Leased bike usage has significantly increased by three times.
Many individuals are now leasing their bicycles through their employers, and frequently opting for high-end models. Jobrad Managing Director Florian Baur discusses the booming business model and the backlash from some dealers.
What's the reason for leasing a bicycle rather than buying it?
Florian Baur: The principle is quite straightforward: the employer leases the bike for the employee. And the leasing payments come straight out of the employee's gross salary. The bicycle only incurs a tax liability of up to 0.25% of its list price as a non-cash benefit, meaning 40% of its cash purchase cost can be saved.
Doesn't this encourage individuals to opt for pricier models - models they ordinarily couldn't afford?
Yes, that's absolutely what we witness. The average price of a bike we sell is approximately 3,800 euros. The usual bike market hovers around 1,000 euros cheaper. The savings inspire people to purchase bikes they wouldn't or couldn't normally buy.
Are the higher average prices mostly due to e-bikes?
Yes, over 80% of all bikes we sell are now e-bikes.
How popular has this business model become?
Within our sector, we've witnessed a growth of approximately 300% since 2019. The number of leased bicycles has tripled. As a company, we currently have 1.5 million bicycles on the road. It's fair to say that we've played a significant role in shaping the bicycle market in Germany. Numerous companies are no longer able to operate without corporate bike leasing.
In recent years, this market has seen huge peaks and troughs. During the coronavirus pandemic, demand was sky-high, yet supply was scarce because supply chains had collapsed. Now there's an abundance of supply, but significantly less demand. How does this impact Jobrad?
Fortunately, this doesn't affect our business model. We're still growing at a consistent rate. However, the trend towards corporate bike leasing is gaining even more traction. We're therefore exerting more pressure on the industry than ever before.
The Jobrad model is built on the premise that the company negotiates discounts with associated bicycle dealers. Some dealers are now decrying the excessive discounts. Is this justified?
We're now the largest bike buyer on the German market. And when we lease bikes, we receive a discount of 4-6% from the specialist dealer, increasing with turnover. These discounts used to be capped. We've lifted this cap. This garnered considerable criticism from the market, some of which was warranted and some not so much. I can understand the criticism insofar as the timing was ill-advised. We introduced the measure at a moment when the market was already destabilized, and many retailers were experiencing cash flow issues. But we also responded to this situation.
How did you respond?
With two key initiatives. One was aimed at cargo bikes, i.e., a segment heavily affected by the crisis. There's now a subsidy for every cargo bike sold. Secondly, we're giving a subsidy to dealers who provide outstanding service. We aim to motivate dealers to offer great service for job cyclists.
How much was the priciest bike ever leased through Jobrad?
We're capped at 14,999 euros. Some bikes are close to that. They range from high-end racing bikes to mountain bikes. Consumers can also spend a sizable amount on cargo bikes. There are numerous enthusiasts willing to delve deep into their pockets.
Florian Baur was interviewed by Nils Kreimeier.
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Why Jobrad didn't advertise for a long timeWhat percentage of Jobrad customers keep their bikesWhy Jobrad's logo now appears on SC Freiburg jerseys
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A word from our sponsor 1: Jobrad sinkt ohne Werbung vorne [2]: Employees decide whether to keep bikes they're leased [3]: Der Jobrad-Logo auf den Jerseys vom SC Freiburg 1: Despite lack of advertising, Jobrad rises to the top[2]: A good portion of Jobrad customers keep their leased bicycles[3]: Jobrad logo adorns SC Freiburg jerseys
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Employers are now offering bicycle leasing as a benefit to their employees, with many opting for high-end models due to the tax savings. This trend has significantly contributed to the increase in leased bike usage, resulting in a tripling of the number of leased bicycles since 2019.
Dealers are faced with the challenge of negotiating discounts with employers like Jobrad, which has become the largest bike buyer on the German market. With the average price of a leased bike at approximately 3,800 euros, the demand for high-end models has increased, leading to a shift in the bike market.
Source: www.ntv.de
