In February 2020, I was scouting around for a new entrepreneurship venture.
Learning from my mistakes from my previous Airbnb business and the current economic constraints due to Covid-19, I think it’s a wise idea to avoid fads and go back to basics.
In this article, I will be sharing with you my observations on opening a shop lot based car wash business in Malaysia:
- 3 Reasons Why Car Wash Business is Attractive
- Estimated Car Wash Revenue
- What are the Car Wash Set Up Costs?
- What are the Car Wash Monthly Running Cost?
- Should you Buy an established car wash instead?
- Car Wash Business Risks
Let’s begin with the summary of my observations & findings:
Car Wash Business Key Observations
|Demand||Medium to high|
|Training||Can learn as you go, or join professional detailing courses.|
|Potential to Scale||If you run things right, franchising is lucrative|
|Set Up Costs||RM 21,900|
|Monthly Revenue||RM 9,050|
|Monthly Net Profit||RM 7,150|
|Set Up ROI||~3 to 6 Months|
3 Reasons Why Car Wash Business is Attractive
Reason 1: According to statistics, there’s one car for almost every 2 Malaysian. Malaysia has the second highest car ownership ratio in Southeast Asia after Brunei.
That mean’s there’s no shortage of cars to wash:
Reason 2: High demand. Try and wash your car anytime during weekends, and there’s almost always a queue.
Reason 3: No Gimmick Business. Cleaning cars for profit. The simplicity of the business model is attractive to me.
I know a person who knows another person who operates a car wash. He’s kind enough to talk to me about how to set one up of my own.
Here are my findings and observations on how to start and operate a car wash business in Malaysia:
Estimated Car Was Revenue
Here is a typical price list for the average car wash in Malaysia:
|Source of Income||Price, RM|
|Regular Car Wash||RM 12|
|Interior Nano Clean Mist||RM 40|
|Interior Cushion Cleaning||RM 120|
|3 Layer Polish & Wax||RM 300|
|Premium wax||RM 500++|
The regular car washing will be your volume seller. Wash 10 cars a day will bring your total revenue to RM 3,600 a month. That’s not a lot at all.
The real money is in the upsell: interior cushion cleaning, polishing, and waxing.
So let’s make a realistic assumption, that you can polish & interior clean 1 car each day. That’s (RM 300 + RM 120) x 30 days = RM 12,600 extra revenue a month.
The total estimated monthly car wash revenue: RM 3,600 (car wash)+ RM 12,600 (upsell) = RM 16,200
What are the Car Wash Set Up Costs?
|Rental Deposit||2.5 months x RM 3,000 = RM 7,500||Assuming rental of RM 3,000/month.|
|Cleaning Equipment||RM 8,400||Avoid cheap packages on Shopee.|
|Cementing Ramps||RM 500 – RM 1,000||It might costs more if your shop lot doesn’t have a rear entry.|
|Security Camera||RM 2,000||Vital to protect yourself from theft or any customer disputes.|
|Miscellaneous||RM 3,000||Reserve for random stuff to run your business.|
|TOTAL||RM 21,900||Min setup costs.|
The startup cost above is pretty low for a physical shop based business. Now let’s break down the upfront costs one by one, starting with the rental:
Here are the few criteria to consider when finding the perfect place to set up a car wash business:
- Must be ground floor, can be an intermediate unit.
- Cheap rent, below RM 3,000 a month. The lower, the better.
- Location near housing areas (i.e. Kajang, Bangi, Semenyih, Shah Alam).
- Nearby car showrooms.
- Nearby used car lots.
- Nearby banks.
- Nearby tint shops.
Browsing through mudah.my for shop lots in Kajang, you can get rentals as low as RM 1,500. It’s safe to say, with a budget of RM 3,000, you’re not short of options:
Assuming a max rental budget of RM 3,000 a month, you’ll be looking at a deposit of 2.5 months or RM 7,500 as a deposit.
Once you have a rough location and budget, the next business todo is to get the essential equipment.
Equipment Needed for Car Wash Business
Total equipment set up cost will be circa RM 8,400 for quality equipment that’ll last at least 2 years of daily use.
At this stage, we will only focus on equipment for car washing, and not waxing or polishing:
|Industrial grade wet & dry vacuum x 2||RM 600|
|Air Compressor (2HP)||RM 2,000|
|Water Pump/ power sprayer||RM 1,000|
|Water Drum or tank||RM 400|
|Cement ramp||RM 500|
|Sponges & car towels||RM 100|
|Carpet cleaner||RM 1,800|
|Miscellaneous & Backup||RM 2,000|
|Total Equipment Costs||RM 8,400|
Avoid Cheap Online Starter Kits
I was advised to avoid starter kits that are sold on Lazada or Shopee for around RM 1k+:
He said that these are usually cheap no-brand inferior products from China that will conk out in a couple of months if used on a daily business setting.
