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