The car wash industry is at a pivotal juncture, experiencing significant shifts that are reshaping its landscape. As consolidation and saturation continue to reshape the industry, understanding these trends is essential for industry stakeholders looking to navigate the evolving market.
By Dr. James H. Davis, Utah State University
The U.S. car wash industry, traditionally a mixture of family-owned and small operations, is undergoing a dramatic makeover. With the market projected to hit a staggering $20.74 billion by 2028, according to Grand View Research, it’s attracting serious attention from private equity firms and national chains looking to expand. Many are seeing a perfect storm of consolidation and market saturation that appear to be reshaping the entire industry landscape. If these perceptions are correct, this transformation isn’t just about more cars getting washed. It may be about a fundamental shift in how the industry operates, raising intriguing questions about market dynamics, technological innovation and the future of small businesses.
While precise industry-wide statistics are challenging to come by, the trends are clear. The International Carwash Association reports steady growth in the number of conveyor car washes across the country. But here’s the kicker — anecdotal evidence suggests the number of unique owners may be decreasing. This apparent contradiction sets the stage for a fascinating exploration of industry dynamics. How many car washes can a single market support? What happens when corporate efficiency meets local business character?
Consolidation: The Rise of Industry Giants
In recent years, the car wash industry has been undergoing a dramatic consolidation wave. Large chains are acquiring smaller, independent operators at an unprecedented rate, resulting in some markets increasingly being dominated by a few key players. This trend is driven by the quest for economies of scale, operational efficiencies and the ability to invest in cutting-edge technology.
For larger chains, consolidation offers numerous advantages, including bulk purchasing power and streamlined operations that enhance overall customer experience. It also enables these giants to offer a wider range of services, from basic washes to premium detailing packages. For independent operators, this consolidation presents both a challenge and an opportunity. Smaller businesses must innovate to stay competitive or consider strategic alliances to ensure long-term viability.
Saturation: Navigating a Crowded Market
Simultaneously, the car wash market is facing saturation, particularly in urban areas where service locations are plentiful. This high density of car wash facilities means that attracting and retaining customers requires more than just offering a wash. Price competition is fierce, and businesses are increasingly focusing on differentiating themselves through enhanced services and unique value propositions.
One effective response to market saturation is the adoption of subscription models, such as monthly memberships or unlimited wash packages. These models not only provide a steady revenue stream but also cater to consumers’ growing preference for convenience and value. Additionally, the integration of eco-friendly practices and technological advancements is becoming a key differentiator for businesses aiming to stand out in a crowded field.
The Intersection of Consolidation and Saturation
The intersection of consolidation and saturation may be creating a complex landscape for the car wash industry. While consolidation may help streamline operations and manage high customer volumes more efficiently, it also raises questions about the future of competition and innovation. For investors and operators, this means adapting strategies to thrive in a market where a few large players dominate, and consumer choice is abundant.
The Road Ahead: Questions That Demand Answers
As the car wash industry evolves, several questions loom large:
1. Most research argues that the car wash industry remains highly fragmented nationally. Where is consolidation and saturation occurring?
2. Are smaller communities/regions being affected?
3. Which markets are experiencing saturation and consolidation? Why?
4. How will market saturation impact profitability across the industry?
5. Can technological innovation continue to drive growth, or will it lead to diminishing returns?
6. How will changing consumer behaviors — like the rise of ridesharing and potentially autonomous vehicles — impact the demand for car washes?
7. Could increased community, state and national regulations reshape the competitive landscape?
8. What strategies will prove most effective for independent operators looking to survive and thrive?
The answers to these questions will provide valuable insights not just for the car wash industry, but for anyone interested in the dynamics of market consolidation, technological disruption and the ongoing tension between local businesses and national chains.
In the high-stakes world of car wash consolidation, the ultimate winners and losers are yet to be determined. As we continue to explore these trends, one thing becomes evident: The ability to adapt and innovate will determine who leads the way in this transforming market.
Join Jim at ROADMAP during Destination 3: PROJECTIONS on Dec. 13, which will be the launchpad for the results of his research commissioned by ICA related to the impacts of consolidation and saturation in the car wash industry. This is the first study of its kind in the industry and includes over a dozen measurement system analyses.
ROADMAP Destination 3: PROJECTIONS
Dr. James Davis, the Vernon M. and MaRee C. Buehler Endowed Professor of Management at Utah State University, is a presenter at ROADMAP during Destination 3: PROJECTIONS on Dec. 13. Davis’ presentation will be:
How Many Is Too Many? The Threat and Reality of Car Wash Growth
For the last two years, Davis has worked on behalf of ICA to study and measure these trends, first based on the concepts outlined in Deans, Kroeger and Zeisel’s seminal Harvard Business Review study “The Consolidation Curve.” Davis has extended his work to now study the impact of saturation, including detailed analysis of more than a dozen markets in the United States. Davis will present his findings for the first time, exclusively at ROADMAP.