Ladies and gentlemen, we warmly welcome you to the Capital Markets Webcast, part four, strategy North America of the WashTec AG. I am pleased to welcome WashTec CEO, Michael Drolshagen, CFO, Andreas Pabst, as well as Uwe Scharfy, CEO and President at Mark VII. These gentlemen will guide us through the presentation in a moment. After the presentation, we will move to a Q&A session. With that said, I am handing over to you, Mr. Drolshagen.
Ladies and gentlemen, welcome to our Capital Markets Webcast on the WashTec Group's North American strategy. Let me begin with a clear overview. The U.S. is the largest and most dynamic car wash market in the world, and thus a key market for WashTec, and in particular for Mark VII. For us, North America is not just another market. It is the market that will determine whether we can further expand our global leadership position. Against this backdrop, today's focus is on three key success. First, service is the backbone of our business. Service secures our installed base, fosters customer loyalty, and acts as a firewall for our market share. Second, digitalization and data are our key drivers of efficiency. They enable higher availability, better control for the customer, and thus structurally higher profitability.
Third, now a stronger focus, consumables and clean are key growth drivers. Chemicals are not just an additional business, they are a highly profitable recurring revenue stream and a central component of our one-stop shop approach. At the same time, we see an opportunity here to clearly differentiate ourselves with sustainable, efficient solutions. Finally, a significant portion of the market is not yet actively addressed by us, our so-called sleeping customers. The interplay of service, digital, chemicals, and green and targeted market development is the core of our growth strategy in North America. Before we dive into the details, let me briefly introduce today's panel. I am pleased to say that today you will be guided through our strategy from three different perspectives. I will start by providing an overview of the market and our current situation.
Next, Uwe Scharfy, CEO of Mark VII, will take over and walk you through our U.S. strategy and the road to 2030. Finally, Andreas Pabst, our CFO, will explain the financial goals and implications. It is important to us to provide you with a comprehensive, integrated overview today. From our understanding of the market to the strategic measures and their financial implementation. Let me briefly go over the agenda. We will start by providing an overview of the North American market and our performance to date. Building on that, we will present Mark VII's strategy with a clear vision for 2030. This is the central part of this presentation. We will then move on to the financial targets and the economic rationale, of course, we will have plenty of time at the end for your questions.
The overarching theme is very clear. What have we learned? What will we do differently in the future? How does that translate into profitable growth? Let me start by making a clear statement. The performance of our North American business in recent years has fallen short of our expectations. It is important to us to address this openly. The key point is, for a long time, we did not sufficiently understand the market based on its own logic, but instead viewed it too much through our European lens. The U.S. market operates fundamentally differently. Different customer needs, different operating models, different economic levers. At the same time, North America is our largest single market, and thus of correspondingly high strategic importance. The conclusion is clear. We do not need incremental adjustments, but rather a distinct market-specific strategy.
It is precisely this new perspective that we would like to present to you today. When we look at the numbers, it becomes very clear why we had to take action. For one thing, our business has underperformed expectations. For another, there is a clear structural difference between North America and Europe. In North America, our business is more equipment-driven, while in Europe, service and consumables account for significantly larger shares. This is precisely the key point. Service and consumables are the high margin, stable, and recurring sources of revenue. This means our previous mix in North America was not optimal for sustainable profitability. Furthermore, we have not consistently addressed the market in certain segments based on our customer segments and needs.
Our conclusion is we must delve deeper in the market, clearly define where we want to succeed, and deploy our resources there in a targeted manner. With this focus, we expect significant revenue growth accompanied by disproportionately high EBIT growth. To understand the new strategy, one point is clear. The U.S. car wash market differs fundamentally from the European market. I would like to illustrate this across four dimensions. First, equipment. The market is dominated by tunnel systems with extremely high throughput. Speed is a decisive factor. A wash cycle often takes only two to three minutes. Second, customers. U.S. vehicles are larger, usage is more intensive, and above all, subscription models are widespread and are driving usage up sharply. Third, our operators. Operators expect maximum convenience and integrated solutions.
