By Skorzewiak @

After trying to bring more production in-house during the pandemic, Peloton will outsource manufacturing of its bikes and treadmills to Taiwanese firm, Rexon Industrial Corp. Sharon Terlep reports in The Wall Street Journal:

The New York company said Taiwanese manufacturer Rexon Industrial Corp., which has been working with Peloton for years, will become the primary maker of hardware for its bike and tread product lines.

The change reverses a pandemic-driven strategy to bring its production in-house. It will reduce the cash burden on the business, said Peloton Chief Executive Barry McCarthy, who had already scrapped plans to build a factory in Ohio.

Peloton also said it will suspend operations at its Tonic Fitness Technology Inc. plant for the rest of the year. The company acquired Tonic, one of its longtime Taiwan-based bike-manufacturing partners, in October 2019.

Peloton spent hundreds of millions of dollars in the past couple of years to build in-house U.S. production capacity, believing that pandemic-driven demand for its products would remain elevated for years and that it could avoid ocean-shipping logjams by operating U.S. sites.

But sales of equipment have fallen more than 40% from a year ago as people return to gyms and pre-Covid-19 routines.

Mr. McCarthy, a former Netflix Inc. and Spotify Technology SA chief financial officer who took over the CEO role earlier this year from founder John Foley, wants to turn Peloton primarily into a subscription-based company rather than an equipment manufacturer.

Peloton has substantially cut the prices of its bikes and treadmills, which are equipped with a tabletlike screen that connects users to online workout classes, while raising the price of monthly subscriptions to $44 from $39. Though subscription growth has slowed, millions more people subscribe to Peloton than before the pandemic.

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