The best is to buy quality products individually:
Industrial Grade Wet & Dry Vacuum
Different than what you have at home, a wet & dry vacuum can suck in water without any problems and doesn’t need vacuum bag replacements.
Criteria to look out for when selecting one:
- Reputable, international brands:
- Black & Decker
- Must be wet & dry capable
- Tank capacity around 15 L
- Lightweight (less than 5kg) as you’ll be moving the vacuum around
Below are 2 examples of what you can buy online:
The air compressor is used to power the air gun. Which is used for car detailing work:
- Blowing dust out of cracks and crevices.
- Blow drying hard to reach places.
The compressor power must be at least 2hp. Brands are subjective, but the one that my friend used for years without any issues is Swan. It cost around RM 1,800:
The water pump is what builds up the pressure to suck water from the tank and spray the car with pressurized water. Making cleaning an easy task.
Criteria to look for:
- Electrically operated (engine power might be unnecessary).
- A min of 3hp or 40 bar pressure.
- Costs around RM 1,000.
The bigger, the better to make sure you have enough water for continuous operations on a busy day. You’ll be looking at a min 200-gallon tank around RM 400, including shipping:
You’ll need some sort of ramp at the front and rear of your shop for your customer’s drive into and out.
You can purchase metal ramps, or hire a contractor to construct a concrete ramp.
My friend got a good deal with a close friend contractor, at around RM 200. But if you’re not that lucky, prepare a higher budget of RM 500 to RM 1,000.
A professional grade carpet cleaner is a must if you want to be taken seriously. I was recommended this particular brand that is used by a lot of cleaning companies:
If you’re starting out, you can skip this item first and get it later once you have acquired a steady stream of customers.
Possible new stream of income: You can also use this equipment to clean home carpets and sofas.
What are the Car Wash Monthly Running Costs
|Staff (RM 1,300 per worker, 3 staffs in rotation)||RM 3,900|
|Staff housing||RM 1,500|
|Staff Commissions for upselling (5-10%)||depending on sale|
|Water & electricity bills||RM 1,000|
|Total Monthly Costs||RM 9,050|
You’ll need a minimum total of 3 staff, 2 working in rotation. These people are often foreign workers, and possibly UN cardholder refugees from Myanmar.
You’ll most likely have to deal with their accommodation as well. Assume you are able to rent a place near your shop, or oftentimes, above the car wash itself for around RM 1,500 a month.
Cleaning Detergent (Soap & Shampoo)
Car washes typically buy the detergent in bulk, and you can get the 20kg barrel of soap from Lazada for around RM 75:
Should You Buy an Established Car Wash Instead?
Alternatively, you can find out good deals on existing car washes that are advertised on sale on Mudah.my:
Most of these business are sold lock-stock-and-barrel. All in, with their workers, deposits, tenancy agreements, equipment and existing client base.
Although some of these look like a really good deal, I can’t help to wonder why are these businesses for sale. Like, is there anything wrong with it? Will you be inheriting a nightmare?
Everything is set up for you, including SOP & staff. All you need to do is to take over the management.
- The best-case scenario is if the last owner genuinely wants to sell the business because he/she needs the money to do something else.
- Which makes me wonder if the business is profitable, why would they want to sell it?
- You could be inheriting a nightmare.
Car Wash Business Risks & Solutions
|Foreign workers running away||Prepare a comfortable working and living condition for them|
|Workers stealing & pocketing the money||Get a POS system & make sure accounting is in check. Install CCTV|
|In certain areas, you might be dealing with ‘protection’ money||Due diligence is needed. Ask your potential neighbors|
|Damaging a customer’s car||Need proper SOP to train staff & prepare for the worst-case scenario|
|Customer accusing us of stealing car contents or damaging car||Install CCTV|
The car wash business is an honest, down to earth business.
The best is if you can set up shop near a housing area and get contract work with car dealerships & workshops.
Formula for success:
- Setup 1 shop and refine your working SOP.
- Achieve ROI as soon as possible, then save up 6 months of business running costs. According to my estimate earlier, this could take up to a year.
- With additional profit beyond the ROI & savings in step #2, consider opening up another branch or franchising it.
- Profit $$$
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