This extends to automated chemical supply and data-driven operations. Fourth, the market structure. We see consolidation at the top tier combined with many specialized niche providers. Overall, it is a clearly cash-driven business. The bottom line can be boiled down to three key concepts: speed, convenience, integration. It is precisely these three dimensions that we are aligning our strategy with. Let's now take a closer look at the structure of the North American car wash market because it is crucial to our strategic approach. What you see is there, the market comprises around 70,000 professional car wash locations with one dominant segment, tunnel car washes. These tunnels not only account for a large portion of the installed base, but also represent the core economic market if they have very high utilization and throughput rates.
In contrast are classic in-bay car washes, where we have traditionally been strong. Here, however, we see two things. First, in the U.S., the share of brushless solutions is significantly higher than in Europe. Second, the importance of this segment in the overall market is lower than that of tunnels. This is exactly where our key strategic point arises. We are currently well-positioned, but not sufficiently represented in all relevant growth segments. Another difference is the logic behind the segments. In the tunnel business, speed and volume are the primary factors. In the IBA segment, flexibility and specific use cases play a greater role. In areas such as JetWash or truck and bus, our opportunities are currently still selective with a priority on digitalization.
Therefore, we must sharpen our focus, invest strategically in the relevant segments, and where necessary, expand our portfolio in a targeted manner. The key message is therefore, the North America market is highly segmented, and success means addressing the right segments with the right solutions. Our strategy is based precisely on this market logic. What we specifically derive from this, what priorities we are setting, and how we intend to further develop Mark VII by 2030, Uwe will explain now this to you in detail. Thank you.
Thank you. Good afternoon, everyone, and thank you for joining us. Over the next 20 minutes, I want to take you to North America to show you the market we operate in, the company we have built there, and the strategy that will carry Mark VII to 2030. Let me start with the market itself, because the opportunity in North America begins with demand that is large, durable and growing. Consider the foundation. There are 288 million registered light vehicles in the U.S. Americans are driving more miles each year. They are washing their cars more often, 12 to 13 times per vehicle on average every year. Total consumer spending on car washing in the U.S. runs to about $16 billion-$18 billion annually.
Registered vehicles, rising mileage, increasing wash frequency, growing consumer spending, every one of these driver points in the same direction, up. The slice of that world we serve directly is equipment, service, and consumables, which is a $2.3 billion market across the U.S. and Canada in 2025, and it is growing. By 2030, we expect it to reach $3.3 billion with a compounded annual growth rate of around 7%. With that, equipment and consumables are of similar size, roughly $0.9 billion and $0.8 billion respectively, while service adds about 30% on top of equipment revenue. There's also a truck and bus segment worth an additional $300 million in the U.S., a segment where Mark VII is not presently today, but one we are aware of. So the picture's clear.
Strong underlying demand, healthy structural growth, and a market that rewards the player who is closest to the customer. That is the backdrop of everything that follows. Next, the competitive landscape, and this is where the opportunity sharpens. The North American market shows a very particular shape. Strong consolidation at the top and highly fragmented field below. A small number of players generate more than $100 million in revenue. Below them sits a long tail of smaller competitors in the $50 million-$100 million range, the $20 million-$50 million range, and many more under $20 million. A couple of points of orientation. Sonny's sits at the large end as a reference point for scale.
While Istobal appears on the landscape, it does not generate its main revenue in the U.S. and Canada, so it is not fully comparable to the players competing head-to-head in our market. Why does this structure matter? A market that is consolidated at the top and fragmented below is a market where a focused, well-capitalized, full-line player can take share, both by competing for the large multi-site operators and by consolidating the fragmented middle. That is precisely the position Mark VII is building towards. Who is Mark VII? Let me give you the company at a glance in four numbers. 60 years of history, founded in 1966 in Arvada, Colorado. Roughly 5,500 Mark VII car washes operating across North America today.
