Even though a car wash can be a very profitable business and generate up to $900,000 annually, starting one needs extensive study, a significant upfront investment, and a lot of effort. It doesn’t matter if you already own the property or not, these car wash startup costs depend on the kind and size of car wash you choose to construct.
Considering that it can take six months to build a car wash business, you will need money to cover overhead costs during this time as well as other car wash business expenses.
There are more than 58,000 car wash & auto detailing businesses in the US alone. The existing car wash industry comes in a variety of models, from passive ones with no staff to full-service, expensive models.
Do you intend to launch your own car wash business? In your car wash business plan, be sure to take into account the overall cost and all applicable charges to open and operate a car wash. These can vary from leasing fees to equipment and staff costs.
We’ll go over every expense you’ll have to make to launch your own car wash business in this article. We’ll also take a look at the usual car wash’s break-even point in the last section.
Essential car wash startup costs
Depending on the scale you intend to operate at, starting a car wash involves a certain amount of expense. Depending on the style of car wash you operate, initial costs might range from $50,000 to $150,000. That is if you choose to rent rather than own the property and the structure.
A brand-new full-service car wash industry needs to be built from the ground up, which can be more expensive and time-consuming than most people think.
A basic site will cost roughly $700,000 to build and will cost between $400,000 and $450,000 in equipment expenditures for a full service car wash with one automatic in-bay and three self-serve bays.
The price of the facility, the equipment, and the lot all go into the car wash cost. For the development of automatic car washes, plan on spending about $42,000 per bay.
These figures cover various topics, such as plumbing, cabling, installations, soaps, conditioners, and more. Essentially all that you will require to start trading on the day you open.
The above-mentioned startup fees for a new car wash business may seem a little intimidating to individuals who are unfamiliar with the sector. So from where are all these other expenses originating?
The categories mentioned below, which we have included in our car wash pro forma template, can be used to break down the startup costs for new car wash owners:
- Water Treatment System
- Equipment for Tunnels
- Vacuum system
- Site preparation
What are the costs associated with the various business models for car washes?
There are three main car wash business models – Tunnel car wash, In-bay automatic car wash, and Self-serve bay car wash.
Tunnel car wash
A driver can pull onto a track at a tunnel car wash, where equipment will carry the automobile through the tunnel while cleaning and drying it. The three car wash designs will have different initial costs, but a tunnel car wash will probably have the best capacity and potential for revenue.
Car Wash Advisory estimates that the launch costs for a tunnel car wash can be anywhere between $2.5 million and $7 million.
In-bay automatic car wash
A car wash that is In-Bay Automatic (IBA) enables you to drive in, park, and have the car wash equipment move around the car as it is being washed. The benefit is that the client can continue to use the vehicle without having to wash it by hand.
For the customer, the automatic car wash is also going to be quicker. In-bay automatic car washes are frequently seen inside gas stations or businesses that provide oil changes, but they can also be run independently as a car wash.
According to ISS, you should budget at least $250,000 per bay for an in-bay automatic car wash. As a minimum launch cost, they project $150,000 for equipment and $100,000 for a structure.
Self-serve bay car wash
A self-serve bay car wash is only an open bay where you may pull in, pay for the kind of wash you want or the length of time you require in the bay, and then use the equipment provided, such as a brush, vacuum and sprayer, to clean your vehicle by yourself.
This is typically the least expensive car wash choice for a client. Comparing this model to automatic or tunnel-based car washes, the setup and operational costs for this type will be the lowest.
According to ISS, the equipment costs for a self-service car wash range from $15,000 to $25,000 per bay, $25,000 for the most basic building structures and the cost for land.
Some additional aspects to think about
Car wash bays
The next item to think about is creating the carwash bay after renting or purchasing a property. Usually, you have to build the carwash bay, establish a solid foundation, and take care of the landscaping. Building a nice carwash facility will cost you about $42,000.
Licenses and permits
For services including washing, cleaning, vacuuming, polishing, drying, and other cosmetic automobile care, you need a carwash license. Permits and licenses for carwashes are available online. In New York City, for example, a license for a carwash typically costs $550.
Car wash equipment
You will have to spend money on all the necessary equipment in addition to establishing the carwash facility. The type of carwash services you plan to provide will determine the average cost of the car washing equipment.
A self-service car wash bay typically costs between $8,000 and $10,000. Equipment prices for an automated car wash bay range from $31,000 to $100,000.
Where to Purchase a Car Wash Company
Fortunately, there are many readily accessible and for-sale existing car wash businesses.
