How Much Do Car Washes Make? 2024 Profitability Guide

How much do car washes make? That's a question you must have Googled if you're planning to buy a car wash franchise or are in the process of setting up a car wash business. The answer to this question is not as straightforward as you might think, since the profitability of a car wash depends on various factors. 

We considered all these factors when putting together this guide. From operational costs to utility costs and the profit potential of your business, we discuss it all below.

Types of Car Wash Businesses and Average Profits

Just like any other business, the type of operation you choose determines the expected average profits. For example, self-service car washes will have a different annual revenue than an in-bay automatic car wash because the former requires minimal staff while the latter needs more expensive equipment.

Let's break down the annual revenues for different types of car washes.

Self-Service Car Wash

How much do self-serve car washes make? These car washes typically bring in anywhere from $40,000 to over $100,000 in annual revenue. As mentioned earlier, these car washes have lower operational costs and, therefore, tend to be more profitable. However, they may have less traffic due to limited services and the unfamiliarity most people have with the DIY concept.

In-Bay Automatic Car Wash

An automatic car wash gets more traffic since it's highly convenient. Customers can simply drive in, pay for the service, and receive a thorough wash without having to do anything themselves.

The annual revenue for these car washes is $200,000 to $500,000. You can expect to reach the higher end if you offer additional services and are in a location with a substantial average income.

Large Car Wash Conveyor Business

If you have a large car wash facility with multiple wash bays, you can expect to make $500,000 or more in annual revenue. However, these types of car wash businesses are only suitable for larger cities with high traffic. The profit margin will not justify the initial investment and operational costs in a smaller area.

Full-Service Car Wash

Providing more services than a regular car wash, a full-service facility typically has annual revenue of $500,000 and $900,000. Additional services like waxing and detailing contribute to higher profits.

How Do You Calculate Profit Margin, and What Is a Good Average?

The profit margin for a car wash is the percentage of income you're left with after deducting the costs of running the business from sales revenue. For example, if total revenue for the year is $500,000 and business costs are $400,000, your profit is $100,000.

The profit margin is 20% since $100,000 (profit) is 20% of total revenue ($500,000).

You can calculate the gross profit margin using this formula:

(Net sales - Cost of goods sold) / Net sales x 100

The cost of goods sold is the amount you spend on supplies, equipment, labor, utilities, and other expenses related to providing car wash services.

Suppose your car wash revenue from net sales is $100,000, and your cost of goods sold (COGS) is $65,000. Put all these figures in the above formula, and you'll get:

(100,000 - 65,000) / 100,000 x 100 = 35%

Your car wash's profit margin is 35%. You can further calculate your net profit margin, which is the percentage of income after deducting all expenses, including taxes.

Here's the formula:

(Revenue - Cost of goods sold - operating expenses - interest - taxes) / Revenue x 100

Net profit is the final profit you're left with after business expenses are subtracted. A good average net profit in the car wash industry is 10% to 12%. In a survey of 235 franchises, SharpSheets found the average operating profit margin to be 14% to 26%.

Note that this is before interest and taxes. Once you deduct them, the profit margin falls to around 10%.

Car Wash Profitability Factors and Tips To Enhance Revenue

How much do car washes make a year? The answer depends on these factors.

Location and Impact

A car wash's revenue is largely dependent on its location. If you're in an area where people can afford to pay for car wash services, you're likely to get more customers. Besides affluent neighborhoods, lifestyle preferences also come into play.

For example, if people in your location are likely to follow eco-friendly practices, your waterless car wash service might be a hit. Similarly, mobile and automatic car washes will do well if you're in a locality where people prefer convenience over anything else.

Pro Tip: Conduct a thorough market analysis before setting up your car wash business. If there's too much competition in your area, consider a different locality or a type of car wash that's not already present.

Equipment Costs Recurring Expenses

Equipment and cleaning supplies are variable costs of a car wash business. You'll also spend on equipment repair and maintenance. Similarly, equipment may need replacement every few years.

Pro Tip: Have a budget for this so you don't suffer when your equipment breaks down. Also, buy your cleaning chemicals from a reputable supplier with competitive pricing.

Services Offered and Seasonality

Car washes, especially full-service ones, can offer a ton of extra services. The number and type of services will determine how much you make in a year. For example, more popular services like waxing and detailing bring in more revenue than basic washes.

Car wash revenue also differs by season. Business is likely to be slower during the colder months in areas with harsh winters. Similarly, business may pick up during spring and summer when people are more often out and about and want their rides to be pristine.

Pro Tip: Offer seasonal promotions to attract more customers during slower months. As for services, try to include as many as you can comfortably offer with utmost quality.

Marketing Efforts and Customer Preferences

Car wash marketing may just be the differentiator between your business and another, especially in this digital era. If your marketing efforts align with consumer preferences, you'll attract customers.

For example, in an area with a younger millennial or Gen Z population, social media and influencer marketing might be more effective than TV or print ads. The opposite may be true for a town with largely senior citizens.

Pro Tip: Get a marketing strategist on board to tailor your efforts. Don't forget to collect regular feedback and make changes to your services accordingly.

How AP Formulators Can Help Improve Your Car Wash Revenue

As we've explained, a big part of maximizing your average income as a car wash owner is relying on trustworthy suppliers for cleaning chemicals. Doing this helps in two ways. First, you can better satisfy your customers with premium products, retaining them for the long term. Secondly, high-quality chemicals last longer, so you don't need to restock constantly, saving costs.

To get these benefits, partner with AP Formulators for a consistent supply of top-of-the-line cleaning chemicals at competitive prices. Regardless of your car wash type, you get a made-to-order inventory of cleaning products and best-in-class service that will give your car wash revenue a boost. Contact us for more details.