A round 275 committed employees in North America, and of this, approximately 130 service staff backed by additional local partner technicians on the ground. Those numbers tell you something important. This is an established, deeply rooted business with six decades of installed base, a substantial service footprint, and a committed local team. That installed base and that service presence are the platform on which we build everything else. I would like to show you now a small video about Mark VII. Operator, please start the video.
Building a strong community and culture is a top priority because we know that our people are the foundation of our success. We have a history of talking about this place being like family. Working here, it's an environment of great spirit and great opportunity. It's a real car wash company. Most of the people in the company have huge knowledge about how to clean a car. People are passionate about what they do, who are so committed to success. That's what I love in Mark VII. What sets Mark VII apart is our ability to deliver a complete future-ready car wash solution that combines German engineering precision with North American market expertise. We lead with innovation from touchless and soft touch systems to advanced water recycling and digital monitoring tools.
Our technology is designed to maximize uptime. Our customers know they can count on us for reliability, responsiveness, and results. Their factory is in the U.S. They make that stuff in Denver. It's easy to get. They're in the middle of the country. I found there has been no supply chain issues, which I appreciate. Today, running a factory means working with your teams to solve new problems every day. Those teams today include the supply chain, vendors from all over the Denver market, all over the U.S., and really all over the world. What truly differentiates us is our service model. We offer a full-service approach from site planning and installations to training, maintenance and remote diagnostics. At Mark VII, we make car washes, we service car washes, and we monitor car washes.
We're here for you on your behalf. We're looking at your car wash all the time. We're looking at the history. We're looking at the errors that are going through your machine. We have a better understanding of your car wash than anybody else is our goal. It's our name on the piece of equipment, there's a bit of pride that goes along with anywhere from the factory in Denver, all the way up to the service technicians and sales teams here. Our technicians are local, responsive, and deeply knowledgeable, which translates into faster support and higher customer satisfaction. You don't want to buy a machine and be stuck on an island and not have service. Without service, you don't have a machine. Service is first and foremost the best part of the Mark VII that I use.
Mark VII does truly want to do everything right. They're proud to have us as customers. We're proud to be part of Mark VII. They do business like I want to do business. My vision for Mark VII is to lead the transformation of the car wash industry into a smarter, more sustainable, and more customer-centric ecosystem.
Let me add a little more detail on the business itself. Mark VII has been part of the WashTec family since 2006. We operate from two locations, our headquarters in Arvada in Colorado, and a facility in Burlington, Ontario, which is serving the Canadian market. Our Colorado footprint comprises of three buildings, about 120,000 sq ft on eight acres, with a team of around 275 people. On the product side, we comb ine local manufacturing with the best of WashTec. In Colorado, we fabricate and assemble equipment built for the North American market, local for local. The SL-1, which is a durable speed tunnel, ChoiceWash, AquaJet, SoftWash, and JetWash.
From the WashTec in Germany, we import the SL-2, which is a durable high-end tunnel, WheelWashers, AquaPure, as well as some key components such as the side brush carriages, WheelJets, and hub scrubs. What sets Mark VII apart is the completeness of our model. We cover the United States and Canada through both direct sales and distributor network. We provide full service coverage, and we serve the consumables market with our own private labeled chemicals. Mark VII is a fully integrated equipment service and consumables business anchored in the North American business powered by WashTec. Here you see our product portfolio at a glance. It spans the full spectrum of professional vehicle washes, from in-bay automatics to mini tunnels, short, and long tunnels, self-service, and water reclaims, as well as auxiliaries such as dryers, reverse osmosis.
All those cover the needs of fuel and convenience retailers, professional car wash operators, and fleet customers. Mini tunnels are considered when an in-bay automatic is converted to a tunnel in a very small space, usually minimum of about 37 feet. With that market and the company in mind, our road to 2030 rests on five strategic pillars. Pillar number one, geographical expansion. For us, focus means servicing the top states directly so we can be as close as possible to our customers. Pillar number two, service excellence. Our customers benefit from maximum uptime, high convenience, and reliable availability. Pillar number three, True Green leadership. Sustainability that pays off. The smartest way to run a sustainable car wash is less water, less chemistry, lower cost, proven at scale. Pillar number four, digital and intelligence.
