ZIGUP operates across a number of diverse but connected markets.
Customers have a variety of routes to access both passenger and commercial vehicles, and to accident & incident management services, including claims and repair, but very few participants can provide an integrated service for most or all of their needs.
Within these diverse markets, ZIGUP has developed a market-leading reputation as a large, integrated specialist operator focused on the LCV fleet rental segment across the UK, Ireland and Spain, together with provision of accident claims, hire and repair services of all vehicle types to large corporate and insurance partners in the UK.
ZIGUP’s owned end to end mobility services offering is a key asset in this context. This includes a substantial vehicle fleet totalling over 130,000 vehicles, over 1,200 call centre claims handlers, 350 legal advisers and one of the largest combined branch network and repair capabilities across its geographies.
LCV
There are many businesses in the UK and Europe offering such leasing and rental services, from single-location through to large multinational operators, where LCV supply is part of a larger offering of a broad range of vehicle types.
UK & Ireland and Spanish fleet customers have traditionally chosen to own their vehicles directly, but have increasingly taken out multi-year long term lease contracts or rented products for portions of their fleet. Rental offers greater flexibility in managing fleet size and lower capital expenditure compared to ownership; this is combined with the benefits that ZIGUP can offer customers in terms of additional fleet services, efficiencies, and vehicle supply and choice.
Accident management and repair
The UK market is highly competitive, with a broad range of participants ranging from smaller single garage service centres and body shops, through to large independent national chains, as well as in-house operations within large insurance companies.
Increasingly, these in-house operations have been viewed as non-core by insurers and major fleet providers, increasingly aligned with the outsourced model used by insurance brokers and smaller operators. There has therefore been a growing trend to outsource such requirements to networks of independent repair centres or to regional or nationwide bodyshop group operators, such as ZIGUP.
We differentiate ourselves from our peers in the breadth and quality of services we offer from our platform, however there are large competitors within the different elements of accident and claims management and repair. In Spain, the legal framework does not support credit hire and repair services, and repair centres tend to be more local operations.
Market opportunity
Our customer base is growing as the Group increases its share in the segments it operates in; from acquisitions and also as a result of underlying market growth as outsourcing continues to grow. Clients are attracted to the multiple services they can access from ZIGUP’s integrated platform, the simplicity this brings to complex processes, and our specialist technical expertise.
Our platform provides our customers both with greater flexibility and cost benefits derived from the greater efficiencies and national presence that our platform affords; and our clients can minimise operational friction and benefit from greater responsiveness by choosing to take multiple services from us.
Vehicle supply
Global vehicle supply chains and production capabilities have started to recover, together with some interesting new market entrants. With improved availability we will be able to accelerate vehicle onboarding allied to responsible remarketing of used vehicles.
Tim Bailey
UK Fleet Director
ZIGUP has relationships with over 40 automotive OEMs and historically has been one of the largest single purchasers of LCVs in the UK and Europe, outside of the traditional OEM dealership networks.
This strong supply-side relationship network means that the business typically has early access to new vehicle supply at scale. This is because our financial strength, responsiveness and ability to showcase brands and new models is attractive to manufacturers looking to place multiple vehicles as we continually seek to refresh and expand our fleet of over 130,000 vehicles.
COVID-19 and the regional conflicts have combined to create tight supply conditions for LCVs and new vehicles in general over the past three years, with manufacturing processes and supply chains significantly dislocated for both new units and parts.
While the left-hand drive markets, including Spain, have recovered much of their new vehicle supply chain liquidity, particularly for new cars, the right-hand drive market of UK & Ireland remains substantially under-supplied. This has continued to have consequences for both the new vehicle market and also for used vehicle pricing, which has remained at significantly higher levels than pre-COVID-19.
Continued lack of visibility around the supply chain easing, and the cumulative under-supply estimated at c.250,000 LCVs (in the years following COVID-19) in the UK and Ireland, means the supply-demand imbalance is expected to continue for a number of years before normalising, with a slow return to “normal” markets. In Spain however, improved vehicle supply is allowing the market to revert to closer to historic norms, although used vehicle prices remain above pre-COVID-19 levels.
EV & new technologies
The growing market for non-ICE vehicles, principally EVs, has also been impacted by supply chain constraints. For the emerging e-LCV segment, there is the additional challenge of limited range and payload capabilities of the current generation of battery technology and the supporting infrastructure.
