The express exterior carwash is often described by its proponents in glowing terms as a business that is unlikely to fail and a lot of folks seem to be jumping on the bandwagon. What’s not to like about a business model that eliminates virtually all aspects of the human element and excludes value-added services like interior cleaning, express detailing and reconditioning from the operation of a car-care appearance facility?
Although some folks continue to debate how the carwash industry should define express exterior, I believe the term “vending machine” fits the bill.
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The National Automatic Merchandizing Association describes vending as the business of buying, placing on location, filling with product, removing cash and maintaining equipment. Express exterior fits this description to a certain degree as does wand-bays and in-bay automatics.
Both industries are made up of manufacturers, suppliers, distributors and operators and tend to segment themselves by the kind of service provided by the operator. Investors face many of the same issues; determining what source of capital to use; what to look for; training and support; evaluating the opportunity; getting data; and making a decision. Both industries are entrepreneurial and relationship-based businesses that require community involvement.
Another similarity is innovation that is pointing to technical solutions for both industries that are aimed at reducing operating costs or improving revenues.
This includes the use of chip and key cashless systems; touch-screen interfaces; internet enabled telemetry that allow operators to be connected to their machines on a 24-hour basis; and, in the case of express exterior, “free-use” of centrally-operated vacuums. These vacuums reduce the need for unskilled labor, while auto-cashiers eliminate the need for sales personnel and reduce the level of management attention.
Over the last decade, consolidation of vending service operators has been happening at an astonishing rate and the pool of operators is down to about 8,000 companies.
In the vending industry, large operators buy smaller operators as the fastest way to gain market share. Consumer downsizing and consolidation has also allowed the larger companies to gain a greater share of the market and clout with product and equipment suppliers.
There is now at least one express exterior franchisor that is reported to have an agreement with a major manufacturer to sell an exclusive line of carwash equipment.
If the carwash industry continues to adapt express exterior as a way to make the industry more profitable and prosperous, technical requirements will continue to be a priority, as will taking advantage of every efficiency possible.
As the carwash business becomes less labor intensive and more capital intensive, the appetite for capital will require larger companies with access to the equity markets.
We have already seen convergence occur to a certain extent in the carwash industry with the number of low-priced, copycat in-bay automatic and wand-bay systems that are currently available in the market. This hasn’t happened yet with conveyor equipment, but it could occur because express exterior has a very limited variety of roles.