(1) RISING DEMAND AND GROWTH OF CAR DETAILING SERVICES

• The car detailing sector has seen phenomenal growth in the past few years and is projected to grow at a higher rate in the future. Several reasons have been noted to be accountable for the increasing popularity of car detailing. The most significant ones include the growing demand for vehicles.
• About 17 million light vehicles were registered across the United States in 2016. This figure is 183,000 higher than those recorded in 2015.
• By January 2017, vehicles roaming the streets of America reached 278.6 million, a figure 2.4% more than 2016 count. Experts estimate that the number of car units would reach 284 million by the year 2020.
• Auto dealers demand car detailing services for used vehicles to make them ready for resale.
• Car owners also require car detailing services whenever they want to get their cars cleaned up and polished.
• Fashionable/modern car exterior detailing services in the United States include wash and dry services, clay work using clay bars, car polishing, and car seal application which renders the cars a glossy look.
• With 6,000 car wash establishments in 2018, car detailing services in America grew at an average rate of 3.3% between 2017 and 2018.
• The employment rate of automotive service technicians, as well as mechanics that offer car detailing service, is projected to increase by 17% between 2010 and 2020. 

(2) GROWTH OF EXPRESS CAR WASH SERVICES

• Full-service car wash operators across America are combating the industry disruptions by adding "express lanes to their offerings" remain competitive.
• Many express car wash service operators provide additional amenities to improve conveniences and boost the experience of their customers. Such services are driving an evolution in car wash retail services.
• Car wash customers are demanding more and more value, and this has brought about a shift in the industry "that is creating a proliferation" of express (mobile) car wash locations.
• Express (mobile) car wash units as of 2019 out-number full-service by the ratio 2 to 1 across Phoenix. They require less labor and advances in technology makes them offer services similar to full-service, hand-wash, hand-dry operators which are already feeling the pressure and are "being washed out" of operation.
• The mobile car wash industry is highly fragmented as 50 of the largest United States companies control less than 20% of the mobile car wash market.
• The mobile car wash industry grew by 3.3% between 2017 and 2018, reaching $7.7 billion in 2018. It's market growth thrives on the discretionary spending and driving habits of car owners/consumers.
• Significant mobile car wash brands in the United States include Mister Car Wash, Autobell Car Wash, Wash depot, Goo Goo Express Wash, Boomerang car wash, Delta sonic, Crew Car Wash, The Washtub, Brown Bear Car Wash, Kaadey Car Wash, Waterway Gas & Wash Company, and Car Wash USA Express.
• According to Techcrunch, Washé, a Boca Raton-based mobile-service car wash operator recently raised $3.5 million as seed funding to grow its business. Washé has a network of about 1,000 licensed as well as insured car wash professionals. The car wash operates in parts of Florida, Southern California, Georgia and New Jersey, and had performed over 100,000 car washes by 2018 in the South Florida market. Washé claimed to have witnessed a 125% annual growth rate.
• While mobile car wash operators continue to grow, the overall number of car wash businesses in America has declined in recent years to a value of about 13, 177 forcing most operators to either expand or diversify available services.

(3) DEMAND FOR AUTO BEAUTY SHOPS

• According to KTVN, Auto Beauty Shops will be among the fastest-growing segment in the car care industry and will continue to experience growth in the future.
• Auto beauty shops are needed to repair cars involved in an accident. Services offered by auto beauty shops include Paintless Dent Repair (PDR), body repair and painting services, etc.
• There will be a continuous demand for the services of auto beauty companies as an average of 6 million cars are involved in accidents every year in the United States. About 72% of car crashes result in property damage, including car dents.
• According to CNN, data obtained from the National Highway Traffic Safety Administration reveals a 7.7% increase in fatal accident cases in 2015, increasing from 32,600 in 2014 to 35,200 in 2015. This increase is indicative of the rising number of accidents and car dents that may need auto beauty services.
• Unfortunately, we could not uncover the growth rate or market growth for auto beauty shops.

(4) POPULAR USE OF WATER-BASED SOLVENTS AND ECO-FRIENDLY DETAILING IN CAR CARE

• Eco-friendly detailing solutions remain the most significant innovation in the car detailing sector for the past ten years. Innovations in this field include "waterless washing products" which rose in popularity since the 1990s. While waterless washing products are still in use today, a majority of operators prefer the use of water.
• There is a rising demand for water-based solvents due to the low cost of essential raw materials needed to manufacture them. Water-based products are biodegradable and also environmentally friendly.
• Unfortunately, we could not uncover the growth rate or market growth for water-based solvents.

