There’s no question that an automatic carwash represents a significant investment for any dealership. Whether you’re building a new facility, adding a wash to your existing dealership or considering a replacement for your current wash, determining the return on your investment (ROI) is always a key consideration.
It’s not an easy calculation, due to the fact that your return is composed of both hard numbers and intangible factors. My goal is to provide some clarity on both. So, with that in mind, here are some factors to consider when determining which carwash option provides the best ROI.
Your number-one goal is to provide a top-quality wash to help ensure customer satisfaction. Does the wash you are considering use the latest technology? And does the manufacturer invest heavily in product research and development?
Today’s leading carwashes use brushes made of closed molecular foam to buff and shine the vehicle, as opposed to using materials that retain dirt and can cause miniscule scratches. The most advanced equipment also uses sensors to constantly adjust brush pressure to match the surface of the vehicle, minimizing the potential for damage.
In addition, the latest equipment uses much less water than older machines and as little as 0.6 kilowatt hours per car, keeping consumable costs in the range of 28 cents per car.
Service Response Times
Obviously, carwash downtime is a hit to your ROI. You still have all the fixed costs, and then you must pay someone to hand wash the vehicles until the equipment is fixed. Consider whether your equipment supplier has a dedicated service team that can respond within 24 hours — rather than four to five days — to any service request.
Those are the key intangibles. Now, let’s consider some bottom-line numbers. Obviously, there are a wide variety of potential scenarios to consider — whether you are currently hand washing every vehicle, whether you have a wash that requires additional detailing after it’s finished and whether you rent or own the equipment.
Let’s look at the numbers for a move from hand washing to an automatic unit. Assuming you’re paying your porter $10/hour and they are washing four vehicles during that hour, your labor cost is $2.50 per vehicle. That does not include benefits. Hand washing also uses considerably more chemical and water than a modern automatic. Your per-vehicle cost will likely range from $3.50 to $5 per vehicle. A modern, automated wash can wash 30 vehicles per hour using far fewer consumables. At that rate, your total cost per vehicle — including equipment purchase costs — would be roughly 90 cents per vehicle.
If you’re renting, you’ll want to do the math on your agreement to see how the per-vehicle numbers pencil out. And don’t forget the intangibles of technology and service.
There is a final consideration. You have the potential to greatly improve your ROI by converting your wash from a loss leader to a potential profit center — or at the least, a break-even proposition.
Many dealerships are offering their carwash — whether free-standing or housed within the dealership — to the public. Any of the options used by retail carwashes — carwash clubs, monthly passes and a selection of wash levels — can be used to generate revenue at your wash. A retail wash option will also generate additional traffic to your dealership.
Look for a carwash manufacturer who can assist you in setting up and pricing your retail program. Those with retail experience can also provide upsell wash options that can further increase the quality of the finished product and your per-wash margins.
Just remember — when it comes to ROI, all carwashes are not created equal.