In his “Finishing Line” column this month, Robert Roman makes a statement that most operators hold as true: “The car wash industry is literally fed by vehicle sales from new- and used-car dealerships.” I was wholly unaware, however, of the staggering number of car washes performed by or at the dealerships. Bob crunches the numbers, which show that even as their salesmen shepherd new potential car wash customers onto the streets, the dealerships present competitive challenges.
The recently released Global Auto Report from Canada’s Scotiabank provides an inkling as to where the auto industry is heading. That the industry in the United States has largely recovered from the dark days of 2008/2009 is not in dispute. Indeed, the report expects rising vehicle production to add 0.7 percentage points to economic growth in the United States in this second quarter — the healthiest contribution in two years. Production for the quarter is scheduled to reach an annualized 16.9 million units, which, if realized, would record a level not seen since mid-2002.
Used-car sales are not being left behind. According to ADESA Analytical Services’ analysis of the used vehicle market, wholesale prices strengthened in March compared to both seasonal and year-over-year levels. Prices remained at high levels in April, reflecting strong demand particularly for late-model used vehicles eligible for certified pre-owned status. Further, retail used-vehicle sales rebounded strongly in March, which contributed to overall higher prices.
Scotiabank’s report notes that new passenger vehicle sales in North America reflect the rising popularity of crossover utility vehicles (CUVs), a category that captured a record 28 percent of the U.S. market in February, up from 25.5 percent for the whole of 2013 and 24 percent in 2012. Canadians are even more enamored with these vehicles, making them their choice in a third of all purchases. As with sales in general, the used-car market mirrors the preferences of its new-car counterpart: ADESA reports that wholesale prices for pickups and SUVs recorded particularly strong increases in March, while midsize and mini SUVs had the strongest month-over-month and year-over-year price increases in April.
The report from Scotiabank covers more than North America; it is, after all, a Global Auto Report. With the International Carwash Association embarking on a foreign adventure — hosting The Car Wash Show Europe in Amsterdam in October 2015 — a peek at the auto market beyond our borders seems in order. According to the report, global vehicle sales reached record levels in February with a 7 percent increase year over year. If you want to operate in the hottest market, China is the place to be where sales volumes soared 22 percent year over year. Vehicle assembly capacity in China is already more than double the North American total of nearly 18 million units, the report says, and will jump to more than 40 million units by 2015.
March was the seventh consecutive month of growth (9.3 percent over March 2013) for the European car market, according to JATO Dynamics, an automotive data provider. Of the 30 sub markets studied, 24 posted year over year increases for the first quarter of 2014. Among the markets that shrank: the Netherlands where sales retreated 7 percent, the reversal being attributed to a tax change that took effect at the start of 2014.