1. Executive Summary This report furnishes a 5-year strategic plan for setting up and subsequently operating a successful car wash business in the city of Jeddah, Saudi Arabia. It analyses the car wash industry and local Jeddah market to propose operating a full-service express automatic car wash as chosen strategy. This will fill the market gap and satisfy customer demands by offering a superior customer experience than the widespread traditional 2 bucket manual wash currently offered in the market. This differentiation strategy will ensure competitive edge is maintained in the market that allows for the car wash to operate in a profitable way that maximises shareholder value creation as measured by a positive NPV. This was chosen based on insights gained from primary dara collected on local customer preferences and observations of competitors. Alternative strategy considered included operating an around the clock external only self service car wash which had USP of convenience for the car owners, as it offered quick car wash In under 4 minutes. Key risks considered included demand volumes not meeting forecasted levels, resulting in negative impact on profitability, The chosen location may not attract sustainable traffic count Which isthe key success element for a car wash with high fixed costs due to capital intensive automated car wash equipment and rent expense. KPIs identified included daily number of cars washed, wait time for customers and down time for the automatic car wash system, Further, contingency plans to mitigate key risks include expanding target market to reach corporate clients to drive traffic up in morning hours when household demand is low. Similarly, if market demand does not respond well to the differentiation strategy and customers are unwilling to pay premium prices then a low-cost strategy can be easily switched to by reducing. manpower fixed costs and marketing spend. A lower competitive price can then be offered to the market which will drive up sales volume resulting in more profit, but with thinner per unit ‘margins than before.a Contents 1 Executive Summary. son 2. Background Research 24 Global Car wash industry 2.2 Saudi carwash industry, 2.3. Types of car wash systems. 24 Jeddan’s car wash market and competitive landscape. 25. Jeddan’s Demography, 3. _ Strategic Analysis. oe 3.1 External environment analysis. 3.2 Jeddah Car Wash market competitive forces analysis. 3.3. Demographic analysis and Target Market. 34 Business Case Strategic option... 4. Strategic option 1: Ful service automatic car wath 4.2 Strategic option 2: Quick external only car wash 4.3 Sharcholder Value and Recommended strateny 4.4 Financial projections KPI to monitor performance Key risks assessment and contingency planning 7. Conclusion... 8. Appenain: 8.1 Primary Data collection from online survey. 8.2 Nores from site vis 8.3 Chosen Car Wash system - Oasis (US) Typhoon touch free 84 Forecasted Financials Reference list 0 12 13 14 14 16 17 18 2 2 26 a 27 34 35 362. Background Research 2.1 Global Car wash Industry The global car wach industry sat to grow at 2.1% CAGR and expected te reach USD39 billion by 2030 as per recent market research. (Business Wire, 2022). Industry trends show a shift ‘towards convenience as consumer lifestyle is evolving and car ownership is rising, which is driving the demand for car wash services up as people's life become busier and they prefer to have their cars washed professionally rather than doing it themselves. 2.2. Saudi car wash industry ‘CarOumersip pet 3000 people vs GDP per Capita og GOP pr capt constant 2000S. ots) Fg 1 Source: ma, 2008) IMF report fins that Lar ownership increases as eauiies gruw a standard of living which is indicated by a higher GOP per capita (2008). With Saudi Arabia undergoing economic and social reforms under Vision 2030, car ownership is expected to grow for the foreseeable future. The country witnessed highest GOP per capita in 2022 as per official data from Ministry of Economy and Planning (2022) and this trend is expected to continue. ‘aise their populations The harsh dessert climate, government subsidized local fuel prices in this il exporting nation and lack of public transportation system indicates reliance on cars for conveyance will remain at the forefront in this country. Further, the conservative society recently removed decades longban on women’s driving in 2018. This maylead to an increase in the number of cars on the road ‘as more women start driving gradually (Shannon, 2018). ‘Saudi Arabia GDP Per Capita Trend 42. sourc: (stats, 20252) ‘New car sales in Saudi Arabia are expected to grow at 2% CAGR to reach 517,000 new units being sold in 2027 (Statista, 2023b). Corona pandemic saw a drop in sales in 2019-2020 but has since regained traction. As per recent study carried out, there are 12 million active cars on the roads in the country, representing 1.30 cars per household (Ilussain, 2020). Saudi Arabia New Car Sales Trend = = =—2 = " - . secon 1828 a re inca ooo Fig3 Source: (stata, 20230)Thus. the growing car market isa key factor that affirms that the Saudi car wash industry will be financially viable to enter and operate a profitable new business venture. 