Bicycle market: What’s going wrong with leasing and the second-hand market

​Traditional company bike leasing is on the wane, but demand for affordable e-bikes is growing. In this interview, leasing expert Sören Hirsch explains how innovative insurance models, more flexible contract terms and the high-street second-hand bike market could revolutionise the cycling industry.

​The cycling industry has enjoyed a period of strong growth, but is now facing new structural challenges in the leasing and insurance sectors. Whilst traditional company bike leasing has remained virtually unchanged since its launch in 2012, market players are now calling for bold reforms to tap into new target groups and strengthen sustainability. Sören Hirsch, a representative of the Hanover-based insurance and leasing provider Linexo, explains in an interview how modern comprehensive cover protects against downtime, why the second-hand bicycle market urgently needs to be integrated into specialist high-street retailers, and how untapped scope within the legal framework could revitalise the leasing market.

Sören Hiorsch: When we launched our leasing service in 2024, the market was already dominated by a number of established players. We specifically sought out a niche and identified this target group. Many large providers are primarily interested in huge volumes and tend to overlook smaller businesses. The response has proved us right: demand in this segment is extremely high. Decision-making processes in smaller firms are short, the amount of advice required is minimal, and we are highly satisfied with this target group. Particularly in times of a skills shortage, craft businesses are also realising that bicycle leasing is one of the few employee benefits that is completely cost-neutral for the employer.

A sensitive issue in the context of leasing is absence from work due to job loss, parental leave or long-term illness. How have you addressed this risk for both employers and employees?

In our leasing division, there is just one insurance package, which is included as standard in every contract at no extra cost. This provides comprehensive cover against loss of use. It comes into effect without any excess and without any waiting periods. In the event of temporary absences, such as parental leave or long-term illness, we cover the leasing instalments. In the event of a complete cessation of employment – that is, in the event of termination or death – we settle the contract directly with the bank. We take the vehicle back, and neither the employer nor the employee needs to worry about being left with the costs.

The second-hand bike market is growing massively in popularity, driven in part by bikes returned at the end of three-year lease terms. Where do you currently see the biggest challenges and opportunities in this area?

The topic of second-hand bikes is fascinating. Due to the economic climate and a marked tendency to save in Germany, we are currently witnessing an unprecedented situation: demand for bicycles in the lower price segment is higher than supply, because prices for new bikes have done nothing but rise in recent years. In the short term, only the second-hand market can meet this demand.

The problem is that, at the moment, 99.9 per cent of this market takes place online via so-called refurbishers. In my opinion, however, it belongs in specialist shops. A bicycle is a high-value product; customers want to see it, touch it and test ride it. We are therefore working hard on solutions to channel returned stock back to specialist retailers in batches. The retailer refurbishes the bikes, retains their margin, and the end customer gets a high-quality, regularly serviced bike at a fair price.

Many users are completely unaware that their insurance cover ends when the lease expires. What happens if I want to buy my bike outright after three years and continue to insure it?

This is an important point. As the ownership structure and the contracting parties change upon transfer – previously the bank and the employer, and subsequently the employee as a private individual – a completely new insurance policy is required. We have introduced a change in this regard with effect from 1 April, bringing the second-hand e-bike fully into line with the new e-bike. We insure the taken-over bike for the same sum insured and at the same premium as a new bike. If, for example, the e-bike cost 6,000 euros three years ago, we insure it for exactly that value again. If it is then stolen, we reimburse the customer the full 6,000 euros for a new bike, as this is their actual financial loss.

The so-called ‘Leasingcheck’ was recently launched in the cycling industry. You were involved in developing it. What exactly is it?

LeasingCheck was developed at the direct request of specialist retailers. There are now over 20 or 25 leasing providers, and almost all of them operate with different rates and service packages. In day-to-day operations, it was impossible for dealers to keep track of which customer had which package with which provider – in other words, what was covered by insurance or how much service credit was still available. LeasingCheck is a shared platform where, using minimal customer data, the dealer can immediately see where the customer is insured and what can be invoiced.

You are also calling for fundamental reforms to the bicycle leasing scheme. The system has remained virtually unchanged since 2012. What might some concrete new approaches look like?

The leasing scheme has been working well since 2012, but the system has become set in its ways. Nobody has given any thought to alternative plans in recent years. If we want to bring the price down for end customers, we need to break away from the established practices. Why, within the legal framework of the leasing decree, do we always stick to just one approach: a 36-month term followed by an offer to buy?

One could, for example, opt for a 48-month term, which would significantly reduce the monthly instalment. If this is combined with a pure subscription model, where the customer does not take ownership of the bike at the end of the term, the vehicle is then automatically channelled into the organised second-hand market operated by specialist retailers. The Ministry of Finance does allow for some flexibility in its guidelines; we just need to make use of it, rather than seeing everything in black and white. Models like this could be a real game-changer.