METHODOLOGY

S.W.O.T. ANALYSIS OF U.S. CAR CARE MARKET

STRENGTHS

•  Economic stability. The car care market is not significantly affected by economic recessions and can remain profitable since they generate above-average high gross margins from their services.
• Consumer spending habits and increasing new car sales continue to drive the U.S. car care market. Research findings indicate that through 2018, motor vehicle registrations numbers are set to continue climbing at 1.3% annually, which would likely result in increased consumer demand for after-market services such as car care.
• The startup costs of launching a car care center are low and range from $20,000 to $250,000 depending on whether the facility will use automated equipment, making it a venture that anyone with that amount can establish.
• Companies providing car care and detailing services produce insanely higher gross margins compared to self-service car washes.
• The car care business has substantial access to capital since the major obstacle to setting up the business is real estate, which most financial institutions are willing to offer the necessary capital to start these investments.

WEAKNESSES

•  High competition. The market is dominated by a few major players; however, the increased competitiveness of smaller car care providers make the whole industry more competitive.
•  High operating expenses. Despite having high-profit margins, car care centers are expensive to operate. Often, the high costs of maintaining a piece of real estate and high utility costs make these businesses hard to run. High water and energy costs also drive down profits in this sector.
•  Low barriers to entry for establishing a new car care center, except the mechanically operated centers. This low barrier to entry fuels intense competition from small scale entrepreneurs to large and established car care brands.
• People can clean and offer minor care services to their cars at home. Research by Dewolfchem noted that 50% to 70% of Americans wash their cars at home, and 25% of them do it at least once per month.
•  High labor turnover because of unskilled labor. Car care centers often use unskilled labor, and the hired individuals can leave anytime without even notice resulting in high turnover rates.

OPPORTUNITIES

• As consumers' disposable income rises, so does the demand for car wash and detailing services. Further, technological advancements have enabled car owners to seek long-lasting and proper car washes resulting in rising demand for high-end retailing services.
• The continued rising disposable income of U.S. consumers is projected to continue fueling the demand for car care services into the future. The continued rise in incomes for discretionary spending promises a potential opportunity for the car care market to continue growing and expanding into the future.
• Car care businesses have great expansion opportunities, which include expanding their menu offering at minimal incremental costs. For instance, these businesses can easily expand to new locations to create more opportunities for maximizing earnings. Also, car care centers can expand their businesses by acquiring existing similar businesses.
• Financial institutions require a 20% down payment to establish a car care center. These types of businesses remain lucrative for one thing, their resilience during recessions and high-profit margins. Studies suggest that the industry has gross margins of 90% with profit margins declining to 40% year-over-year.
• The current car care market as is lacks car washes with significant market shares. The sector is highly fragmented providing lucrative opportunities for small business owners in this segment to grow their locations and acquire a sizable market share.

THREATS

•  Fluctuating gas prices have a significant impact on the driving and related retail sales. Increasing gas prices will reduce driving; hence, directly affect the car care market.
• Similarly, as gas prices increase, consumers' disposable incomes decrease, hindering their ability to spend on discretionary services like car care. Therefore, an increase in crude oil prices poses a potential threat to the industry.
•  Weather anomalies affect the nature of the car care business. Since most of these businesses are outdoor-based, bad weather means low volume as consumers are likely to ignore them, and car care center employees cannot perform optimally under poor weather conditions.
• Increasing concerns around sustainability can potentially threaten the car care industry, which often results in increased water wastage that if left untreated, can affect the environment because of the chemicals used in cleaning cars.
• Regulations around water treatment and wastage can potentially threaten this industry, which is known for high untreated water wastage.

RESEARCH STRATEGY

CAR CARE MARKET

• According to market reports, the US car care market is segmented into two main product types: cleaning products and protection products.

Cleaning products

•  Cleaning products segment is the segment that dominates the car care product market and is expected to lead the market share until 2025.
• The segment is mostly driven by interior cleaning, followed by hand wax services, exterior cleaning, shampoo floor mats and upholstery cleaning.
•  The growth of this segment is boosted by the fact it is dominated by multipurpose, user-friendly products that are offered at competitive price ranges.
• The biggest new offering in this segment are water-based solvents which are seen to lead the market globally until 2025. Water-based solvents are biodegradable and environmentally friendly which shows an improvement when compared with traditional chemical-heavy products that used to dominate the cleaning car care market segment.
• The cleaning products segment is the largest segment of the car care market with a market share of approximately 69.55%. 

Repair & Protection products

• According to market reports, repair & protection products compose the next largest share of the car care market at an estimated 24% share.
• The protection products car care segment is further divided into polishing and waxing, sealing glaze and coating, and other protection products sub-segment.
• This segment is projected to also be on the rise until 2025 based on the fact that consumers in the car care segment have recently become aware of the advantages of using car care products when it comes to protecting the car against outdoor influences such as the sun, snow, and other harmful factors.

RESEARCH METHODOLOGY

CAR CARE: PRODUCTS

• According to Market Watch, this year, 2019, the global market size of car care products is $85,100 million. The market is expected to grow at a CAGR of 5.5%, hence, by the year 2024, the market is expected to hit $117,300 million.
• This market for car care products was segmented into regions. Those regions are Europe, North America, Asia, and among other regions.
• In 2016, Europe was the major supplier of car care products holding 38.05% share of the total global market, while North America held 32.33% of the total global market.
• For the past years, there has been a higher demand for car care products in Asian countries, especially China.
• Based on type, the cleaning products held the largest segment of the total market in 2016 with around 69.55%, while repair and protection products accounted for about 14.35% and 9.66%, respectively, of the total market share, however, these two products were more expensive.

