In prior updates, we have continued to emphasize the same core message: the economy remains resilient, but inflation, elevated interest rates, geopolitical uncertainty, and a higher cost of capital are still shaping market sentiment and transaction activity.
That view has not materially changed. If anything, the latest data reinforces it. This is not a frozen market. Capital is still available, buyers are still active, and quality transactions are still getting done. The difference is that buyers continue to be more disciplined, lenders are more selective, and sellers need to support valuation expectations with clean financials, current performance, and a clear growth story.
Overall Sentiment
The economy continues to hold up better than many expected. Second quarter real GDP was revised higher to 2.2%, and real final sales to private domestic purchasers, a useful measure of underlying private demand, increased 4.6%. Consumer spending also remained firm in August, with personal consumption expenditures up 0.9% and real PCE up 0.6%. BEA, BEA
That said, the labor market is cooling. Employers added only 29,000 jobs in September, the unemployment rate moved to 4.2%, and prior months were revised lower. Wage growth also moderated to 3.0% year over year. BLS
This supports the same balanced view we have discussed before: growth is still present, but momentum is uneven. J.P. Morgan Asset Management’s Dr. David Kelly has highlighted this tension, noting that slower job and wage growth reduces the risk of a wage price spiral, but it also makes the economy more vulnerable if higher rates or energy costs begin to weigh more heavily on consumers. J.P. Morgan Asset Management
Interest Rates Remain the Key Constraint
As we have noted throughout the year, interest rates remain one of the most important variables for transaction activity. The next Federal Reserve meeting is scheduled for October 27-28, so the market is now focused on the inflation and consumer data that will be released before that meeting. Federal Reserve
The rate environment remains restrictive. As of October 2, the 2-year Treasury was 4.83% and the 10-year Treasury was 5.28%. U.S. Treasury
This matters directly for M&A. Higher Treasury yields affect mortgage rates, commercial real estate financing, acquisition debt, and cap rates. They also raise the return threshold for buyers, which keeps pressure on valuation multiples.
Morgan Stanley’s Andrew Sheets has framed the current market as one where inflation uncertainty and Fed communication can keep rate volatility elevated. Less certainty around the Fed’s path means each major data release has more power to move the market. Morgan Stanley
Inflation Is Still the Central Issue
Inflation has cooled from the peak, but it remains above the Fed’s comfort zone. August CPI increased 3.4% year over year, while core CPI increased 2.4%. BLS
Producer prices are also still elevated. Final demand PPI increased 5.4% year over year in August, with pressure showing up in energy, transportation, diesel, steel, and other business input categories. BLS
The Fed’s preferred inflation measure, PCE, is also still above target. August PCE inflation was 3.4% year over year, while core PCE was 3.0%. BEA
This is why inflation remains central to the outlook. Dr. Kelly has pointed out that the gap between CPI and PCE is especially important right now. CPI by itself may not look alarming, but PCE is the Fed’s preferred measure, and the Fed will remain focused on whether PCE inflation continues drifting lower. J.P. Morgan Asset Management
Dr. Anthony Chan has also argued that some tariff-related inflation may prove to be more of a one-time price adjustment than a persistent inflation cycle. That is an important counterpoint, but energy prices, geopolitical risk, and supply chain pressure can still complicate the path lower. Fox Business
Energy and Consumer Pressure
Energy remains one of the biggest swing factors. U.S. regular gasoline averaged $4.47 per gallon for the week of September 28, while diesel averaged $6.38 per gallon. Both remain significantly higher than a year ago. EIA
For consumers, higher fuel costs reduce discretionary income. For businesses, higher diesel and transportation costs can pressure margins. For car washes specifically, fuel prices matter because they influence consumer sentiment, driving patterns, and operating costs.
Major Items to Watch
The next few weeks will be important because several key data points will shape the Fed’s October decision and the market’s view of year-end policy.
The September CPI report is scheduled for October 14. BLS
The September PPI report is scheduled for October 15, and retail sales for September are also scheduled for release that day. BLS, U.S. Census Bureau
The advance estimate for third quarter GDP and the September Personal Income and Outlays report, which includes PCE inflation, are both scheduled for October 29. BEA
Implications for Car Wash M&A
The message for car wash M&A remains consistent with what we have been seeing throughout the year: active, but disciplined.
The industry is no longer in the easy-money growth phase that defined parts of 2020 through 2022. New development has slowed, capital costs are higher, and buyers are underwriting more carefully. A 2026 industry analysis described the market as one where the “gold rush” has met a ceiling: professional wash adoption is high, new express openings have slowed, and non-member retail traffic has become more pressured. At the same time, the report noted that profitability has not collapsed, with strong mature express sites still capable of producing attractive four-wall EBITDA margins. MMCG Invest
That is an important distinction. The car wash sector is not broken. It is maturing. Recurring membership revenue, automation, attractive margins, and fragmented ownership continue to support the long-term investment thesis. However, the market is becoming less forgiving. In this environment, buyers are paying closer attention to site-level performance, trade area saturation, membership quality, retail traffic trends, labor efficiency, utility costs, and the credibility of forward growth assumptions.
The International Carwash Association’s CAR WASH Pulse also continues to focus on industry sentiment, consumer behavior, revenue expectations, growth projections, and the effect of economic volatility on discretionary income. International Carwash Association
For sellers, this means valuation needs to be supported by real data. Buyers will continue focusing on current EBITDA, same-store sales, membership revenue, margin stability, labor trends, utility costs, and realistic growth assumptions.
Strong assets with clean books, recurring revenue, attractive locations, and defensible cash flow will continue to receive attention. Underperforming or ramping sites will still be marketable, but they need a clear operational story and may require more structure.
Strategic buyers and well-capitalized operators remain better positioned than highly leveraged buyers. Seller financing, earnouts, sale-leasebacks, and other structured components will continue to help bridge valuation gaps. However, elevated Treasury yields and higher borrowing costs will keep pressure on operating multiples and real estate cap rates.
Overall Takeaway
The takeaway remains largely unchanged from prior updates: the market is active, but disciplined.
The economy is not signaling an immediate recession, but the path forward is still complicated by sticky inflation, elevated rates, higher energy costs, and uneven labor market momentum. For M&A, that means buyers will continue to be selective, lenders will remain careful, and sellers will need to be prepared.
The opportunity is still there, but execution matters more than it did in the last cycle. The winners will be the groups that can present the financial story clearly, support valuation with clean data, identify quality opportunities, and create competitive tension in a market where capital is available but no longer cheap.
Jay De La Riva
Director – Sales & Acquisitions
Mobile: (520) 247-2339
jaydelariva@miracle-re.com