Digital solutions that empower our customers and differentiate Mark VII from our competitors. Pillar number five, the portfolio completion. Winning as a one-stop shop, closing portfolio gaps to share, scale faster, and monetize profitable niches. Let me take you through each one of them. First, geographical expansion. North America is not a homogeneous market. As the map shows, the top 15 states each have more than 1,600 car wash sites, while the bottom 15 have fewer than 200. Where we compete matters enormously. Our expansion logic follows the volume. We are expanding in the high-volume wash markets with direct sales and direct service because direct presence keeps the customer relationships close to Mark VII. In some areas, we will operate hybrid territories alongside our distributors. Equally important, we are establishing direct chemical sales channels in these high-volume markets.
This is what lets us participate in the large tender of major multi-site operators, tenders that are simply not accessible through an indirect model. It directly supports our push into the convenience store and fuel station segment, as well as professional car wash operators. The ambition shows in the coverage numbers. Today, our direct coverage reaches around 180 million people for equipment and 55 million for consumables. In the future, that grows to roughly 270 million for equipment and 190 million for consumables. On the consumable side, that is more than threefold increase in direct market access. Second, service excellence. In this industry, uptime is everything. Every hour a wash is down, our customers lose revenue. Service is not a cost center for us. It is a competitive weapon. We are investing in three areas.
First, a new training excellence center, enabling faster onboarding of service technicians and extending to the training of our customers and distributors. That is driving efficiency and higher quality across the network. Second, we are strengthening our leadership in remote monitoring. Today, we already solve 65% of all issues remotely from Colorado for our key account customers. We are now rolling that capability out to all of our North American customers, meaning faster responses and increased uptime. Third, we are transforming towards data and AI-driven service. By combining the data we already hold with artificial intelligence, we enable smart systems that deliver faster, more efficient response times and transparent reporting for our customers. The outcome is higher uptime, and with it, stronger customer loyalty. Third, True Green leadership.
Sustainability in our industry is not a marketing exercise. It is economics. Less water and less chemistry mean lower operating costs for our customers. Green that will pay off. Our path here has three steps. We will introduce our own formulations for True Green chemicals. We will significantly expand our consumable sales network geographically, as I described previously under pillar number one. Once a certain volume threshold is reached, we see the potential to insource consumables production in the future. A clear growth path has be en built. Mark VII intends to lead the green transition of the North American car wash market and to capture the margin that comes with it. Fourth, digital and intelligence. The headline is the launch of Car Wash Assistant in North America.
Car Wash Assistant is being rolled out successfully across Europe today, and we will bring it across the Atlantic. The goal is simple, reduce downtime, increase uptime. It is a key tool for easing operations at convenience stores and for enabling unmanned sites, which is where this market is heading. Alongside, we are expanding mymarkvii.net, our digital interface for the customer. Billing, service reports, machine status, water quality, electricity consumption, wash programs, configurations, key performance indicators, everything the operator needs in one place. Digital is how we differentiate and how we stay embedded in our customers' daily operation. Fifth, portfolio completion. Our ambition is to win as a one-stop shop, and that means four work streams. One, modernization of our in-bay automatic solutions.
We will strengthen our core market leadership by enhancing existing technologies and closing featured gaps with most features launched by 2028. Two, insourcing of certain key components currently sourced externally. This increases our margins, improves system integration, and gives us greater control over supply, with most of this insourcing completed by 2028. Three, the introduction of new innovations. Targeted product and features launches between 2027 and 2029 that are new to the North American market to close a portfolio gap and sharpen our differentiation. Four , entry into a new product segment. We see significant market potential in the segment we do not yet cover today for a customer base we already serve very well. We are currently evaluating several avenues to enter this market, and the timeline will depend on the avenues we select.