They have a variety of wash businesses available, including semi-truck wash businesses, automatic tunnel washes, self-wash, and everything in between.
How to Finance the Purchase of a Car Wash
Once you’ve found a car wash that piques your interest, you’ll need to figure out how to pay for it. An SBA business loan is the funding option I choose. You can obtain up to $5 million in credit through the SBA 7a loan program in order to buy a car wash company.
Expect to put down 10% of the buying price for the venture, either from your own money or from investors you are bringing in.
Dultmeier asserts that a single-bay self-serve car wash requires a population between 1,000 and 1,500 people to operate. They calculate that each bay in a self-serve car wash can bring in about $1,000 to $1,500 per month. The US car wash sector generates $14.67 billion in sales yearly, according to Grandview Research.
With 332 million people living in the US, this translates to an annual cost of $43 for car washes for the average citizen. Based on those expenditures per person, the Dultmeier estimate of about $1 per person per month for a self-service car wash appears reasonable.
Approximately $139,000 is the annual revenue generated by the typical in-bay automatic vehicle wash, according to JBS Industries. Because it can pay more and uses up less time per wash, an in-bay automatic car wash has a far better income potential than a self-service car wash.
According to JBS Industries, a tunnel car wash generates $685,000. Given that a tunnel car wash charges an average of about $15 every car wash, it can produce a substantially larger annual income.
A subscription program with unlimited washes is common at contemporary tunnel car washes.
If your car wash offers more than one membership level, you can specify the percentage of active consumers you can convert into unrestricted wash members and split among the various membership levels.
Marketing and advertising
Spending money on marketing and advertising will be necessary. Car washes are neighborhood businesses. Their marketing expenses will primarily be offline (as opposed to online) and may involve things like billboards, posters, collaborations with other car wash businesses, radio commercials, etc.
You will also need a monthly budget to fund dryers, sponges, brushes, soaps, and other car wash materials. Depending on how many vehicles you’ll be washing, the average monthly cost for car wash materials ranges from $1,000 to $5,000.
FAQ about car wash startup costs
How much does it cost to start a car wash business?
Depending on the location and type of car wash you wish to operate, starting a car wash can be expensive.
A basic self-serve car wash typically has beginning costs between $10,000 and $50,000, however, a fully automated vehicle wash may cost upwards of $500,000 or more.
What are the different types of car wash businesses and how do their startup costs differ?
Self-serve, automatic, and full-service car washes are among the several kinds of car wash businesses. The initial costs for self-serve car washes are the lowest, while those for full-service car washes are the highest. Automated vehicle washes usually fall in the middle.
What are the initial expenses involved in starting a car wash business?
The cost of the building, the equipment, the permissions and licenses, as well as the costs of marketing and advertising, are the initial costs associated with starting a car wash business. Also, you might have to pay for expert services like legal or accountancy fees.
How much does it cost to purchase equipment for a car wash business?
Depending on the kind of car wash you wish to run, the equipment cost for a business can change. While a fully automated car wash can cost hundreds of thousands of dollars, a basic self-serve car wash may just need a few thousand dollars worth of equipment.
How much does it cost to lease or purchase a property for a car wash business?
Depending on the location and size of the property, leasing or buying a property for a car wash business can cost different amounts. While buying a home could demand a down payment and a mortgage, renting a property might require a monthly rent payment.
What are the ongoing expenses associated with running a car wash business?
The cost of electricity, maintenance and repairs, equipment upgrades, personnel pay, insurance, and marketing and advertising costs are among the recurring costs related to operating a car wash business.
Are there any regulatory or licensing costs associated with starting a car wash business?
Certainly, beginning a car wash business involves expenses for licensing and compliance with regulations. This could include getting a business license as well as getting permission to dispose of waste or discharge water.
What are the staffing costs associated with running a car wash business?
Salaries, benefits, and payroll taxes are included in the staffing expenses related to operating a car wash service. The size and type of car wash you intend to run will determine how many personnel are needed.
Are there any marketing or advertising costs associated with starting a car wash business?
Undoubtedly, there are expenses related to marketing and promotion when beginning a car wash business. This can involve making a website, publishing marketing materials, and placing ads in regional publications.
What kind of insurance coverage is required for a car wash business, and how much does it cost?
General liability, property insurance, workers’ compensation, and commercial auto insurance may all be available for a car wash business. The price of insurance will change depending on the size, type, and level of protection needed for the car wash you intend to operate.
Conclusion on these car wash startup costs
From a purely monetary perspective, it is obvious that a tunnel car wash model will be the most successful car wash business strategy.
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