Sustainable & Smart: E-bikes: Hamburg Commercial Bank finances booming leasing business

In March 2021, the Zweirad-Industrie-Verband (ZIV) [The German Bike Association] presented fantastic figures for the previous year. And despite the current supply shortage of new bicycles, the figures are expected to remain as impressive in the coming year. "Bicycles, with and without electric motors, have been and continue to be the mode of transport of choice, and have greatly benefitted from the unprecedented situation over the past year," reports the industry association.

In figures: With 5.04 million units sold in 2020, sales of bicycles and e-bikes were a massive 16.9 percent above the previous year. 38.7 percent of these were premium e-bikes. Turnover for bicycles and e-bikes reached 6.4 billion euros in 2020 – an increase of 60.9 percent compared with 2019. This shows that not only are more and more Germans riding bikes, they are paying significantly more money for their bikes than before. The average purchase price per bike in 2020 was 1,279 euros. And still rising.

"The fact that cycling is more relevant than ever has once again been made very apparent, particularly during the corona pandemic. Both bicycles and e-bikes are indispensable modes of transport both now and in the future, and offer virus-safe, active, environmentally friendly mobility," says ZIV Managing Director, Ernst Brust.

AGL Activ Services GmbH is also benefitting from the boom in premium and high-priced e-bikes. As well as the mid-tier leasing business, the medium-sized, owner-operated leasing company from Hanover specialises in leasing exclusive electric bikes. The company, founded in 1990, has also been the exclusive partner of EURORAD, a wholly owned subsidiary of the Zweirad Einkaufs Genossenschaft eG [Bicycle Purchasing Cooperative] for some years.

Both partners, AGL and EURORAD, specialise in the "salary conversion model". With a small portion of their gross salary company employees finance the monthly leasing instalments for premium company bicycles, which they can also use outside of work. There are usually subsidies available from the employer for switching to bicycles. A win-win for the company and its employees. For a comparatively small amount of money employees get a lot of bicycle, and what is more, they save on tax. By using the conversion model the companies also gain a good reputation as a modern employer and benefit from a fitter workforce. State and federal authorities are also increasingly encouraging their employees and civil servants to switch to cycling and are enticing them with appropriate offers.

But the financing model behind this is significantly more complex and demands professionals. AGL has been cooperating since 2019 with Hamburg Commercial Bank, which is again active in the leasing industry in Germany following its successful privatisation. Hamburg Commercial Bank reliably refinances the e-bike segment of AGL through its "Smart Lease Platform". "The challenge lies in the large numbers. There are numerous individual contracts with various lessees and models of bicycles. All these contracts have to be combined and provided with an interest and repayment schedule," says Alexander Tschirpke, Relationship Manager Leasing/Factoring at Hamburg Commercial Bank.

The great success of our support of AGL customers testifies to the high level of competence of Hamburg Commercial Bank in the area of leasing. HCOB offers the setup and refinancing of leasing portfolios with a basic ticket size of between 10 and 50 million euros. The underlying leasing contracts have a term of up to 72 months, so that in addition to e-bikes and bikes other leasing items can also be financed.

Given the good prospects for the German leasing market and particularly the bicycle business, AGL and Hamburg Commercial Bank want to continue to grow together. Nearly needless to say, employees of the bank are also increasingly switching to company (e-) bikes themselves.