Let me close by being direct with you, because you deserve candor as much as ambition. I'm not satisfied with where Mark VII stands today. We have a 60-year heritage, a strong installed base, and the backing of WashTec. We are not yet the player where we should be in the North American market. There's a great deal to accomplish. I see that clearly, and we are ready for the challenge. We're not here to defend a position. We are here to build one. Our ambition is clear: Make Mark VII a successful leading player in the car wash equipment manufacturing business in North America. What gives me confidence and not optimism, it is concrete plan with concrete actions behind every commitment.
Let me show you what I mean by walking through what Mark VII will be in 2030 and the actions that will get us there. By 2030, along with our partners, Mark VII will compete to win in every product category that matters in this market. The white space is real. Every gap we close is share we capture and revenue we add. A modernized in-bay automatic line, a wave of innovations landing through 2029, and a brand new segment we do not touch today. That is a broader product engine and a bigger addressable market for the same customers we already serve. Mark VII will sit right next to its customers, not at the end of the distribution chain, but face-to-face in the markets that drive the volume.
Direct sales, service, and chemical channels in the highest volume states unlock something we cannot reach today. Those are the large multi-site tenders where the biggest contracts are won. This is how we convert proximity into pipeline and pipeline into recurring revenues. Also by 2030, Mark VII will be a great development center in North America and an engine that is building products designed for this market. We will be putting our money where our ambition is by at least doubling our R&D efforts. That investment, combined with insourcing key components that we buy externally today, lifts our margins, tightens our supply control, and turns innovations from a promise into a pipeline. Uptime will be our signature. T oday, we already fix two out of three issues remotely from Colorado with our key account customers.
Tomorrow, we extend that reach to every customer in North America and supercharge it with data and AI. Every hour a wash stays running in perfect condition is revenue for our customers and loyalty for Mark VII. In a market where service revenue rides on top of equipment, this is not just better service. It is a higher margin and a more defensible revenue stream. The most important of all, our people. None of what I have just described happens on a slide. It happens because of the Mark VII team. We have six decades of deep part one knowledge sitting inside this company. Knowledge of these machines, these customers, this market that you simply cannot buy.
By 2030, we will have grown that knowledge, not lose it, and we will have paired it with fresh talent and fresh ideas that push us forward. Experienced personnel that mentor the next generation, combined with the new thinking, will energize our veterans. We need both. We will invest in both, because a strategy is only as strong as the team that executes it, and this team is ready. Mark VII will not just participate in the green shift, we will lead it. Our own True Green chemical formulations and a far wider consumables network turn sustainability into a profit center with higher margin products for us. In this industry, green is not a cost we absorb. It is a value we create. This is my response to you. Yes, there's much to do.
We will not pretend otherwise, every one of these commitments is backed by a specific action on a specific timeline in a market that is large, growing, and ready for a focused full-line player. With the action we are planning, I'm convinced we will succeed with our strategy 2030. We know where the growth is. We kno w how to reach it, we have started executing. Thank you very much for your attention. I would like to hand now over to our CFO, Andreas Pabst.
Well, thank you, Uwe, for this good and very profound explanation of our strategy in North America. Hello, everybody. Good to have you here. Ladies and gentlemen, let's now touch some of the financial implications about what you have heard. I guess you fully understand that we cannot dive too deep into the figures due to the competitive reasons. Nonetheless, please find our key statements for North America on this slide. In all discussions we had over the last months developing the strategy for North America, we focused on rising revenues with over proportional development of our profitability. We are targeting an up to 50% increase of revenue until 2030, and in terms of EBIT margin, we want to knock on the double-digit bill.
All that we want to achieve by an optimized capital allocation, meaning low single million CapEx per annum in North America, ramping up local R&D team with strong ties to our team in Europe. What Uwe already implied, we have learned from the past that we cannot and will not do all by ourselves. We open up for partnerships where appropriate to relieve our own spend. If we now look a little bit closer to the expected revenue stream, we see that on a long term, Mark VII was somehow a EUR 90 milli on company, influenced over the last years by some contractual effects with key accounts and by the general market trends, as Uwe explained before. That is what we change now with our new strategy.
