In-bay automatic car wash systems are the bread and butter of many self-service operators.
According to recent Auto Laundry News’ research, in-bay sales account for more than 52 percent of operators’ total income. What often prevents this from being even greater is capacity, specifically the need to wash more cars per hour.
For example, average touch-less in-bay systems can wash between eight and 15 cars per hour, with the fastest processing up to 20. Friction in-bays range between 10 and 15 cars per hour and 20 for auto dealers and commercial units (three-minute wash).
According to ALN surveys, in-bay sales volumes have been trending at around 18,000 to 20,000 cars per year. If an operator requires more, they will need to increase production capacity.
Of those who choose to do so, 70 percent add a second touchless in-bay. This requires either cannibalizing one of the spray bays and making building modifications or adding a new structure to the existing site layout to create an additional wash bay. Another option would be to convert an in-bay into a mini-tunnel or a short conveyor capable of washing up to 50 cars per hour.
Car wash conversions are essentially retrofit projects that combine mechanical engineering, industrial controls, automation, and civil work. The exact scale and scope of the project will depend on the integrity of the existing building, the car wash equipment, and whether the current system is touch-less or friction-based.
The Right Fit?
Aside from the engineering challenges, operators must determine if the local market can support the higher throughput that a conversion provides.
The need for a conversion can be determined qualitatively and characterized by long average waiting times and frequent balking and drive-offs. The need can be determined quantitatively with business models that equipment suppliers leverage to prepare estimates for new sites. However, these models do not provide an estimate of the total, serviceable, or obtainable market that is required to reach an opinion on market saturation.
Market area analysis is required to determine if the demand/supply balance in the trade area is favorable. In other words, is there enough unmet demand to support the conversion?
After all, conversion represents a strategic market decision that reshapes the in-bay operator’s business model by altering its target market, pricing structure, staffing model, and overall site economics.
For example, the mini tunnel’s proposition is to deliver the speed, quality, and consistency of a full-sized express exterior conveyor in a compact package. While the process helps blur the distinction between DIY and DIFM, the operator must still overcome customers’ potential hesitance about using a conveyor versus a gantry.
Conversely, the operator stands to gain from an efficient operation with lower capital and operating costs and the potential for recurring revenue from wash plan sales.
The new wash will attract old and new folks who value convenience, speed, premium services (waxes, free vacuums), and subscription memberships. Typically, this will require different pricing and shifting from low-price, pay-per-use (transactional customers) to premium pricing, tiered service packages, and monthly memberships (non-transactional customers).
A conversion may increase the need for a full-time employee or a site manager, more frequent housekeeping, open/closing duties, and maintenance. And finally, conversion affects factors such as capital expenditure, maintenance costs, labor expenses, utility consumption, and long-term profitability.
A mini tunnel conveyor is 40’ to 60’ in length with five to seven brushes, tire brush, high-pressure wheels, wax/rinse arches, and tire shiner. The conveyor can be an over/under chain, surface mount, single belt, or dual belt.
Swapping the in-bay with the mini-tunnel equipment without modifying the building’s exterior dimensions is the best way to obtain approvals from planning and zoning in a timely and economic manner. Otherwise, a conditional use permit may be required.
Planning and zoning departments usually focus on traffic, queuing capacity, parking, environmental impacts, compatibility with surrounding land uses, and standard building codes. General planning requirements include a revised site plan showing traffic circulation and vehicle stacking; architectural/civil plans for building modifications, drainage, and utilities; and mechanical, electrical, and plumbing plans for the new equipment.
Some municipalities will require a traffic study if vehicle volumes are expected to increase, as well as an environmental study (i.e., wastewater, stormwater, and water reuse).
Costs
Extensive plans drive up start-up expenses. For example, the difference in cost between an over/under chain conveyor and a dual belt model is measured in tens of thousands of dollars. Likewise, if a wash plan is offered, the wash needs remote vehicle identification, state-of-the-art pay stations, mobile payment, and someone to sell memberships.
Shown above is an example of start-up expenses for an in-bay to mini-tunnel conversion. Ten years ago, the cost for a similar installation was $600,000. These expenses may be lower if the project can utilize existing energy, water, and sewer infrastructure, and portions of building, foundation, parking, and site improvements.
Determining whether the project makes financial sense requires a pro forma site analysis or feasibility study (benefit/cost), which is beyond the scope of this article. However, as with any new project, it’s advisable to begin with a sanity test. One metric to determine economic feasibility is debt service coverage ratio (DSCR).
DSCR = NOI / annual debt service. DSCR should be equal to or greater than 1.5.
This normally provides sufficient evidence to conclude that the project has practical potential.
Bob is an industry consultant with more than 25 years of experience and is a former operator of car wash, oil change, and detail businesses. He can be reached at (727) 723-9474 or bobr427@protonmail.com.