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According to the International Carwash Association’s (ICA) Study of Consumer Carwashing Attitudes and Habits, home carwashing has declined from 47.6 percent in 1996, to 44.5 percent in 1999, and to 43 percent in 2002.
When taken in context with socio-economic factors such as age distribution, available vehicles, housing trends and population, the market potential for the carwash industry from this 9.6 percentage change could be significant.
U.S. Census and the carwash inventory
According to the Bureau of the Census, there were approximately 280 million persons, 105 million households and 105 million available vehicles (passenger type) in the United States in the year 2000.
The forecast for the year 2009 places these numbers at 306 million persons, 121 million households and 121 million available vehicles.
By holding constant the change in the attitudes and habits of consumers in terms of carwash used most often, and using the equal-weighted average number of cars washed per year per carwash, we can make a rough estimate of the expected change in the market potential for new carwash sites based on the percentage change in the number of vehicles.
If the economic forecasts remain on target, the demand for additional carwash outlets could expand by as many as 5,434 new units by the year 2009.
There are also other factors that could affect the size and composition of the carwash industry’s inventory.
Income, age and population
According to the ICA’s consumer studies, income and age have an affect on the type of carwash used most often.
For example, home washing in-bay automatics and self-serves tend to be used more often when household income is $20,000 - $60,000 and drops off significantly when household income rises above $60,000.
Full-service and exterior tend to be used most often when household income rises above $75,000.
In terms of age, there is a greater tendency to use home, in-bay automatic and self-service when the head of household is under 30 years old to 49 years old.
Conversely, there is a greater tendency to use full-service and exterior when the head of household is 50 - 60 years and older.
As shown in Table 5 (page 26), the U.S. population is expected to age considerably over the next few years.
By the year 2009, the number of persons between the ages of 50 - 85+ years old is expected to increase both in number (20 million persons or a factor of 1.267) and as a percentage of the total population, with the greatest change occurring with folks who will become 50 - 69 years old.
This change should be of particular interest to carwash operators, since most persons within this age bracket are more likely to use full-service and/or exterior carwashes.
Conversely, the age bracket that is more likely to use home, in-bay automatic and self-service (15 - 49 years old) is expected to decline as a percentage of the total population (51.3 percent to 48.5 percent), and increase by 4.8 million persons or a factor of 1.04.
The demand for new carwash outlets may also be affected by the change in population in different states.
As shown in Table 6 (page 28), there are a number of states that have growth rates that are above and below the national average. Although growth may be viewed as a precursor to new carwash opportunities, the base population must also be considered.
For example, New York is nearly at the bottom of the ladder in terms of growth, but it remains the fourth largest state in terms of total population. As such, New York’s projected low rate of growth will still produce a considerable number of persons.
Nevertheless, states such as Texas and Florida, which rank second and third in terms of total population and boast robust growth rates, should attract a substantial portion of new carwash investment.
Homeownership may also affect the demand for new carwash outlets and their composition.
According to the Bureau of the Census, the rate of homeownership in the U.S. has changed from 62 percent in 1960, to 69 percent in 2004. With the exception of the period of 1980 to 1995, the homeownership rate has risen every year.
This change may be important to carwash operators if one considers the assertion that home washing has declined since 1996, while the rate of homeownership has risen significantly.
For example, many consumers who rent apartments and condos do not have the facilities necessary to clean their vehicles where they live. Arguably, these folks would tend to use a professional carwash to fulfill their car-care needs.
As these folks become new homeowners, they not only have the opportunity to wash at home, which is in decline, they also exhibit the propensity to refinance at some point to pay down other debts, improve their homes or purchase a new vehicle. Folks with new vehicles tend to wash their vehicles more frequently.
The rate of homeownership also tends to increase as one gets older.
For example, the rate of homeownership is 57.4 percent for folks 30 - 34 years old and increases sharply to 83 percent for folks 65 - 74 years old.
According to the ICA’s consumer studies, the use of full-service and exterior carwashes also tends to increase as the head of household becomes older.
This relationship may become more important to some carwash operators since the 77 million baby-boomers (folks born between 1946 and 1964) are approaching the peak homeownership ages of 65 to 75 years old.
Arguably, the purchasing power and buying habits of the baby-boomer crowd should continue to edge up the homeownership rate and tendency to use automatic carwashes most often for many more years.