The car wash industry has been on an incredible growth path, much of which can be attributed to the interest shown by car wash aggregators and private equity firms. Not a week goes by without news of multiple acquisitions, mergers, or openings of newly built car washes. The instigator for all this attention and activity was the advent of the express-exterior format with its low labor requirement and, most importantly, its adoption of the unlimited wash plan or subscription concept.
Subscription services have themselves gone through a boom period, particularly during the pandemic. It provided consumers a convenient way to shop without visiting a store. Regular meal-kit deliveries became substitutes for restaurant visits. Streaming movies brought entertainment into the living room. Consumers signed up in droves — thanks to stimulus checks, they had more money to spend and were looking for ways to fill their now-extended at-home hours with things to do. In a post on her website, unitymarketingonline.com, Pam Danziger reports that the average U.S. consumer had fewer than two subscriptions in 2020. By the end of 2021, that figure had jumped to five, costing subscribers an average of $38 each or $190 a month just to maintain their memberships.
But subscription services require close attention and work to keep churn at acceptable levels. Churn has always been a problem. Danziger quotes from a 2018 study by McKinsey that found one third of subscribers cancelled within three months, and more than half cancelled within six.
That was then. Observers expect cancellations to accelerate following the rapid mid-pandemic growth. A study by the Kearney Consumer Institute, says Danziger, found that while 40 percent of consumers, overall, think they have too many subscriptions, more than 50 percent wanted to reduce their monthly subscription commitment to about $50. This is understandable. In an uncertain economy with high inflation raging, expenditures that looked like necessities in the past take on a much more discretionary characteristic.
Could this coming retail “subscription apocalypse” that Kearney foresees taint the car wash unlimited wash plans? Will churn become an even greater challenge to manage? Perhaps not. Having a service performed is not quite the same as purchasing a retail item. Consumers know at some point they are going to have that car washed. May as well remain a plan member and do it quickly, conveniently, and benefit from a deal besides.
Auto manufacturers are increasingly turning to subscription services, according to VNC Automotive, a UK-based provider of car connectivity software and hardware. “Like it or loathe it, automotive subscription services are here to stay,” the firm says. Rather than pay for an expensive option at the time of purchase, customers can activate or deactivate options to match their needs and budget. For example, consumers can subscribe to heated seats during the winter months and then let the subscription lapse in the summer.
This will require some adapting from the manufacturers who, intent on generating as much revenue as possible, will want to stick to annual subscriptions, while consumers want to use the hardware already installed in their vehicles, but only when they need it.
“It is clear that convenience and choice are key drivers behind a subscription model for certain vehicle features,” says VNC. That applies equally to warm seats in winter and a clean car.