Especially with our geographical expansion and our investments in service excellence, we will be able to increase revenue in the next two years. We expect a double-digit CAGR. We have clear target figures for every new sales rep and service technicians we hire in the designated new areas, meaning strong focus on controlling of the expected results is given. Midterm, we still believe that we can achieve a mid-single digit CAGR. That further increase will be supported by our additional investments in our ambition for True Green leadership and the enhancement in o ur value proposition and our product portfolio. Just a few words about what we believe in the development of recurring revenues, meaning service and consumables. As you have seen on Michael's starting side, this is very important for us also in North America.
We focus on that business here as well. We expect to increase the ratio of recurring revenues until 2030 to 40%-50%. Coming now to EBIT. As you see in the past, the total EBIT was very volatile, mainly related to up and down of equipment business and in general, shrinking over the last years. This we will break with our recurring revenues and our strategy initiatives for service excellence and our improving digital intelligence. Both programs are focused on higher efficiency and profitability. The strategic initiatives for geographical expansion, portfolio completion, and the green leadership will come along with higher revenues and additional EBIT. For me, it is important to mention here that for every strategic initiative, we made detailed business plans.
You understand that I will not go into the details here, but I can assure you that for every move we make with our new North America strategy, we, the management board of WashTec, requested that we have an over proportional growth in EBIT. We are aiming for a double-digit EBIT margin till 2030, also in North America. I am very happy that our local management, Uwe and his team, is here fully on the same page. Having said that, I thank you for your participation and open the floor for questions you might have. Michael, Uwe, and myself are happy to answer your questions. I'm handing back to the operator now.
Yes, thank you very much for your presentation. Ladies and gentlemen, now it's your turn. We are opening the Q&A session now. If you would like to ask your questions in person via audio line, please click on the Raise Hand button. If you're dialing in by phone, please press star key nine to raise your hand and star key six to unmute yourself. Additionally, you're also welcome to post your questions in our chat box. We have already received a risen hand by Mr. Wolfgang Specht. You may unmute yourself now. I just sent you an invite. Mr. Specht, can you hear us? I just sent you an invite to unmute yourself. I think we have some complications with Mr. Wolfgang Specht.
I will check our Q&A chat box where we have not received any questions so far. Mr. Wolfgang Specht, I will send you an invite to unmute yourself again. I think, Mr. Wolfgang Specht, maybe you can type in your question into our chat box and I can read it out loud for you. All right. Ladies and gentlemen, if you have any questions, please raise your hand or put your question into our chat box. I'll be happy to read it out loud for you. We have not received any questions in our Q&A box yet. I will send Mr. Wolfgang Specht another request to unmute himself, just in case. I think there are no questions so far, nor other risen hands than the one I have received from Mr. Wolfgang Specht.
Here we go.
With that said, we already received one from Mr. Moritz Walz in our chat box. He says, "Can you elaborate on the CapEx plans for America?
Yeah, I'll take this question. Thank you, Mr. Walz, for asking this question. I guess I said it in, let's say, in a side sentence. Yeah, so we made really for every single step we want to make, we made really detailed business plans that includes, for sure, all the CapEx we need for the different plans. What is important, or what can I say here is, that we do not see for the next years, in any year, really a high CapEx spend. It is always a low single-digit million EUR number which we have there. It's overall a little bit more than we have today. That's correct. Yeah, we need to invest, we want to invest, but overall, not really big money.
All right. Thank you very much, and thank you very much, Mr. Walz, for your question. I don't think Mr. Specht is able to unmute himself at the moment. Mr. Specht, if you still want to ask your question, maybe you can put it into our chat box, or you can always contact investor relations at WashTec. We have received another question in our chat box by Mr. James Ogilvy. He's asking, "You mentioned that the structure of the market is quite fragmented other than the four or five large players. Would it make sense for you to play an active role in consolidation if the opportunity arises?
Should I answer?
Yeah.
Okay. What we want to do as a first step is to go into specific segments to get a larger market share. For sure, if we see a chance to consolidate, then we take this also into consideration, for sure.