CAR CARE: REPAIRS AND MAINTAINANCE

• In the United States, the average cost for car light repairs is $387.
• According to the Center for Economic Vitality report, the transmission automotive repair industry holds 6% of the total automotive repair industry.
• In 2017, the estimate of the global car repair industry market was $444.3 billion. The market is expected to grow at a CAGR of 5.6% over the next 10 years.
• There were 160,000 establishments in the United States in 2017 dealing with automotive repair and maintenance services and their combined annual revenue was worth $105 billion.
• According to IBIS World, the annual sales of the auto repair industry in the US are worth $63 billion.
• In the North American automotive repair industry, the US holds the largest share of the total market, 60%.

CAR CARE: CAR WASH AND AUTO DETAILING

• In 2019, the car wash & auto detailing market size in the US is worth $11.8 billion.
• This year, the CAGR of the market is 2.1%, but it was expected to grow at a rate of 3.7% from 2014 to 2019.

RESEARCH STRATEGY

Overview

• The car care industry refers to the chemical products designed to gloss, increase the durability of cars, and improve and protect the shine of vehicles.
• These products include the ones designed for paint restoration, paint protection, paint cleaning, glass cleaner, wheel care, interior and exterior care, tyre shine, etc.
• The car care companies leading the global market are 3M, Turtle Wax, Illinois Tool Works, Armored AutoGroup, SOFT99, SONAX, Tetrosyl, Northern Labs, Liquid Moly, Simoniz, Autoglym, Botny, Bullsone, BiaoBang, CHIEF, Rainbow, Mothers, and Auto Magic.
• Research confirms that 25% of the car care market in the world is dominated by the US, followed by North America and Asia.
• The US companies who are leading the market are Illinois Tool Works, 3M, Simoniz USA, Northern Labs, Turtle Wax, Automagic, and Armored Group.
• The global market has a current value of $11.8 billion.
• Markets and Markets determined that the US leaders in the market are 3M, Illinois Tool works, Simoniz USA, Turtle Wax, Northern Labs, Armored Group, and Automagic.
• Also, the leaders of car wax, one of the most used car care products in the US market are Turtle Wax, 3M, Northern Labs, Henkel, SONAX, Malco Products, Mother, Bullsone, Prestone, Darent Wax, Biaobang, Chief , Tetrosyl (CarPlan), and SOFT99.

US Car Care Leaders

1. Illinois Tool works

• Their Polymers and Fluids division include the automotive aftermarket niche which is composed by car care and tyre repair products.
• In 2018, their Polymer and Fluids division reached a global revenue of $1,724 million.
•  50% of the company's revenue come from consumers out of the US while the other half from US customers.
• The US generated $6,562 million in revenue from all the company's divisions.

2. 3M

• 3M is the global leader of car care and is going to invest $60 million to increase its manufacturing capacity in Greenville.
• Their industrial segment includes the automotive aftermarket niche.
• Their global revenue for the industrial segment was $3.0 billion in Q4 2018.

3. Simoniz USA

• Simoniz is a privately held company.
• Simoniz generates a global revenue of $88.2 million a year.

4. Turtle Wax

• Turtle Wax, Inc. is a privately held company.
• They generate an annual global revenue of $6.7 million.

5. Northern Labs

• Northern Labs is a privately held company.
• They generate an annual global revenue of $32 million.

RESEARCH STRATEGY

Identifying the Car Care Leaders — US

Market Share — US Car Care Industry

Market Share of the Leaders — US

CAR CARE MARKET RETAIL DISTRIBUTION

• In 2018, the global car care products market was valued at $11.8 billion. 
• The US accounts for 25% of the global car care products market. In case the graph is not visible within the report, we compiled a screenshot of the graph detailing the market segmentation by region in the document here. 
• Based on the retail distribution channel, the market is divided into two main segments: Do-It-For-Me (DIFM) or better known as service centers, and Do-It-Yourself (DIY) products available at retail stores.
• DIY product segment available at retail spaces accounts for 12% of the global car care products market while DIFM better known as service centers segment accounts for 88%. 

RESEARCH METHODOLOGY

• The US accounts for 25% of the global car care products market which was valued at $11.8 billion in 2018. Therefore, the US accounts for 0.25 x $11.8 billion = $2.95 billion.
• As the US market segment of the overall car care products market accounts for $2.95 billion, the breakdown of the retail distribution can be calculated as follows: 0.88 (service centers share) x $2.95 (US market size) = $2.596 billion; 0.12 (retail stores share) x $2.95 (US market size) = $0.354 billion.
• The service centers share distribution segment accounts for $2.596 billion while the retail stores share distribution segment accounts for $0.354 billion of the car care segment in the US.