A white paper on a post-pandemic market, recently released by American Marketing Group (AMG), reports that personal consumption spending dropped 4 percent in the first half of 2020 compared to the same period in 2019 – a $303 billion loss in consumer spending. The decline affected both durable and non-durable goods. Of interest to car wash operators on the durable side, new-car sales saw significant drops in March, April, May, and June as reported in this space in the August issue. On the non-durable side, overall spending on gasoline and fuel oil declined by 25 percent.
Adtaxi, a digital marketing agency, released the results of its second Coronavirus and Automotive consumer survey in September. The survey offers a window into consumer attitudes regarding car shopping and how they have shifted due to the pandemic. It’s notable that 70 percent of respondents have lowered their car-buying budget as a result of COVID-19 – they’re still intent on purchasing, they’re just not willing to spend as much as in the past. That’s good news. While 66 percent are considering both new and used vehicles – and here it gets a little iffie for car wash interests – 56 percent say they have shifted their focus from new to used. New-car sales are known to be drivers of wash volume, but perhaps “new-to-me” will be close enough to “new” to keep the clean-car enthusiasm going.
The survey aims to gauge the motivations behind these behavioral shifts. They are, not surprisingly, economic in nature: 35 percent of respondents point to a drop in income, while 54 percent claim to be fiscally cautious due to the economic uncertainty. So, consumers either have less discretionary funds available or are simply holding on to as much of it as possible. Along with feeling the pinch, survey respondents feel less bound by brand loyalty. Price and value are becoming more important.
According to AMG’s white paper, consumer spending on services is far larger than spending on goods: $10 trillion on services last year compared to $4.5 trillion on goods. Overall spending on services declined 6 percent for the first six months of 2020 compared to the same period last year. Spending on transportation services, including auto maintenance, dipped 23 percent. Car washing is not separated out in this report, but the Auto Laundry News In-Bay Automatic Survey, starting on page 39 in this issue, finds that 61 percent of respondents experienced no effect on their car counts from COVID-19 restrictions. Twenty-two percent actually saw an increase in wash volume, while only 17 percent suffered a decline.
If the COVID-19 live panel discussion on Sonny’s Virtual CarWash Expo, Fall Edition is anything to go by, conveyor washes also suffered far fewer setbacks than many other businesses in the service sector. For example, according to panelist Justin Alford of Benny’s Car Wash they never stopped washing, initially voluntarily closing all self-serve vacuums and then reopening half. A second panelist, Andrew Zamora of Racer Classic Car Wash, said his washes also never closed, but experienced a 20 percent drop in wash volume for the first few days following restrictions, but business picked right up after that. A third panelist, Jim Deak of Jimmy Suds Car Wash, had the worst of it, obliged to close for a month – but only a month — a mere four months after first opening.
In his keynote address during the Expo, Paul Fazio, Sonny’s CEO, told his audience that he was grateful to be in the car wash business, a sentiment that will surely find wide endorsement in the industry.