The Business Of
Cars | Mister Car Wash | What Do They Do?
Morning All!
Hope you had a great week. Last time, in the second part of our The Business Of Cars series, we explored the business model of Tesla. And we saw that whilst the US giant was the first company to really put EVs on the map...
… they’re not the biggest EV manufacturer any longer! Now, this week we’re going to have a bit of fun and look at another company in the car industry. And I’m absolutely certain no one will have heard of these guys. It’s the biggest car wash company in the world. It’s Mister Car Wash!
Now, I know car washes aren’t exactly the sexiest industry in the world. But as we’ll see this week, these car wash companies churn out a lot of cash! Mister Car Wash is actually worth a staggering ~$3 billion. And some famous faces, including Jason Derulo and Shaquille O’Neal, have made quite a bit of money from their car wash investments!
So, without further ado, let’s dive in and set the scene for the US car wash industry…
Americans Love A Car Wash!
Okay so, when it comes to car washes, there’s really two dominant types of professional car washes - (i) hand car washes, and (ii) automatic car washes. As we can see from the images below, at hand car washes, it’s humans who wash cars. Whereas at automatic car washes, it’s machines.
Now, I’ll be honest - I can’t remember the last time my wife and I washed our car. We probably wash our car ~2 times a year. And according to a recent poll, only ~5% of UK car owners wash their cars more than twice a year!
However, something I found absolutely extraordinary, is how popular car washing is in America! According to this poll, ~96% of Americans have had their car washed at least once in the past year. And the average American gets their car washed a whopping ~13x a year! That’s more than once a month!
So, that’s the first thing to note - car washes are much more popular in America than they are in the UK and other parts of the world. But here’s a question. Don’t some Americans wash their cars at home, without going to a professional car wash place? You know - washing their car in the drive with a bucket and a sponge?
Well, the answer is yes! A lot of Americans do wash their cars by themselves. But as the chart below shows us, this DIY-type of car wash has declined in popularity over the years. More and more people are choosing to get their cars washed professionally vs doing it themselves.
A Very Unconcentrated Market… Like Car Dealerships!
Okay so, that’s a little intro into the car wash industry. But question - how big is Mister Car Wash in this market? Well to answer that, we first need to look at how many car washes there are in total in the US.
Now, there are so many different reports, which throw up different numbers. But according to this US census in 2019, there were ~17k car washes in America. And Mister Car Wash is the largest player in the market with a whopping 436 car washes!
Now, 436 is a lot of car washes. But out of the overall ~17k total car washes, that’s only a ~3% market share! And this is very similar to what we saw in The Business Of AutoNation.
In the US car dealership industry, we saw that there were ~16,000 car dealerships in the country. But AutoNation, despite being one of the market leaders, only had a ~2% share of the market (247 dealerships)! So what do these low market shares for Mister Car Wash and AutoNation really mean? Well, it means that the car wash and car dealership industries are both incredibly unconcentrated! No one company dominates… like we see with Nvidia and Uber dominate in their industries.
Now, when we looked at AutoNation, we saw that one key strategy that companies use to grow in these unconcentrated industries is acquisition. We saw that AutoNation grew their car dealership locations (and revenue) over the years by just acquiring their local competition.
And so, can we expect the same from Mister Car Wash? Do they just go around buying their local car wash competitors? Well, the answer is yes! Back in 2010, Mister Car Wash only had 60 car washes locations. But by 2022, this number had grown tremendously to the 436 locations we mentioned earlier! We’ll dive into this growth in much more detail tomorrow!
The Netflix Of Car Washes!
Alrighty, let’s wrap up. And to close, let’s just quickly touch on one of the key parts of Mister Car Wash’s business model. Because some of us may be thinking - ‘what’s so special about Mister Car Wash? Why should someone choose Mister Car Wash vs another car wash? And aren’t all car washes basically the same?’
Well, the main thing that differentiates Mister Car Wash vs most other car wash companies is their subscription model! And this is basically like what we see with Netflix and Spotify. Netflix subscribers get unlimited streaming for a monthly fee. Spotify subscribers get unlimited music for a monthly fee. And Mister Car Wash subscribers get unlimited car washes for a monthly fee!
As we can see from the table above, Netflix have ~247m subscribers paying ~$16/month. Spotify have ~226m subscribers paying ~$12/month. And tomorrow, we’ll see what these numbers are for Mister Car Wash!
Plus, we’ll look at some of the other key differentiators that make this a pretty exciting company, in a pretty unexciting industry!
12th Feb 2024
And that’s a wrap! A lot to look forward to this week. Tomorrow, we’ll look at whether the subscription model has been as successful for Mister Car Wash as it’s been for Netflix and Spotify!
Have a fabulous day!
The Business Of Team