Nissan automobile company announced it would “take urgent action” to turn around its business model after results for the first half of fiscal 2024 showed a decline in consolidated net revenue and global sales volumes, as well as a operating profit margin of 0.5%.

In a press release Thursday morning, the company said it was “facing a serious situation” and outlined a plan to achieve “healthy growth,” which includes cutting fixed costs by 300 billion yen (more than $1.9 billion) and variable costs of 300 billion yen (more than $1.9 billion). 100 billion yen ($649 million) while maintaining healthy free cash flow.

To achieve this goal, Nissan announced that it would reduce its global production capacity by 20% and that its global workforce of 9,000 people.

“The company is implementing various measures to reduce selling, general and administrative expenses, lower cost of goods sold, streamline its asset portfolio and prioritize capital expenditures and research and development investments,” a said Nissan.

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Nissan cuts jobs and CEO pay after first-half FY24 results showed a decline in consolidated net revenue and global sales volumes, as well as an operating profit margin of 0.5%. (Artur Widak/NurPhoto via Getty Images)

President and CEO Makoto Uchida volunteered to immediately begin forgoing half of his monthly compensation and other executive committee members also volunteered to take pay cuts.

“These turnaround measures do not imply that the company is shrinking. Nissan will restructure its business to become leaner and more resilient, while also reorganizing management to respond quickly and flexibly to changes in the business environment,” Uchida said. “We (can) aim to improve the competitiveness of our products, which are fundamental to our success, and put Nissan back on the path to growth. As a cohesive team, we are committed to working together to ensure the implementation successful implementation of our plans.

Nissan Motor Co. President and CEO Makoto Uchida will take a 50% reduction in his monthly salary to help the company meet its financial goals. (Kiyoshi Ota/Bloomberg via Getty Images)

Nissan saw a decrease in each category in the first half of FY24 compared to the same period of 2023. Categories include: net sales, operating profit, operating margin, profit ordinary and net profit. Global sales volumes also declined year-over-year to 1.6 million units.

“Profitability was impacted by higher sales expenses and inventory optimization efforts, particularly in the United States, as well as higher monozukuri costs,” the company said.

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The company said it plans to advance the introduction of new energy vehicles in China and plug-in hybrid and e-POWER vehicles in the United States, as well as reduce the vehicle development time to 30 months.

Nissan’s ultimate goal is to “create a simpler, more resilient business that can quickly adapt to market changes.”

The Nissan LEAF is one of the company’s two electric vehicles. (Bryan Mitchell/Getty Images)

It will also use and deepen collaborations with the Renault Group, Mitsubishi Motors Corporation and Honda Motor Company while “exploring more strategic partnerships in the areas of technology and software services”.

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Nissan also said a chief performance officer responsible for sales and profits would be appointed and assume the role by December 1.