investment opportunity: car wash & tire change centre
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Building for Tomorrow
Investment Opportunity:
Car Wash & Tire Change Centre
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Car Wash/Quick Lube & Tire Change Centre
Opportunity Overview:
As part of the Town of Bon Accord’s
overall effort to realistically build on its
competitive advantage and in so doing support
a further diversification of local industry, a Car
Wash/Quick Lube & Tire Change Centre has
been identified as a viable business opportunity
within the community. It is proposed that this
initiative while satisfying several
complementary needs in the community, will
necessary need to be multifunctional in order to
be viable and sustainable. It is expected that
while the potential of the local market will be
sufficient to cover over the basic financial needs
of the proposed business, longer term growth
will require accessing traffic from highway 28.
At its anticipated minimum this
initiative will require a capital investment of
$150,000 to $250,000 for suitable on-highway
or high visibility commercial lease space,
equipment and inventories to accommodate
the proposed enterprise, i.e. a minimum of two
drive through car wash bays, a single drive
through bay for oil change/lube service
together with tire change, a small retail/parts
area, and an appropriate allocation of land for
limited parking. In terms of staffing, in addition
to the entrepreneur/manager, two to three
employees would be anticipated.
Location, service quality, price and
innovative marketing/positioning will be critical
precursors of success not only in meeting and
capturing the needs of the local and regional
populace but in retaining this critical market
niche. As well these same attributes (location,
service quality, price and innovative marketing)
will be essential to the long term growth of the
proposed venture through the attraction of
vehicle traffic off of highway 28.
Industry Overview and Trends
As presented the proposed business
opportunity broadly encompasses three sub-
activities, all of which exhibit similar
possibilities and challenges.
In terms of the automotive oil change
and lubrication industry across North America
there are about 5,000 companies with
combined annual revenues of about $5 billion.
These businesses can be found in most
communities though in smaller centers they are
usually combined with complementary
operations (as proposed for Bon Accord).
Major services are oil changes (about 75
percent of sales) and other preventative
maintenance. Some locations provide limited
repair services and routine maintenance like
adjusting tire pressure, changing windshield
wipers, replacing light bulbs, and topping off
auto fluid levels. The industry itself tends to be
fragmented with the 50 biggest companies
generating about 35 percent of all revenue.
The Car Wash industry has grown from
as simple as hand wash to sophisticated high
impact pressure jet wash technology. The US
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car wash industry includes about 15,000
establishments (single-location companies and
branches of multi-location companies) with
combined annual revenue of about $6 billion
Again the industry is highly fragmented: the 50
largest companies hold just 15 percent of the
market That being said, according to the
International Car Wash Association there are
approximately 22,000 car washes in the United
States and Canada, nearly 90% are operated by
the owners who are small business persons.
Thus clearly owning and running a car wash
these days can be quite lucrative.
Major services are exterior wash,
exterior and interior cleaning, waxing,
underside cleaning, vacuuming, and premium
detailing. Detailing services consist of intensive
interior and exterior cleaning, as well as waxing
and polishing by hand. Some facilities offer
vehicle maintenance and repair and safety
inspection services and sell automotive
products.
Those who own a car or truck tend to
spend a lot of money on tires. From time to
time, they need to have tires pumped up,
repaired or replaced. Add to this the normal
seasonal requirement to change tires and you
have a pretty active marketplace. Tire changing
and balancing equipment technology has
changed dramatically in the past ten years and
in the midst of these changes qualified tire
technicians must be able to dismount and
mount tires quickly and properly.
Entry Barriers
Clearly in all cases overall demand for
the proposed services of a Car Wash/Quick
Lube & Tire Change Centre is determined by:
the numbers of vehicles in the
community/region; the amount of driving that
consumers do; the conditions in which driving
occurs (i.e. good/bad roads; paved/unpaved
roads; summer/winter conditions and the like),
and the relative conscientiousness of
consumers to properly maintain their vehicles.