Thank you very much, Mr. Ogilvy, for your question. We have not received any further questions so far or risen hands. Ladies and gentlemen, if you have any further questions, please feel free to ask either by raising your hand or by placing your question into our chat box. I think there are no questions so far anymore. As we have not received any further questions, we may come to the end of today's call. No, there's no question anymore. Thank you for your interest in WashTec. With that said, actually, there's another question by Mr. Walz. He's asking, "Is the order intake in the U.S. still positive in the U.S., the momentum?
Yes. I would like to answer this. We have very good positive momentum, especially in this year. Order intake, even at the end of last year, has picked up considering the economic factors. I must say that it's really good. We are above target in order intake. I see the momentum. There was some in 2023, 2024, people were holding back a little bit, it's definitely 2026, I see a major uptick on this one, in all the segments also. It's for us in the tunnel as well as the in-bay autom atic. Throughout all of our customer segments, I see positive developments.
Perfect. Thank you so much. We actually made it, I think. Mr. Specht, can you hear us?
Yes.
Perfect.
Hello. Can you hear me? Okay. The system is tricky. Three or four questions from my end, if I may. First, regarding your service employees for the U.S., the figure 135 looks very low. How are your plans to ramp that up, to get better coverage, or are there any plans to add more direct personnel? The second one is the same slide of Mark VII since 2023. I'm very sure you're making detailed channel checks. To which competitors did the business you were missing out since then went mostly? Third question is, what happens to the tail end of the market? A colleague already raised the question if there will be an active consolidation.
Do you also believe that some smaller competitors will simply fade out and leave the market? That would be the first three from my end.
Maybe I can answer t he first one. The first one, in terms of how to ramp up the service personnel, it starts all with hiring the right people, right? This is very important and putting up a proper training program. One of the pillars is also a training excellence center where we not only train ourselves, our employees, but we're also going to train our distributors and as well as some of our customers, because some of our customers have service direct, right? It's all about how well you perform, especially in America, the service is everything. A customer doesn't want to wait a full day to get this machine fixed. How are we going to scale this up?
I think with the right HR strategy, and we're also using some of the weaknesses from our competitors that we currently see in the market, especially on the service side, we're taking advantage of that, and also to recruit the right people in the right places. Hiring the right people is also, we're doing a thorough analysis of each area where we add more people, because it requires a certain amount of machines that need to be in that market for a certain amount of people. With our new training strategy, also, our people are continuously tested and retested to see the skill level.
If there's any lacks in certain areas, we can retrain them, reskill them, but we're very strict on every level, not just in service, but also in the sales performance and chemicals to make sure our people are performing to our expectations.
Second question?
The second one was about to which competitors did our machines go? Maybe if I answer the question and then you can add something, Mr. Specht. If you look at the revenue streams we had over the different years there, you can see that from 2023 onwards, we had declining revenues in North America. I guess that is much more related to two topics. One topic is that the overall market was shrinking a little bit. To our understanding, that was also for some of the competitors. Late in the year, meaning the year before, we had some topics with one of our main customers where a big contract was still under negotiation, and during the negotiation, this customer did not order too much machines. That is mainly the two explanations for the shrinking revenue streams from 2023 to 2025.
Yes, definitely, it was in the middle of the negotiation. If you look at the North American market, it was declining in 2020. You saw already the order intake at 2023, not just with us, but throughout the industry. If you talk to our competitors, there's similar pictures to this. 2024, you really saw 2024, 2025. However, as I mentioned, it has been greatly picked up now at the end of 2025. It was when you have the large key accounts and when you're in the middle of the renegotiation of a year-long contract, then they start to be a little bit more careful in that specific year. Thankfully, we have secured long-term contract with our key accounts, with all of them.
This is very positively to see. I think we're going to have momentum out of this in the next years, for sure. What you also can see is the geographical expansion. Also we make sure that we have the right people, salespeople, measure them accordingly. We're expecting also an increase in sales in terms of certain areas that we determined would be good for the future.
