Peloton will completely outsource the production of its bikes and treadmills in a bid to reduce costs and simplify operations. The move will see the fitness equipment company stop in-house manufacturing.
Over the past couple of years, Peloton has been using partners for manufacturing. However, the duties were split between itself and its partners. For example, Bloomberg says that the company built the standard bikes and higher-end models in facilities it bought in 2019 from Tonic Fitness Technology. Meanwhile, Rexon took care of bikes and treadmills manufacturing during this period.
The plan, going forward, is to stop operating the Tonic facilities and rely wholly on the Taiwan-based Rexon corporation.
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In a statement, Peloton Chief Supply Chain Officer Andrew Rendich confirmed the move. “We are going back to nothing but partnered manufacturing. It allows us to ramp up and ramp down based on capacity and demand,” he told Bloomberg.
The move is likely an outcome of the recent internal unrest the company has undergone. From its founder John Foley being replaced as CEO by Barry McCarthy to massive layoffs, the new Peloton execs are charting a new course.
With shares tumbling nearly 75% this year, it is clear that Peloton’s pandemic success is ending. More people can now return to the gyms, and lesser people are staying at home to work out. Clearly, Peloton has to do something drastic to change its fortune.
Besides halting in-house production, the company has slashed hardware prices and started a leasing program.
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