This currently limits e-LCV real-world usability within a commercial fleet, together with the challenges of overnight charging away from a depot and in-journey and destination charging. With limited options for e-LCVs, customers are more focused on understanding their options for starting to adopt EVs, rather than significant scaling up within their fleets at this time.
Next-generation technology, in particular from newer market participants, does however offer greater range and flexibility potential for fleet users, and e-LCV adoption is expected to grow significantly in the coming years as these come to market. We are working to develop relationships with a broad range of current and new OEMs who are embracing new technology to support the energy transition for LCV fleets.
LCV rental
UK and Ireland
With total LCVs on the road in the UK & Ireland estimated at 4.6 million, with an average age of over eight years. The outsourced (leasing/rental) segment of c.800,000 vehicles makes up a modest but growing percentage of the total vehicle fleet. Demand within this market for LCV rental is driven by economic growth, together with the structural shift to outsourcing non-core operations including fleet management away from ownership.
ZIGUP has diverse end-sector exposure, with no sector representing more than 15% of the fleet and no customer more than 3%. Over 40% of our fleet is placed with clients working in the public sector, and less than 15% is with SMEs who rent fewer than five LCVs.
At present we are seeing strong demand from across the customer base, significantly exceeding the current supply of LCVs, giving us confidence in the longer term growth outlook for the Group.
A growing number of customers are also attracted by the range of ancillary services offered by ZIGUP such as telematics, fleet management and support services, as well as a range of specialist vehicles such as traffic management and refrigerated vehicles.
Spain
The total number of LCVs is estimated at nearly 5 million, and the LCV rental segment totals c. 850k. Of this, around 30% are cars or car-derived vans, a significantly higher proportion than in UK and Ireland, with an older average age of nearly 14 years.
Demand is impacted by similar economic growth factors as in the UK, but additionally by the strong tourist market, which is reflected in strong seasonal activity. GDP growth has been supported by public investment and remains above the EU average, helping demand in infrastructurerelated sectors such as construction, IT and telecoms. Our customers come from diverse sectors, with construction and support services segments such as infrastructure, safety and maintenance being significant.
There are growing market opportunities for EV solutions, including the provision of access to workshop capacity for corporate/insurance customers who have large fleets and need greater certainty of access. There are more significant market operators than Northgate, principally focused on leasing, but few offer the level of rental flexibility and regional services network that Northgate Spain can provide.
Demand continues to be very strong; improved vehicle supply will allow both a refresh of the existing fleet and offer opportunities to grow new business.
Neil McCrossan
Northgate Managing Director
Together with growing our workshop capacity, the progressive easing of vehicle supply throughout the year has been key to accelerating growth and enhancing our customer proposition.
Jorge Alarcon Alejandre
Managing Director Northgate Spain
Accident management, claims and repair
In the UK, there are estimated to be 40 million motor policyholders and around 2.6 million road traffic accidents annually, resulting in two million insurance-related vehicle repairs being undertaken. Each form of claim results in different and complex legal processes for the management of a claim, but will typically involve incident recovery, replacement vehicle loan and bodyshop or mobile repair.
The overall repair bodyshop market in the UK is estimated to comprise of some 3,400 bodyshop locations, with no single operator owning more than 100 locations. There are also networks of independent body shops which contract capacity together.
Our insurance partners are estimated to represent 17-20m policyholders, and typically contract with a number of providers to secure their hire/repair capacity needs, or as referral partners. ZIGUP owns 67 bodyshop locations and has a third party network of over 400 body shops. This places us in the top three providers of repair capacity in the UK, carrying out around 190,000 repairs a year.
The UK market for outsourced services has been growing as more insurance and corporate partners look to reduce their non-core operations. Depending on the business model of the customer, this can be for supporting their direct business for their own policyholders, or as referral partners for credit-based non-fault claims management.
There is also a growing trend of consolidation of outsourced partners and a focus on larger operators such as ZIGUP who can manage the complexity of claims and repair processes and provide the highest levels of customer service.
The trend to increased outsourcing of accident and incident management and repair services by insurance companies, brokers and other corporate partners is expected to continue; this creates numerous opportunities, both in the form of individual services together with a growing number of combined service opportunities across claims handling, replacement hire and repair.
2m
insurance repairs
annually
17-20m
policyholders represented by our insurance partners
The continuing trend for outsourcing combined with scarce supply of bodyshop capacity puts us in an attractive position as a trusted partner, able to provide cost efficient solutions for our partners.
Harvey Stead
COO, ZIGUP UK&I