Third question, I take. It was a question if we see more consolidation or disappearing of our competitors or small competitors in the U.S. market, if there's any tailwind there. We think that the market was consolidated, especially between 2020 and 2024. We don't see a huge consolidation in the next two, three years. Today, there is more disappearing. We expect that the one or the other small machine provider or machine producer will disappear because of the competitiveness of the other actors in the market.
Thanks a lot. If there are no other questions, I will continue with the last one.
Yeah, you're welcome.
Okay. On the chemical side, if I understand you right, you will, for the time being, continue with a white label solution. Are there any important competitors in the U.S. on the equipment side that have their own chemicals production, or does everybody use a white label solution?
There's definitely some of the larger players. They do have their own chemical production, of course. When you have your own chemical production, it always helps with the attach rate, when you can sell bundles of equipment, chemicals, and service. Yes, there's some of them, the larger ones, but the smaller ones, they usually do white labeling. It's a calculation, to be honest. If you reach a certain number, meaning so many thousands of t ons, then it is worth exploring and investing into your own chemical production. A certain number has to be reached.
Okay, for the time being, you're fine with white label, but if your growth plans materialize, it could be a natural step to move to your own production.
Yes, exactly.
Okay. Thanks a lot.
Thank you very much, Mr. Specht, for your questions. In the meantime, we have received one more question by Mr. Ogilvy. He's asking a question on the strategy of insourcing. Some of the components that are purch ased from third parties, what are the main components that you are referring to, and how complicated is it to insource them? Is it more of an R&D issue or a question of manufacturing capacity?
Go ahead, please.
Okay.
Local market.
One is the industry buys from each other in the car wash industry. Of course, we used to have different accelerators that were in our portfolio that were no longer in our portfolio. One is, for instance, the reverse osmosis that I mentioned earlier. We're offering this again because based on our cost structure, we can produce it at a very competitive rate. Yes, there are certain components that we buy in. I wouldn't want to go into the details yet into which components we're looking into. However, there's certain skills that is required to do the R&D project to develop something, but we look deeply into it. What are we paying into the market, or what do we have to pay, and what will it cost us?
We have very detailed business plans before we make decisions to produce something or develop something on our own and then produce something on our own. In terms of R&D capacity, yeah, that was, I don't want to say a roadblock, but it was basically in the past, something that we didn't have enough capacity, but as you saw in my presentation, that R&D will at least double in the next years. We already have specific plans. We already are hiring the right people for that. R&D, yes, we need to bring more people in. I also want to combine the experience of what we have with our seasoned engineering team together with newer technologies and fresh minds that enter the industry.
In terms of production capabilities, we have eight acres, so we have a really large facility. We have three buildings, manufacturing space is not a problem for us. We can expand further. We're ready.
It was a more R&D approach in the past, we have managed now to build up teams driven by U.S., but also supported by Augsburg employees to speed up here, we are already started with one or the other topic.
Thank you so much. Mr. Ogilvy has another question. He says, "Sorry, one last one. Is it still economic to source some components from Augsburg, could these be insourced directly in the U.S. as well?
Purchasing is you.
We made here already very detailed examination of our complete supply chain after the liberation day here, as of today, we are only delivering 30% of our purchasing volume from North America is coming from Europe. That is already pretty low, I would say. Nonetheless, we are enforcing our purchasing and our supply chain team in North America to do even more local. Overall, once again, I think we are in a good shape, we are moving further to be even more local for local.
13% is a low percentage.
Yep.
One three.
One three.
All right. Thank you very much. I would say we come to the end of today's Capital Markets Webcast. Thank you for your interest in WashTec. If you have any further questions at a later time, please feel free to contact investor relations. A big thank you also to the management team for the presentation and the time you took to answer all the questions. I wish you all a successful day. I'm handing over to you, Mr. Drolshagen, once again for your closing remarks.
Ladies and gentlemen, on behalf of the management board, we would like to thank you for your interest in our company and wish you a pleasant day. Thanks very much.
Thank you. Bye-bye.
Thank you.