How to Value: Car Washes & Auto Detailing

Industry Description

The car washes & auto detailing industry cleans, washes and waxes automobiles, such as cars, trucks, vans and trailers (NAICS 811190). This industry also includes self-service car wash establishments. The industry does not include automotive repair or maintenance services, which are the subject of other valuation guides.

The following are some basic characteristics of the industry:

  • Car washes & auto detailing industry has a combined revenue of $14.7 billion, with a growth rate of 2.1% in 2017-2022
  • There are approximately 67,000 businesses as of 2022
  • The car washes & auto detailing industry employs approximately 268,000

Industry Trends

The car wash & auto detailing industry has low levels of market share concentration, with the top four industry players comprising approximately 10% of the industry revenue in 2022. Small players operate on a local basis owning one establishment, while the biggest players own multiple establishments. Some key external forces influencing the industry are (i) eco-friendly products and services, (ii) mobile car wash and detailing services and (iii) technology. Each of these is described in further detail below.

The growing demand for eco-friendly products and services has had a significant impact on the industry. Consumers are growing more conscious of the environmental effect of conventional car washing techniques, such as water waste and the use of harsh chemicals. In addition, a growing number of office buildings require auto detailers to utilize water containment mats and comply with municipal water runoff restrictions, especially near storm drains that feed freshwater sources. A study found that a majority of consumers would pay 25% or more for ecologically friendly products and services. As a result, there is a shift towards eco-friendly alternatives, such as waterless car washes and biodegradable cleaning products.

Mobile services are a trend reshaping the industry because some consumers are too busy and do not have the time to visit a physical car wash establishment. This trend is gaining in popularity because of its convenience and time-saving advantages. Mobile car wash and detailing services provide a more convenient alternative to conventional car washes since clients can have their cars washed at their homes or workplaces. Kumar indicates that by 2032, the mobile car wash and detailing business would be worth over $22.9 billion, up from a projected $9.2 billion in 2022. This trend will continue rising in popularity because consumers have limited time and value convenience.

Technology, much like many other industries, is also significantly impacting this industry. One example is the use of automated payment systems and self-service kiosks to enhance the customer experience and decrease wait times. Social media and mobile applications are some ways industry players advertise their services and interact with clients. Consumers are now more inclined than ever to conduct transactions with a business that communicates and provides services via digital channels. Therefore, technology is a game changer for the industry.

The industry is affected by external forces like eco-friendly products and services, mobile car wash and detailing services and technology. The demand for eco-friendly products and services is growing due to consumers becoming more environment conscious. Mobile car wash and detailing services are rising in popularity due to consumers having limited time and are not able to go to a physical car wash establishment. Technology is a game changer, reducing wait times, making advertising easier, and adding convenience to client interactions. Industry players who adapt to these forces will gain a competitive edge in a growing industry.

Key Performance Metrics

In evaluating car washes & auto detailing companies, the following metrics can provide useful information in comparing a subject company to guideline companies and transactions:

  • Revenue per car/ticket
  • Cars/tickets per days
  • Time between cars
  • Capture rate
  • Client satisfaction and retention

Industry Organizations & Publications

The following organizations publish useful information:

  • International Carwash Association
  • International Detailing Association
  • Professional Carwashing & Detailing
  • Auto Laundry News

Guideline Information: Private Purchase Transactions

Most car washes & auto detailing are privately owned. While there are publicly traded companies, data regarding the sale of 100% of closely held car washes & auto detailing is generally the best source of information to appraise a subject company.

The following are typical appraisal multiples from sale of car washes & auto detailing:

  • Revenue multiples between 0.49 and 1.42 times
  • Gross profit multiples between 0.63 and 1.80 times
  • EBITDA multiples between 1.9 and 7.0 times

In selecting guideline transactions, it is of critical importance to select transactions that are similar to the subject company. Unique factors for any subject company must be considered to yield credible results. Additionally, industry economic conditions also vary over time, which must also be considered.

Guideline Information: Publicly Traded Companies

Most car washes & auto detailing are privately owned; however, there are a few that are publicly traded, meaning it is possible to compare a subject company based on industry metrics and appraise using industry multiples. However, as with the guideline transactions described above, it is of critical importance to select publicly traded companies that are similar to the subject company. Also be aware that multiples of certain publicly traded companies may not accurately reflect a subject company. 

The largest publicly traded US car washes & auto detailing is Mister Car Wash, Inc. (MCW) – $2.7 billion market capitalization.  The Price-to-Earnings (P/E) ratio of this company is 25.0 times.

Appraisal Rules of Thumb

Please note you should never use a Rule of Thumb in place of a professional appraisal. You will never see a competent professional appraiser do their work using a Rule of Thumb. The professional standards that govern professional appraisal practice, which all professional appraisers should follow, specifically prohibit the use of Rules of Thumb.

Car washes & auto detailing are businesses sold based on sound economics. These economic considerations can be measured using the key performance indicators described above, but such economics cannot be accurately summarized in these simple formulae.