In turn the profitability of individual companies
depends on convenient location ( poor location
is among the chief causes of all small business
failure)s, quality service, good pricing
(competitive pricing) and innovative marketing.
In terms of barriers to entry there are a
number of notable considerations, in addition
to those inherent in determinants of demand.
Specifically:
large chains have an advantage in name
recognition;
tire maintenance and tire changes are
often within the standard services offered by
large tire retailers who most often provide
the service free or heavily discounted to
their customers;
for new vehicles often times
manufacturers limit the use of independent
oil change operations;
operations tend to be labor-intensive
which will require recruiting in a highly
competitive labour force market. Given that
margins are often tied closely to cost savings
in labour this will be a considerable, though
not an insurmountable, challenge.
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Competition
While there is certainly an opportunity
for a Car Wash/Quick Lube & Tire Change
Centre within the Town of Bon Accord the
competition to this service will most certainly
come from Edmonton based facilities, especially
for those who regularly work/shop in
Edmonton. Clearly a startup business will face
intense pressure from entrenched chain
competitors so it will be important to
differentiate the offering and service. That
being said a multipurpose centre as is proposed
will satisfy a variety of consumer interests for
local residents more concerned with
convenience and accessibility.
Markets
Research affirms that consumers are
keeping their cars for longer periods and
spending more on preventative maintenance.
But above this and above all else, the Car
Wash/Quick Lube & Tire Change Centre is
convenience-driven. In the short term the
primary market for the will be local/regional
residents and arguably in the long term the
operation will rely on local customers for the
majority of its business. Most customers are
also accustomed to buying additional services
like total fluid replacements and tire rotations
when they come in for an oil change and these
value added services, as proposed, can be quite
profitable. Building on this local market
segment could be enhanced through the
addition of innovative service offerings such as
the increasingly popular mobile oil and lube
service. In the longer term, given a high
visibility location, quality services, reasonable
prices, and a concerted marketing effort, it is
expected the business will benefit from
additional traffic being attracted off of Highway
28. This additional traffic draw will be
especially prominent during times of seasonal
tire/oil changes (as a consequence of
oversubscribed Edmonton facilities).
Start-up Requirements
A typical oil and lube location performs
about 1,200 jobs per month. Most locations
operate two to five bays in a drive-through
building, and many use basement construction
so that oil can be changed below while other
services are being completed above. However,
to keep capital investments low and offer quick
building relocation, vehicle lifts can be used
rather than basements and the facility itself can
be built on a relatively small piece of property.
The oil and lube operation flavored for the
Town of Bon Accord (in association with the
proposed car wash and tire repair service)
would encompass a single dedicated oil and
lube bay with a vehicle lift.
In terms of car wash there are three
options:
1. Self Service Carwash –
Customers wash their own
vehicles in individual wash bays.
These bays can either have self
serve equipment or in-bay
automatic equipment in them.
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2. “Stand Alone” Automatic
Carwash This model consists of
one or two in-bay automatics
and a vacuum and vending area
3. Full Service Carwash – This
carwash business option is a
conveyor wash system with
attendants.
The carwash business model favored for
the Town of Bon Accord (in association with the
proposed oil/lube and tire repair service) would
encompass a self-service car wash with two
equiped wash bays. This arrangement would
offer the advantage of low labor costs and can
be open twenty four hours a day, seven days a
week.
In the case of tire repair/change a more
modest opening is proposed that would
build/complement the oil/lube facility but still
be capable of handling a broad variety of
balancing/changing needs.
Additionally we would propose that a
small automotive supplies area (windshield
wipers, oil, power steering, antifreeze, window
washing fluids, selected cleaning supplies and
tire parts and the like) be added to
complement activities.
In terms of total start up costs this
opportuntiy will require somewhere in the
order of $150,000 to $250,000 in capital and
operational funds.
For any further information on this business opportunity or others in Bon Accord,
please contact:
Gale Schwenneker
Economic Development Manager
Town of Bon Accord
Box 779, 5025 – 50 Avenue
Bon Accord, Alberta T0A 0K0
PH: 780 921-3550