[Editor's Note: This story has been updated with information from Peloton on the impact of this move on Precor.]
In a move to simplify its supply chain and optimize its cost structure, Peloton Interactive, New York, will now use Taiwanese manufacturer Rexon as the primary manufacturer of the hardware for Peloton's Bike and Tread product lines, the company announced.
The company, which already has an existing relationship with Rexon, is exiting all owned-manufacturing operations. Peloton will suspend operations at its Tonic Fitness Technology Inc. facility through the remainder of 2022. Peloton acquired Tonic for $47.4 million in October 2019.
The move will have no impact on Precor, a Peloton spokesperson told Club Industry. Peloton announced in December 2020 that it was purchasing Precor for $420 million, and that purchase was finalized in 2021. With that acquisition, Peloton planned to establish U.S. manufacturing capacity, boost research and development capabilities and accelerate Peloton’s penetration of the commercial market, the company said at the time.
The shift is a natural progression in Peloton's strategy to simplify its supply chain and focus on technology and best-in-class content to continue driving the business forward as a global connected fitness company, according to Peloton.
"Today, we take another significant step in simplifying our supply chain and variablizing our cost structure – a key priority for us,” Peloton CEO Barry McCarthy said in the announcement. “We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility. Partnering with market-leading third-party suppliers, Peloton will be able to focus on what we do best — using technology and content to help our 7 million members become the best versions of themselves."
Peloton plans to maintain a “significant” corporate and manufacturing presence in Taiwan with over 100 Peloton Taiwan team members who will continue to play a key role in the company’s engineering and manufacturing strategy, according to Peloton Chief Supply Chain Officer Andy Rendich.