2.3. Types of car wash systems The car wash industry can be classified as follows: tine) De eu ‘Manual Car Wash Labour intensive, traditional method of 2 bucket car wash with Interior cleaning done by staff. In Bay Automatic Car Wash | Automated external cleaning traditionally done via friction based rotating brushes method or, recently introduced ‘touchless technology based on high pressure water & air nozzles. Interior cleaning done by staff. Self Service Bays Do it yourself, equipped with automatic extemal car wash and vacuum to clean interiors by customer. Dati ig Service Includes detailed manual wash followed by wax and polishing. Other services offered include paint restoration, ceramic coating and steam interior detailing, 2.4. Jeddah’s car wash market and competitive landscape Based on primary data collected (Appendix 1), a considerable majority of Jeddah's residents (57%) have their car washed by their building's watchman rather than visiting a professional car wash center (367) or doing It themselves (7%). Saudl Arabia saw rapid modernization in 1970's cil boom which meant cheap foreign labour was brought in from South Asia to help build and operate much of the rapid urban infrastructure developments. Over the decades, the country has become reliant on foreign labour for low skill obs and domestic help. Hence the convenience and easy a bility of daily car washes done by building's watchman at a low ‘monthly cost of SAR 100 (GBP 21) has led to the professional car wash industry to be under developed in the country. This corroborates with secondary research available in the market. Newer startups with smartphone app-based car wash business model that provide on demand services atcustomer’ location are also finding it difficult to operate in the country (Ken Research. 2019) This is simply because the consumer demand is largely satisfied with the manual bucket wash done daily outside the customer's home by building's watchman (Appendix 1) Observations made via site visits to various car wash businesses in the city reveal majority of Jeddah’s car wash businesses operate with a manual setup, where attendants use hand held hoses, soap buckets and vacuums to clean cars. handful of automatic car wash centers ‘operate in the city (Appendix 2). ‘The market is highly fragmented without any dominant players and mostly consists of unorganized car wash centers that are owned by private investors and employ unskilled foreign workers on temporary basis. This means the quality standard of washing is low. Few professional level car wash centers also exist and they focus on more technical services like ishing and stcam cleaning (Ken Research, 2019). waxing, pe Types lca ear wash setup at petrol station ‘ar Spa Upecale Detailing sop and Car Wash Fig Source Sa, 2023) Market research shows average price of car wash at center is SAR 30 to 40 (GBP 6,50 to 8.50) (Ken Research, 2019). Survey respondents also gave similar response Indicating 50% washed their cars between price range of SAR 30 to 0 (GBP 6.5 to 10.5) (Appendix 1).2.5 Jeddah’s Demography idah is the second largest city in Saudi Arabia andis located on the west coast. itis the gateway to the Two Holy Mosques which are the most sacred sites for the religion of Islam. The population of the city is 4.8 million as per UN estimates (2023). It is expected to grow at average rate of 1.7% per annum. The city can be divided into 5 zones to for population density ‘comparison. The highest density is in the central zone which consists of high-rise apartment blocks, whereas North & West Jeddah consist of villas. ‘esd population density by ditit > seme Fg, Source: Hama, eta 2018), AAs per latest published offical statistics, leddah city recorded the highest traffic densit inthe country. 5.2 million vehicles entered the city on a monthly basis or 167 thousand on daily basic (Ministry of Transport, 2019). While official statistics on the number of active cars in Jeddah is‘not available. the above provides a good indication that the demand for car wash will be high for the foreseeable future,