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 State of the Industry

by David DuGoff of Mid Atlantic Car Wash
Association
reprinted with permission of Modern Car Care

Politically, 2006 has been a fairly calm year for the Mid-Atlantic region.  The spring was very dry, and fears of drought were rising.  However, torrential rains in June soaked those concerns.  Charlottesville, Virginia (the home of car wash closings in 2002) is under new political leadership, more enlightened leadership at that.  A new drought plan is under discussion which would treat all commercial water users the same, even car washes.  This makes us feel very positive about our association, because even though we were badly beaten up in 2002, we seem have won the long term public opinion battle.  This is really a situation were no news, is very good news indeed

The relative calm, has given MCA the opportunity to focus on providing services to our members.

We are expanding the member benefits that we offer.  In addition to insurance and credit card processing, long popular with MCA members, we have added the following discount and/or specialized services: office supplies, Web site design, print publication design, accounting services, small business support services, human relations information, and more.
We are also looking for more interesting locations for member meetings.  In the past we have found very nice hotels with very good food to host our meetings.  Recently, we have found some more exotic locations, like the Collector’s Car Corral in Baltimore, Maryland where we met an entrepreneur who has turned a warehouse into a secure place to store 70 or so rare cars.  Some of our members brought their restored cars to the meeting as well.
In 2006, we launched our Trendsetter Awards, recognizing individuals and products for leading the way in product and service innovation.

January and February had very light snow fall, even for our region.  January was unseasonably warm.  It was very disappointing.  The spring pollen season was pretty, but could have lasted a little longer, if you ask our members.  The summer seemed to be a series of light rains.  September and October were also very wet.  So, basically, the weather has not been very kind to the Mid-Atlantic region this year.  If this is global warming, we are voting for change.

For new washes installations, permitting issues are becoming a bigger and bigger issue.   (As across the country.)  Water tap fees have doubled or tripled. In some cases, the counties have made it all but impossible to apply or get water or sewer.
Carwashes tied in to fueling were negatively impacted by higher gas prices.  Psychologically it was harder for consumers to add on to their already high gas ticket.  Additionally, for some card types, their fuel fill up maxed out the limits allowed by the fuel/POS (often $50 max)

It is clear from our research on trends that many washes in our region are committed to keeping abreast of the constantly improving equipment options, and many of them are upgrading their equipment.
However, in our region most manufacturers are flat or down. Many of the distributors in our region are five years old or less so the history is very short for growth. In some cases there are more sales but they are smaller. Not as many large sites.  New opportunities arise, such as convenience stores that are adding car washes to their facilities.

The major potential issues might include: technology, drought, regulatory issues, consumer, and environmental concerns. Marketing strategies have to include a strong Web presence.
I don't see relief for new installs where permitting is tight - see this as getting worse.  From the manufacturer side, the dramatic increase in steel prices has been a huge hit with unknown future increases.  The fuel prices increased their freight costs dramatically - hopefully we'll see the lower price levels maintained.
Only item that I can find that affects both manufacturers and operators are commodity prices. Fuel and natural gas affect both. Rising steel and copper prices affect the equipment manufacturers which are passed on to the operator.  Soap and wax prices are rising faster than the rate of inflation due to the commodities used in making, warehousing and shipping soap. All of this eventually gets passed on to the operator. The same operator who has been trying to market car washes to a consumer paying $3.00 for gasoline.  

It appears that the car-care industry is thriving in the Mid-Atlantic area. New washes are continually opening, but the demand seems sufficient to keep all doing well. More and more, washes are installing the latest technology, including data capture, glass walls, reclaim systems, and hybrid washes. Individual wash owners are using their own computer based systems to improve management. More and more washes are using the Web as a marketing vehicle. There is a strong collegial relationship among the MCA members, including a willingness to share ideas.

The individual operators will see increased competition from larger retailers and increasingly popular lower-priced models (i.e. the express tunnel craze).  The successful operator will set him/herself apart by understanding their consumer and marketing to their needs.

There is still a strong need for the regional trade associations. We may need to be prepared for slow growth. New sites are going to be harder to find and develop but not impossible.  We need to move into a new century concerning signs and car wash marketing.

 

 
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